When I was at the RE/MAX International Convention in Las Vegas a year and a half ago, the few American agents who attended (relative to past years) were in a funk about the state of their industry. The sub prime fiasco was fresh in everyones' minds. Sales were scarce and prices were way down.
At that time, some economists were predicting that the worst was yet to come. They anticipated that many home owners who were successfully making their payments each month would be faced with difficulties when their existing mortgages came up for renewal.
Millions (yes, millions) of mortgages were issued to Americans for no reason other than they walked up-right and could sign their name. They didn't even have to prove they were employed. The worry was...what will happen when these mortgages come up for renewal? If the homes aren't worth enough to cover the size of the mortgage, many will be forced to simply walk away and let the mortgagee deal with it.
Well, this renewal period has begun and coupled with high unemployment, foreclosures are happening at an alarming rate. The Globe and Mail real estate reporter, Steve Ladurantave wrote this week that "a record 14.4% of mortgages in foreclosure or delinquent".
What does this mean to the Canadian real estate market? I have no idea. I'm not sure anyone does. What it does suggest however is that this may be another opportunity for those Canadians with the cash to invest south of the border. U.S. house prices fell dramatically two years ago and it stands to reason they will fall again.
I made some important friends in the sun belt communities when I was in Las Vegas. These are Realtors who are selling a lot of houses in a depressed market place to they are well positioned to help Canadian investors make some serious money. I'll be telling my clients about this in the days to come.