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Canadians keep investment dollars at home

Canadians are becoming more worried about placing their investment dollars into the US real estate market. While in the last two decades, Canadians have favoured buying second homes in locations like Florida and even Arizona, they are now sceptical about property values there and resorting to keeping their investment dollars north of the border.

The reason for doing so is quite simply because of the economy and the housing slump in the US. Many are fearful of a recession in which property values would plummet, making their second properties worth much less than what they paid for it.

On the other hand, Canadian investors must also consider the likelihood that the housing market fall in the US would in fact trigger the real estate market in Canada to shake. While most investors believe that the Canadian market is going to be strong for 2008, speculation on how the economy will handle a US recession is worrisome to some.

According to IMF chief economist Simon Johnson, the entire world will feel economic slowdowns due to these factors within the United States.

While some areas of Canada have seen incredible growth, for example, Calgary has seen some 30 per cent price increases through both of the last two years, these areas may see much less of an increase going forward, with property prices still rising, just slower.

With resorts and property developments looking to cash in on the baby boomer's buying second homes in Canada, it is likely that Canada will see property growth in 2008. How much will be debatable by many investors.