Condominiums in downtown Miami.CARLOS BARRIA/Reuters
The Globe's Real Estate Beat offers news and analysis on the Canadian housing market from real estate reporter Tara Perkins. Read more on The Globe's housing page and follow Tara on Twitter @TaraPerkins.
Canada's biggest bank is struggling to tell snowbirds that its mortgage business is still operating south of the border.
Royal Bank of Canada decided back in 2011 that it was going to cut its losses and abandon its money-losing U.S. retail banking business, which included 426 branches. In a highly-publicized move, it sold the business to Pittsburgh-based PNC Financial Services for $3.62-billion (U.S.).
While RBC no longer does basic banking for U.S. consumers, it continues to offer U.S. products, such as mortgages, to Canadians. But it's having to work harder to drum up that business.
"One of our challenges is to raise awareness that we still exist," says Alain Forget, head of sales for the U.S. retail business. "Of course we have a more virtual business platform now, but we can actually lend mortgages to Canadians in 50 states."
Awareness isn't the only challenge. More than 80 per cent of Canadians who buy homes in the United States are paying the full price in cash, according to the recently-released 2014 survey of foreign buyers of U.S. properties by the National Association of Realtors.
Canadians spent about $13.8-billion (U.S.) on U.S. homes during the 12 months up to April, and about 73 per cent of the purchases were in Florida, Arizona and California, according to the report.
The $13.8-billion that was spent is about $2-billion higher than what was spent in the prior year. But Canadians only accounted for 15 per cent of foreign sales, down from 17 per cent, as Chinese buyers – who generally buy more expensive homes – stepped up their purchases.
Looking at the year ahead, there is a good chance that the Canadian dollar could drop lower in relation to the U.S. dollar, which might decrease Canadians' appetite for U.S. homes.
Mr. Forget is hoping that that might actually be an opportunity, with the bank hoping to convince Canadians who are shopping for U.S. properties to use a U.S. mortgage to help mitigate the currency effect. "I'm surprised that so many Canadians paid cash and didn't think about U.S. financing to not have to exchange all the purchase amount," Mr. Forget says.
But a mortgage obviously comes with costs and issues of its own. And with the U.S. housing market rebounding, one of the reasons that Canadians are frequently paying in cash is to gain an advantage with the seller.