This is part of a series of stories on retirement and second home destinations in North America.
With retirement only a few years off, Ontario residents Paul and Karen Sullivan weighed the merits of a possible winter getaway property south of the border.
They had their eye on Arizona – but not right away – for its absence of hurricanes, no extra taxes for out-of state buyers, warm, sunny winters and low-maintenance properties without lawns.
But the "at some point" timetable for the Sullivans switched to "now" in early 2011 thanks to a strong Canadian dollar and a severely depressed American housing market.
They paid cash for a three-bedroom house that looks out on a golf course in an upscale gated community in Anthem, 35 minutes north of Phoenix. The five-year-old home sold for $399,000 before the 2007 financial crash, but the Sullivans got it for $269,000.
"At the age we were, we thought if not now, when?" says Mr. Sullivan, 56, a semi-retired financial planner. "With the dollar at par and the [U.S. housing] meltdown, we decided if we were ever going to do it, that was the time."
Increasingly, Canadians are heading to warm-weather destinations in the United States to buy or rent second homes. Florida attracts 40 per cent of Canadians, according to a 2013 survey by the National Association of Realtors, but Arizona ranks second with 24 per cent of snowbirds. NAR data show that 86 per cent of Canadian buyers paid cash, with 47 per cent buying in small towns and resort areas and 41 per cent in suburban communities.
Beyond its reliable weather and lifestyle amenities, Arizona is a draw for its affordability.
In Phoenix, the state's largest city, the mid-point price for a home in the metro area was $191,700 in third-quarter 2013, up 25 per cent from a year earlier, according to the NAR. In Tucson, the second-largest city with 1 million people, the comparable price was $172,400, up 11 per cent from a year ago.
The recent rebound, however, only puts prices back to about 2004 levels.
Price, alone, is not the only consideration in a purchase.
Lifestyle choices (golf, hiking, spectator sports and entertainment), likely length of stay (a few weeks or several months), a preference to rent the property (or not) should all weigh in the decision, Phoenix real estate agent Arnold Porter says. He and his wife Maureen, snowbirds themselves, co-founded Arizona for Canadians in 2007, a real estate firm that caters to Canadian buyers.
Mr. Porter says buyers from Canada need to know U.S. immigration rules, which require a B2 visitor visa for stays of up to six months, as well as U.S. tax rules that apply when foreign owners rent their property for part of the winter. He says Canadians also need to understand provincial rules on health insurance coverage that govern the length of stay (now seven months for many provinces) outside the country.
"Don't just fly down here and go into the local real estate office," Mr. Porter warns. "Make sure you are starting out with what your interests are and how to do it properly."
The Sullivans, for example, choose to rent their home for part of the winter, opting for a gated community to give renters a sense of security. Whether gated or not, many new communities have fee-paying homeowner associations that set rules on house colours and parking. Typically, the fees are included in information when a house goes on the market.
Mr. Sullivan says prospective buyers need to think about their time horizon for ownership, which could affect location and desired amenities.
By contrast, Toronto retirees Ingrid and Tony Ross choose not to rent the three-bedroom home they purchased in Anthem in 2008, after prices tumbled, for $530,000.
They paid through their Canadian bank, but set up an American bank account to facilitate regular payment of utility and other bills. "It's like we don't exist in Canada," says Ms. Ross, of the difficulty in processing cheques from Canada. As is typical for Canadians who spend only part of the year in Arizona, the couple hire someone to check on the house in their absence.
Phoenix has been a top destination for Canadians headed to Arizona, but Tucson is gaining attention as less-congested, less-expensive alternative with easy access to the Sonoran Desert, canyons for bird watching and the ski slopes of 2,791-metre-high Mount Lemmon, says Charlie Bowles, branch manager for Russ Lyon Sotheby's International Realty in Tucson.
Getaway homes in Tucson range in price between $200,000 (US) and $2-million and did not tumble as sharply as Phoenix in 2008-10, he says. "We are now climbing at a nice gradual pace compared to the spike in Phoenix last year."
Calgary retirees Peter and Debra Jennings, in their early 60s, were familiar with a lot of warm-weather destinations in the United States but had never visited Arizona.
But with so many friends headed to Arizona, a mecca for golf keeners like the Jennings, the couple paid their first visit in 2006.
"Friends told us 'don't just go to Phoenix and buy like everyone else does. There are a lot of really nice places south of Phoenix,'" Mr. Jennings, formerly in the financial services sector, says.
They fell in love with Tucson, a two-hour drive south of Phoenix and one hour north of Mexico.
"It was the same as Calgary and had the same sort of feel, laid back and easygoing," he says. "Phoenix had a rush-rush big city feel."
Initially they built a 2,100-square-foot, three-bedroom ranch for $375,000 on a golf course in a gated residential community in Oro Valley in north Tucson.
Then, as now, they dealt with fluctuating currency exchange. "When we wrote up the deal the Canadian dollar was 82 cents U.S.," Mr. Jennings recalls. "By the time we had to come up with the money, the dollar had gone up to 95 cents."
Last year, the couple sold their house at a loss of $100,000 to relocate to a new upscale residential community on the edge of the posh Ritz Carleton golf course in Dove Mountain. But they gained in the end, by buying a larger home with 2,400 square feet for $348,000, well below asking prices prior to the housing meltdown.
The recent tumble of the once high-flying loonie, in combination with a rebound in U.S. housing prices, may give second thoughts to prospective Canadian buyers.
BMO Capital Markets predicts the Canadian dollar will remain "pretty soft or slightly above 90 cents U.S. over the course of the next year," says Robert Kavcic, vice-president and senior economist. "It is settling in to levels that are pretty close to fair value."
So has the ship sailed for a good deal? "That's a tough one," Mr. Kavcic says. "It is not nearly as compelling as it was three years ago."
But like others content with their warm-weather investment, Mr. Jennings says currency is not the only factor.
"I think you have to make the decision based on lifestyle," he says.