Canadians heading south for the winter will face a host of rising costs associated with inflation and competitive real estate prices.
“Unfortunately, this really is a perfect storm for snowbirds and we started seeing some of it last year,” Stephen Fine, president and editor of snowbirdadvisor.ca, said Tuesday.
Fine said snowbirds started seeing an increase in real estate costs for buying or renting in the U.S. Sunbelt last year.
“So we saw that last year, but this year with inflation we’ve also seen an increase in the cost of food, groceries, restaurants, transportation…flights, gas [and] vehicle transportation, which is very important for snowbirds,” Fine said, adding that the weaker Canadian dollar is also driving up costs.
EXCHANGE FEE
In September, the loonie fell below 75 cents US and remains below its May 2021 high of 83 cents US
Despite the falling loonie and rising costs likely to be incurred by snowbirds, Fine said he doesn’t see demand waning from Canadians looking to travel south to Winter.
“We don’t see a lot of people who won’t go at all because of the weak Canadian dollar, but [what] we see some changes in [the spending] habits that people might adopt,” Fine said.
Fine said people might try to save money by shortening their stay, while others might change their destination altogether.
“They’re also looking at alternative destinations for snowbirds, either overseas or in traditionally less popular destinations in the United States, where they might get more bang for their buck or more bang for their buck,” Fine said.
Fine said some may be looking at properties away from prime locations.
“They can rent accommodation a few blocks from the water which may be a little cheaper this year. So there are a number of ways people look to change their spending habits if they’re on a budget and can’t afford the increases that are happening,” he said.
REAL ESTATE COSTS
In the second quarter of 2022, Florida experienced the largest house price appreciation of any U.S. state at 6.74%, according to the Federal Housing Finance Agency.
Rental costs in Florida have risen along with the appreciation in home prices.
According to a statement released Monday by Apartment List, rental prices in Miami were up 15.6% from a year earlier. Rent prices in Fort Lauderdale are up 22.5% year over year. Tampa’s rental prices rose 6.3% from a year earlier. Over the same period, rental prices rose 10.2% in Orlando.
“So if you have Canadians looking to winter here and looking to rent, I think they’re going to be put in a really bad spot because [of] the complete and utter frenzy of the past two years,” April Robinson, realtor and president of Florida Expert Realty, said in an Oct. 13 interview.
Robinson, who operates in the Tampa Bay area, said the “frenzy” of the past two years has resulted in housing prices that “have continued to rise to unprecedented levels” leading to housing issues. supply and accessibility.
Robinson said the frenzy has caused a “domino effect” where many vacation rental properties, frequently used by Canadian travelers, have been converted to long-term rentals in a bid to take advantage of peak prices.
“It’s just a snowball effect in a situation where it’s so much less affordable for everyone,” she said.
But amid the US Federal Reserve’s interest rate hike campaign, Robinson said the market was changing again and buyers were now “finally back in the driver’s seat”.
“Interest rates are the catalyst. So that’s really the driving force of the market. June is when the change started to happen [and] I started feeling it right away,” Robinson said.
Robinson said high interest rates are not compatible with the appreciation many homes have accumulated over the past two years.
“So when you have interest rates that have gone up so fast and house prices are so much higher, there’s no one left to buy them,” she said.
Despite the current buyer’s market, Robinson said she would advise Canadian snowbirds to wait a year and “see where the market is.”
SNOWBIRD FINANCIAL ADVICE
Canadian snowbirds will rack up increased costs in a variety of areas, according to personal finance and travel expert Barry Choi. Specifically, Choi said Canadian snowbirds may pay more for airfare, food, hotel rates and gas prices.
Choi said airline prices are rising with travel demand. However, he said the rise in airline costs was not drastic.
While Canadians might be used to seeing increases in food prices at home, Choi said it’s an expense that needs to be factored into travel plans.
“If snowbirds have traveled in the past and are used to lower prices, they’ll likely see a bit of a sticker shock once they get back south, because in the US restaurant prices have increased, tips increased. [and] grocery store prices have gone up,” Choi said.
Snowbirds should also expect to see hotel prices increase, in part due to inflation and cleaning efforts related to COVID-19, Choi said.
“It should also be noted that obviously parts of Florida have been significantly impacted by the hurricane, so some areas will have fewer hotels available,” he said.
Snowbirds driving south from Canada will pay extra at the pump because they will likely have to fill their tank multiple times, Choi said.
According to an Oct. 10 GasBuddy release, the national average gasoline price in the United States rose 67 US cents per gallon from a year ago and 22.5 US cents from the previous month.
“The rising cost of everything we see needs to be taken into account when budgeting,” he said.
Despite the rising costs, Choi said he doesn’t think this will deter travellers.
“In fact, I think the demand has increased because there will undoubtedly be many snowbirds who have avoided traveling for several years for obvious reasons,” Choi said.
Amid various cost increases, Choi recommends travelers know how they use their credit cards.
“If you’re going to be using your credit cards throughout your stay in the South, remember that most credit cards charge a 2.5% exchange fee. However, some credit cards waive this fee. So if you get a credit card with no exchange fee, you’ll save 2.5% on every purchase,” Choi said.
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