Topic: How To Invest

What is Pat's commentary for the week of January 10, 2012?

Article Excerpt

It appears lots of Canadians are buying second homes in Florida and other parts of the U.S. CTV recently invited me to go on air and discuss whether these purchases make investment sense. It seems I surprised everybody when I said that buying in Florida might make sense as a lifestyle decision but was liable to be a bad investment. Here are some of the “buts” they raised, and my responses. “But the prices of Florida homes have collapsed in the past three to four years—doesn’t that make them a bargain?” There was a once-in-a-generation (if not once-in-a-lifetime) boom in real estate in the U.S. Sunbelt in the last decade. Many special circumstances added up to create this boom: stock-market gains from the Internet boom, the Federal Reserve’s low-interest-rate and easy-credit policies, plus U.S. tax policies and government subsidies aimed at stimulating mortgage lending and home buying. However, boom times don’t last forever. This boom peaked around 2006. Since then, Florida real estate prices…