Loonie's fall to end property buying spree, says economist

A new forecast by Capital Economics today said the Canadian dollar will drop to 92 cents (U.S.) by the end of the year, then down to 86 cents by the end of 2013.

As of Tuesday, one Canadian dollar was being exchanged at a rate of 97 cents (U.S).

In other words, a Canadian with C$150,000 could buy a U.S. property for $146,000 cash (U.S.) today. If the forecast pans out, then that same amount of Canadian currency could only buy a $138,000 property by the end of the year, and a $129,000 property by the end of 2013.

Toronto-based economist David Madani for Capital Economics said the currency is likely to shift due to the prospects of further declines in commodity prices and lower expectations for interest rate differentials between the U.S. and Canada.

However, other forecasters have predicted more parity going forward between the two currencies this year.

For now, Canadian investors have been taking advantage of some of the most favorable conditions ever in cross-border real estate transactions. A survey earlier this month by the National Association of Realtors found that Canadians accounted for 24% of all international sales, compared to 23% in the 2011 survey.

The median price of U.S. homes held by households outside of the U.S. was $252,000, according to the report.

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