In 2008 we found ourselves becoming more and more frustrated with the Canadian market. The prices were consistently too high, the ROI too low. This came at a time when the severe price drops were happening in the US, particularly in the sunbelt regions. We analyzed cities across North America to determine the best place to invest our money specifically where there was economic diversity, continuous migration and where house prices were stabilizing. After much deliberation we picked Phoenix as it met our criteria.

The Phoenix market, like most of those heaviest hit by foreclosures, is in continuous flux as the banks do their best to carefully get rid of the foreclosures on their books with as little repercussions as possible. That said we want to be cognizant of trend lines. Phoenix was nicely following a normal appreciation trend line until of course the boom which began in 2005. For the next 3 years, this pushed prices to heights that were unreal. When the crash occurred, the prices over corrected and resulted in the prices dropping below the trend line to the year 1999 prices. Foreclosure filings are down, rentals demands are up, listings have dropped to half the level of 2006 as this very efficient market resets prices on foreclosure homes.

We as Canadians rarely, if ever discuss the cost per square foot when it comes to pricing a property and determining current value as well as predicting potential appreciation. We have been able to purchase newer properties at essentially half the cost of the original construction cost. To put that into understandable terms, if you could by a new car for half the price the manufacturer spent to produce it, most people would jump at that. The similar holds true here. With the foreclosure crisis and housing crash, construction in Phoenix has ground to a virtual halt. Consider the fact that there is a continuous year over year migration stream to Phoenix, because of this lack of construction, there will be soon be a major housing shortage. We feel it stands to reason that in order for construction to begin again to meet this demand; existing houses have to appreciate to a value that is close to the cost of construction for the builder to be competitive and still make a profit.