Canadian homebuilders look south, bet on U.S. housing recovery
By Sweta Singh and Ashutosh Pandey
(Reuters) - Overheating worries at home are driving Canada's homebuilders south of the border where they buy up rural land, betting on a recovery in the U.S. suburban housing market even as many local players remain on the sidelines.
Homebuilders such as Mattamy Homes and Brookfield Residential Properties Inc BRP.TO BRP.N are buying undeveloped land in Florida, Texas and other states where prices tumbled during the global financial crisis and remain well below pre-crisis levels.
The companies said that by moving now they give themselves enough time to prepare the land and build homes so they will be ready for sale once the U.S. recovery gains momentum in a couple of years.
"We are probably a good two years away before we are at a normalized U.S. housing market and so it is actually a good time to go and buy in the U.S.," Mattamy Homes Chief Operating Officer Brian Johnston told Reuters.
He said the company was focusing on suburban areas, where more and far cheaper land is available than in the cities, allowing to build on a bigger scale.
Mattamy and its peers also expect to hit a sweet spot with retirees and affluent second-home buyers who want amenities like shopping, dining and entertainment, and "snowbirds" -- Canadians who migrate to southern U.S. states for the winter.
Some analysts warn Canadian builders could end up waiting much longer than they expect for returns from those investments and many of their U.S. rivals appear not sold yet on the idea of suburban market revival.
"There is little bit of a timing risk. You can go buy the land now but it will be sometime before demand really bounces back," said Ryan Severino, an economist at real estate research firm Reis. Continued...