After the Fed cut the interest rate last month, many opined that it would do little to help out the housing situation and instead would only weaken the US dollar. Although one data point does not make a trend, in the immediate term those opinions appeared to be correct as evidenced by mortgage rates which for the most part held steady. Something interesting did happen as a result of the cuts however.

Within days of the Fed announcement, our phones starting ringing off the hook. Our real estate agent clients were calling us asking what we had changed with our online marketing because an abnormally high percentage of their real estate leads were coming from Canada. Of course we had changed nothing. Upon further digging and talking to clients, we estimated that real estate leads coming from our northern neighbors increased by approximately 300% after the announcement. Most of the flurry of activity came from the traditional real estate investment markets, namely California, Arizona, Nevada, Texas, and Florida. Since real estate investment is so heavily tied to speculation, it only makes sense that speculation about the value of the Canadian dollar vs. the US dollar based on interest rate drops would create such a spike.

My original thought was that this would just be a quick blip on the radar screen, caused mostly by curious Canadian investors simply looking for some information. I have recently received word however that these individuals are indeed showing up, looking at houses, and diligently preparing to purchase. I don’t see this as a market saver by any stretch but perhaps a less expected benefit.