Canadian-U.S. currencies equal for first time since '76
For the first time since 1976, the Canadian dollar — nicknamed the "loonie" because of the loon depicted on the $1 coin — is worth as much as a greenback...
Seattle Times business reporter
Kim Stark and Mark Crittenden of Burnaby, B.C., had just finished shopping at the Gap and Banana Republic outlet stores in Snohomish County's Quil Ceda Village — a rest stop on their trip to Nordstrom in Seattle — when they paused to consider the rise of the Canadian dollar against its U.S. cousin.
"Isn't it great!" Stark exulted.
Nearby, a trio of women from Vancouver, B.C., barely paused as they headed toward the sprawling outlet mall alongside Interstate 5. How did they feel about the high-flying loonie? "That's why we're running — because the shopping is so good," one called out over her shoulder.
Americans who remember a few years back when one U.S. dollar could buy $1.40 or $1.50 in Canadian goods had better get used to some new math.
For the first time since 1976, the Canadian dollar — nicknamed the "loonie" because of the loon depicted on the $1 coin — is worth as much as a greenback. Though that makes Canada a much more expensive visit for Americans than even just six months ago, throughout northwest Washington retailers and other businesspeople are seeing increased trade from newly flush Canadians.
More Canadians are traveling to the States than a year ago, though still far fewer than used to visit. Car dealers in Bellingham report getting dozens of phone calls from Canadians looking to buy — even though the manufacturers discourage their U.S. dealers from selling new cars to Canadians. And some Canadians, priced out of vacation areas such as Victoria and the Okanagan Valley, are looking across the border for that waterfront second home of their dreams.
"There's just been a tremendous influx of Canadians returning to the market," said Mike Kent, a real-estate agent in Blaine. "They can find a place close to home for half the money" they'd pay in British Columbia.
Not like the '90s
But economists who study the Pacific Northwest and Canadian economies say not to expect the kind of bonanza seen in the early 1990s — the last time the Canadian dollar was worth more than 90 U.S. cents.
"The role of the Canadian dollar is less significant than it used to be," said Hart Hodges, director of Western Washington University's Center for Economics and Business Research.
"I'll take somebody else's money any day," Hodges continued. "But the Whatcom County economy isn't going to benefit from the Canadian shoppers the way it used to."
Over the past decade and a half, the Bellingham area's economy has grown, diversified and become less geared toward the Great Wet North. Canadian shoppers have more choices closer to home, while stricter border inspections, longer wait times and higher U.S. gas prices act as disincentives.
Still, some Canadians are making the journey, credit cards at the ready. Last weekend, for instance, Joseph Park of Coquitlam and his girlfriend made a day trip to Bellis Fair mall in Bellingham, coming away with a couple of pairs of jeans.
"It does make us feel better, the value of the dollar," Park said. "You do notice things are more attractively priced."
In fact, Park said, Canadians don't get the full benefit of the higher exchange rate unless they shop in the States: "Our Canadian retailers still mark up — when they import from the U.S., they don't pass their savings on to us."
Stark and Crittenden said they'd popped down to the States for a day of shopping and fun, encouraged by the knowledge their loonies would go a lot further now.
"We would have done it regardless, but you're more conscious of what you buy" when the Canadian dollar is weak, Crittenden said.
No boon for car sales
Rick Wilson, general manager of Wilson Toyota in Bellingham, said his phone had been ringing off the hook with calls from Canadians seeking to buy cars — which tend to be cheaper here — and drive them north. Unfortunately, he said, Toyota has asked its U.S. dealers not to sell new cars to Canadians, a move intended to protect the company's Canadian dealers. Mercedes, which Wilson's dealership also represents, dispensed with the niceties — it simply fines U.S. dealers for selling new cars to Canadians.
"They're not happy about it," Wilson said of his disappointed Canadian callers. "Some of them have threatened to sue for restraint of trade."
Used-car sales aren't proscribed, and Wilson said his used-car business is up about 30 percent over the past six months, largely due to Canadian sales. Still, he said, the dealership sells two new cars for every used one.
"I could sell an awful lot of cars in Canada," he said.
More choices up north
These days, Canadians no longer have to leave their home country to shop at big U.S. retailers. Wal-Mart, Costco, Home Depot, Best Buy, Staples and Toys "R" Us, among others, have outlets in greater Vancouver.
"Retailing in Canada in the early 1990s still wasn't very vibrant," said Paul Storer, a native Canadian who teaches economics at Western Washington University. "There wasn't a lot of choice. And you'd go into an Eaton's [a now-defunct department-store chain] and get the feeling you were bugging them if you asked them for something."
Storer noted that the high loonie of the early '90s also coincided with the introduction of Canada's goods-and-services tax, a hugely controversial levy that gave Canadians another reason to shop across the border.
The loonie's subsequent long decline — it bottomed out at 62 U.S. cents in January 2002 — helped break much of Whatcom County's dependence on Canadian shoppers, Hodges said. It also contributed to a dramatic drop in the number of cross-border visitors.
In 1991, more than 13 million people crossed into the United States at the two border stations near Blaine, according to the U.S. Bureau of Customs and Border Protection; last year, just 5.7 million people did.
This year through the end of August, 4.52 million people had crossed, a 10.9 percent increase from the same period last year. Experts attribute most of the recent increase to traveling Canadians.
Even with the Canadian dollar at parity, Hodges said he doesn't expect Canadians to flood in the way they used to. The reconstruction of the Peace Arch border crossing, scheduled to start this fall and last until the end of 2009, will cut the number of southbound inspection lanes and extend wait times even more.
Of course, one way for Canadians to minimize border waits is to move to the States, temporarily or permanently.
Kent, the Blaine real-estate agent who specializes in the Birch Bay and Semiahmoo areas, said most of his business these days comes from Canadians. The combination of a more valuable loonie and soaring real-estate prices in British Columbia has led many Canadians to buy on this side of the border.
A three-bedroom, two-bath house with a water view in Birch Bay probably would sell in the $400,000 range, Kent said; a similar house in Kelowna, B.C., on Okanagan Lake, would easily exceed $1 million.
Kent said his Canadian trade started picking up about a year ago, when the loonie rose to about 92 U.S. cents. Ironically, he said, much of his business when he started in real estate nine years ago was selling Canadian-owned properties.
"Canadians helped me get established back then by giving me product to sell, and now the next generation is coming back as buyers," he said. "It's kind of neat."
Drew DeSilver: 206-464-3145 or email@example.com
Copyright © 2007 The Seattle Times Company
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