Earlier this year, we bought a second home in Naples, Florida. This wasn’t a quick decision for my husband and me. We love spending time in that area of Florida and property prices there are at their lowest level since 2002, but I really struggled with whether a second home made financial sense. But, ultimately, home buying can’t just be about the money. Buying a home is also an emotional decision.

I know we are not alone. Many boomers are actively considering buying a second home in the U.S. sunshine belt. A stabilizing global economy, coupled with lower U.S. real estate prices and a strong Canadian dollar are just some of the obvious reasons that it could be a good time to buy.

But, Canadians do need to tread carefully: U.S. property prices are still on a slow downtrend and we just can’t know how close they are to a bottom. As a prospective homeowner, you also need to factor in the cost of maintenance as well as annual property taxes. Plus, in some states like Florida, hurricane insurance is both very important and very costly. Just this past month, regulators approved an average rate hike of 18.8 % for Florida homeowners covered by State Farm!

So why did we do it? As empty-nesters, it really was a lifestyle decision for us. We had already downsized from our family home to a condo in Toronto after our children moved out. It was our plan that many years from now, when we retired, we would look at purchasing a winter home. But, given the current real estate prices and the strong dollar, my husband was keen to buy now. I was not. Actually, I was initially totally against it. I crunched the numbers and from a purely financial standpoint, it made more sense to rent. But, my husband made a compelling argument: buying this home was less about investing in real estate than it was about creating a place for our now-dispersed family to gather for many years to come. I couldn’t argue with that logic.

You can put a price tag on a home, but you can’t put a dollar figure on its emotional value.

But -- and this is key-- you need to ensure you can truly afford it. If a second home is going to sink you deep in debt, don’t do it. Buying a second home should really only be a consideration when your mortgage on your first home is paid. And, even then, consider a modest investment that will not have a significant impact on your retirement funds.

The home we bought is a nice place that will give us the room to entertain friends and spend time with our kids. But, we chose a view of the golf course over a beach front property to reduce costs. Plus, we also managed to buy the model home, which we’ve leased back to the builder for the next few years. If you can find this type of opportunity, I highly recommend it. It effectively allows you to take advantage of the strong dollar now and enjoy the property later.

If you are thinking seriously about buying a place in the U.S., it is also important to consider your mortgage options. In an ideal situation, you would pay for the entire place in cash. Not only does that ensure you avoid negatively impacting your retirement, but qualifying for a mortgage from a U.S. financial institution may be tricky.

There are also tax implications. Before we bought, we spoke with a tax advisor who specializes in cross border investments to understand the taxes. You might also want to ensure you understand the new U.S. estate tax rules and exemption limits which can impact estate taxes for high net worth Canadians.

So, should you consider buying a second home in the U.S.? My vote is a very qualified yes. This definitely should not be a spur of the moment decision, but if you can afford it, there are certainly lifestyle benefits. Although I was initially against it, I now can’t wait to share a home down south with my family.

Financial Post

plovett-reid@nationalpost.com

Patricia Lovett-Reid is senior vice-president, TD Waterhouse