Canadians buying property in the States has been going on for decades, and vice versa with Americans buying property in Canada. While the volume of homes and vacation properties in Canada being sold to American buyers has remained fairly consistent, the number of U.S. properties going to Canadian buyers has surged upwards in recent years. There are a number of factors playing into that trend, and the first and most obvious of them being the prohibitively high price of real estate in major metropolitan areas in Canada.
Here at Real Estate Leads, we’re thrilled with how our online lead generation system for realtors has been so well received by the real estate agent community in Canada, and we’ll continue to make adjustments to it to ensure it’s serving its purpose with maximum efficiency. We also enjoy keeping our thumb on the pulse of trends that are emerging in real estate.
The increasing number of U.S. properties being sold to Canadian buyers is one that’s particularly interesting to note. With accelerated house price growth in Canada’s hottest markets – Toronto and Vancouver – more Canadians are opting to buy affordable properties across the border. Given that we can assume the majority of those buyers do not have dual citizenship or a work visa, there can be some guessing as to what would spur the purchase of a home in a country that – despite being your next door neighbour – is just that, a foreign country.
That can and will be a discussion for a different day, however.
Residential All the Rave
From April 2016 to March 2017, the $19 billion that Canadians spent on residential properties in the United States was a record — in fact, it’s more than double the total of $8.9 billion recorded in last year’s report. All this from the National Association of Realtors’ (NAR) latest report from earlier this month. During this same period, a total of 284,455 properties were sold to foreign investors, a number that was up 32% from 2016.
Canadian buyers made up for 33,819 of those properties, a jump of nearly 7,000 from 2016. China led the way with the most foreign purchases for a third consecutive year, making 40,572 purchases in the US worth an astounding $31.7 million.
This is further despite the fact that inventory shortages continue to drive up US home prices, and it would seem that many of these Canadian buyers are looking south of the 40th in search of affordable vacation homes.
The common consensus seems to be that a measure of the acceleration in foreign purchases over the past year is coming from the combination of more affordable property choices in the U.S. with foreigners assured in their decision to buy now by understanding that any further weakening of their local currency against the dollar will make buying in the future considerably more expensive.
Exchange Rate Factors
Foreign investment from Canadians dropped from 2015 to 2016 in the US as a result of the weakening Loonie, but this year’s heightened activity is believed to be a temporary phenomenon when we consider the red-hot market activity seen in Vancouver and Toronto. Industry experts expect to see continued strong demand from Canadian buyers, but they also believer there is very like going to be a pullback too.
The median price tag for US homes purchased by Canadians was $288, 615 – which was up from just over $222k in 2016. An interesting trend to note is that from April 2016 to March 2017, the majority of Canadian buyers were choosing the southeast and southwest areas of the US as their preferable investment areas, and most particularly in Florida.
Affordable options and a warmer climate pair to make up the top reasons why Canadians consistently are in the top 3 nationalities of foreign buyers purchasing homes in the U.S. That’s in large part because home price appreciation is quite strong in Canada relative to the United States, and you then factor in warm weather is a driver all on its own. Further, you also tend to get a lot more for your money in terms of square footage and kind of proximity to amenities in U.S. locations
Overall, foreign buyers and immigrants spent $153 billion on homes, and not only is this number a notable 49% increase from $102.6 billion in 2016, it’s a new record high that suggests the purchasing prerogatives for buyers here in Canada and elsewhere are changing to be less focused on the domestic market and buying homes for housing to more focused on investment and acquisition of assets.
Working with buyers is an equal 50% of what most realty professionals do here in Canada, and working in conjunction with similar professionals working in the U.S. to accommodate the purchasing wishes of clients looking for an investment home in U.S.A can be very much a mutually beneficial arrangement.
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