U.S. Real Estate Remains Attractive for Canadian Buyers

Just as Canadians enthusiastically travelled back to the United States once borders re-opened, they also began investing in U.S. real estate again. In fact, based on the 2022 International Transactions in U.S. Residential Real Estate report published by the National Association of REALTORS®, Canadians spent $6.6 billion on U.S. real estate purchases in 2022, continuing to be one of the largest groups of foreign U.S. property buyers (10%).

Despite interest rate increases, U.S. homes remain affordable for Canadians

While the inventory of homes for sale in the U.S. is well below pre-pandemic levels, there were 48.3% more homes for sale in April 2023 compared to the same time last year, according to the realtor.com April 2023 Monthly Housing Market Trends Report. And in the 50 largest metro areas, the number of homes for sale increased by 52.7%. Yes, housing markets continue to face challenges as affordability headwinds endure, but according to the Fannie Mae Home Purchase Sentiment Index 64% of respondents feel that now is a good time to sell in the United States.

The median sales price for an existing home was $430,000 USD in April, up from $424,000 USD in March (however, this is down from a record high of $449,000 USD in June of last year). The median list price represents a yearly growth rate of only 2.85% – the lowest rate of growth since April 2020.

While U.S. buyers aren’t feeling particularly keen to purchase in 2023 (only 22% said now is a good time to buy), the market environment is attractive to Canadian buyers who have their eye on U.S. property. Here’s why:

  • While homes in Canada are slightly more affordable than they used to be, they are still out of reach for many buyers.
  • The ability to pay off a mortgage in full without penalty is a considerable benefit for Canadians who have limited access to this opportunity back home.
  • It’s easier than ever for Canadians to get a mortgage in the U.S., with some lenders taking Canadian credit history into account. While the CAD to USD exchange rate isn’t favourable for Canadians at the moment, easy access to financing reduces the upfront impact of foreign exchange.
  • Despite higher interest rates, buying a home in the U.S. is still more affordable than it was a few years ago. Average home prices, while strong in key U.S. locations, remain lower than prices in some Canadian markets.
U.S. LocationMedian Price (USD)  2023Canadian LocationMLS® HPI Benchmark Price (USD) July 2023
Orlando, FL$390,000Toronto, ON$856,622
Tucson, AZ$355,000Calgary, AB$406,506
Palm Springs, CA$732,500Vancouver, BC$892,722

Florida remains the top purchase destination

Florida has long been a prime destination for Canadian short-term vacationers and snowbirds who enjoy an extended winter stay. As temperatures dip north of the border, the Sunshine State’s warm weather broadens its appeal to Canadians. So, when it comes to purchasing real estate, it’s not surprising that Florida is again top of the list for Canadians.

According to CREA’s 2021 International Activity in Canadian Real Estate Report, the U.S. is the top location for Canadians looking to buy abroad (at 39%) and the top location remains Florida for those buyers.

72 million people visit Orlando each year. Aside from weather considerations, one of the reasons Florida remains so attractive to Canadian buyers is its affordability – particularly in Orlando and Central Florida. This reality, combined with the considerable short-term rental zoning in Orlando, makes the area particularly appealing for those looking to purchase investment properties. Buyers interested in purchasing a short-term rental will want to confirm the terms with the Homeowners Association, as they can vary across properties.

Other areas to watch include Arizona, where cities on the west side of the Valley of the Sun are up and coming. There’s a lot of construction happening in that region, and it’ is one of the more affordable areas for buyers in that state. 

Canadians are primarily buying vacation properties

According to CREA’s report 78% of Canadian buyers of U.S. real estate purchase a property for use as both a vacation home and/or a rental unit/investment property.

While most Canadian buyers purchase detached single-family homes in the U.S., they also purchase condominiums. This is likely because their properties are primarily used for vacations.

As REALTORS® know, the real estate market both north and south of the border is complicated and trends are difficult to predict. While interest rates, home prices, inflation and other broad economic conditions may have thrown a wrench into some buyers’ plans, there continue to be opportunities for some.

The bottom line is that Canadians are back to buying U.S. real estate again, and – they just need some guidance from experienced REALTORS® who can partner with them through the exciting journey.

The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.

The original version of this blog was published in the Global Connect Newsletter by CREA Global and RBC.

The CREA Café team is responsible for the official blog of The Canadian Real Estate Association (CREA). The CREA Café is a cozy place for CREA to connect with our valued members and friends by sharing our thoughts and insights over a virtual cup of coffee.

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