Photo: Joe Busby/Flickr
With elevated house price growth in Canada’s hottest markets, Toronto and Vancouver, more Canadians are opting to buy affordable properties across the border.
From April 2016 to March 2017, Canadians spent a record $19 billion on residential properties in the United States — more than double the total of $8.9 billion in last year’s report, according to the National Association of Realtors’ (NAR) latest report, published on Tuesday.
Even though inventory shortages continue to drive up US home prices, Canadians are still turning to the south in an effort to find affordable vacation homes.
“Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the U.S. and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future,” says Lawrence Yun, NAR chief economist, in a statement.
During the April 2016 to March 2017 period, a total of 284,455 properties were sold to foreign investors, up 32 per cent from 2016.
Canadian buyers accounted for 33,819 of those properties compared to 26,851 in 2016. For a third consecutive year, China led the way with the most foreign purchases. During the period studied by NAR, Chinese buyers made 40,572 purchases in the US.
After foreign investment from Canadians dropped from 2015 to 2016 in the US, due to the weakening Canadian dollar, this year’s heightened activity is believed to be temporary considering the red-hot activity in Toronto and Vancouver.
“We expect to see continued strength and demand from Canadian buyers. However, we do think it’s just probably an anomaly and we’re going to get a pullback. There’s a lot of unrest and uncertainty over this time period,” Ken Fears, NAR senior economist, tells BuzzBuzzNews.
From April 2016 to March 2017, the majority of Canadian buyers were choosing to invest in the southeast and southwest areas of the US, particularly in Florida.
Canadians spent slightly more on homes in the US compared to last year. The median price tag of a home Canadians purchased was $288,615, up from $222,310 in 2016.
Affordable options and a warmer climate are the top reasons why Canadians consistently make the top three list of foreign buyers in the US, explains Fears.
“The home price appreciation is quite strong in Canada relative to the United States and there’s always this long-term driver of warm weather. But also you get a lot more for your money [in the US] in terms of square footage and kind of proximity to amenities,” says Fears.
Overall, foreign buyers and immigrants spent $153 billion on homes, a notable 49 per cent increase from $102.6 billion in 2016. This is a record high in the history of the report.
For a fourth straight year, China maintained its top position, spending $31.7 billion on US properties.