A recent report from RBC shows that despite a significant reduction in foreign real estate activity in the US, Canadian buyers continue to dominate the market. From April 2023 to March 2024, Canadians not only outpaced other international buyers but increased their market share, reflecting their sustained interest in US residential properties amid global economic challenges.
Foreign Real Estate Purchases in the US Decline
According to the National Association of Realtors (NAR), foreign investment in US real estate saw a sharp decline between April 2023 and March 2024. Transactions involving international buyers totaled $42 billion, a 21% decrease compared to $53 billion the previous year. Additionally, the number of properties purchased by international buyers dropped significantly by 37%, down to 54,000 from 84,600 the previous year. These figures mark one of the steepest declines in recent years, highlighting global financial pressures.
Canadians Maintain Top Spot in Foreign Real Estate Investment
Despite the overall downturn, Canadians have not only maintained their presence in the US real estate market but have also increased their market share. Canadian buyers accounted for 13% of all foreign real estate transactions in the US during this period, making them the largest group of foreign buyers. They overtook other major foreign buyers like Chinese, Indian, and Mexican investors, each representing 11% of the total foreign real estate purchases.
The RBC report states that while the US housing market has been facing challenges such as high inflation, rising mortgage rates, increasing home prices, and inventory shortages, Canadians continue to see opportunities. "Canadians can still find attractive deals south of the border, even as other foreign buyers pull back," the report noted.
Canadian Purchasing Power Remains Relatively Stable
Several factors explain why Canadians have been less affected by the economic headwinds that have diminished the purchasing power of other international buyers. The Canadian dollar, while slightly depreciated, remains relatively strong. Over the past year, the Canadian dollar depreciated by only 3.6% against the US dollar, while other major currencies, like the Chinese yuan, saw a much sharper decline of 9.4%. This more modest depreciation has allowed Canadian buyers to retain their ability to purchase properties in the US, while other foreign buyers have struggled with reduced buying power.
Though Chinese buyers still led in terms of the total dollar volume spent, purchasing $7.5 billion worth of US real estate, Canadian buyers followed closely behind, with $5.9 billion spent. This illustrates the depth of Canadian engagement with the US housing market, even amid an overall contraction in foreign purchases.
Comparing Real Estate Prices: US vs. Canada
Another factor driving Canadian investment in US properties is the relative affordability of homes in the US compared to the skyrocketing prices in major Canadian cities. For example, the price per square meter in Toronto in June 2024 was CAD $12,504 (USD $9,250), more than double the price per square meter in Los Angeles, which was USD $4,760, and significantly higher than in Honolulu, where the average price was USD $6,280. With Canadian home prices in cities like Toronto and Vancouver continuing to climb, many Canadians see the US as an attractive alternative for purchasing second homes, vacation properties, or even retirement residences.
Where Are Canadians Buying?
The data shows that nearly half (49%) of Canadian buyers in the US purchased homes for vacation purposes, and the majority of these were single-family homes. Townhomes and condominiums represented a smaller share of sales, at 18% and 8%, respectively. This trend is consistent with past years, where Canadians have demonstrated a strong preference for owning larger homes in desirable vacation spots.
The most popular US destinations for Canadian buyers continue to be Florida, Arizona, and Hawaii. Florida led the pack, attracting 41% of all Canadian home purchases, followed by Arizona with 23%. Hawaii, a more recent addition to the list of preferred destinations, saw a significant increase in interest, with 9% of Canadian purchases occurring there, up from just 2% in the previous year. In total, 37% of Canadian buyers chose homes in resort areas, which typically offer amenities like beaches, golf courses, and warm climates—ideal for vacation homes or retirement properties.
RBC’s report notes: “Consistent with previous years, Canadians are buying in their favourite US destinations—namely Florida and Arizona—while interest in Hawaii has increased significantly. The concentration of homes purchased in resort areas underscores Canadians' desire for properties that offer a warm climate and an appealing lifestyle.”
Vacation and Investment Opportunities
Canadian buyers are primarily motivated by lifestyle choices, seeking homes in sunny, leisure-driven areas like Florida and Arizona, which have long been popular for snowbirds—Canadians who seek warmer climates during the winter months. Florida remains the top destination, with its favorable tax environment, a wealth of properties, and miles of coastline. The continued strong Canadian presence in Arizona is also notable, with the state offering relatively affordable real estate, especially for retirees looking to escape colder weather.
In addition to vacation properties, some Canadians are purchasing US real estate for investment purposes. The US housing market, despite recent volatility, still offers long-term value, particularly in rental markets within resort areas and major cities. Canadian buyers, with their strong purchasing power relative to many other foreign groups, can capitalize on these investment opportunities.
Conclusion
Canadians are continuing to make a significant impact on the US real estate market, outspending other foreign buyers and securing prime vacation and investment properties. With favorable exchange rates, rising Canadian home prices, and strong demand for properties in warmer climates, Canadians are well-positioned to maintain their presence in the US housing market, even as foreign investment as a whole declines.
As more Canadians look to the US for both vacation homes and investment opportunities, it’s clear that cross-border real estate transactions will remain an essential part of the North American real estate landscape. Whether it's Florida’s beaches, Arizona’s golf courses, or Hawaii’s scenic vistas, Canadians are finding value and opportunities in the US real estate market that will likely continue in the years to come.
