An annual report from the American National Association of Realtors (NAR) found that sales of US real estate to foreign buyers between April 2023 to March 2024 saw the lowest numbers recorded since the report's inception in 2009. But helping keep numbers up, RBC reported, was Canada.
According to the report, Canadians made up the largest number of foreign sales representing 13% of the pool of purchases, beating out China and Mexico, who represented 11% each, followed by India at 11% and Colombia at 4%. Though, China had Canada beat in total dollar value, with Canadian transactions accounting for $5.9B and the Chinese spend clocking in at $7.5B.
Still, the dollar volume of total international sales in the US was down 21% with the overall number of transactions down 37% compared to the previous year. In total, $42B was spent on 54,300 foreign home sales in the past year.
The cause of this decline, of course, was high inflation, high interest rates, and limited inventory in the states, reported RBC. Similar to Canada, the US saw its lowest year for overall sales since 1995. Still, homes south of the border remain cheaper than in Canada, even despite a 14% year-over-year price increase, hence their popularity among priced-out Canadians.
For comparison, RBC pointed out that as of June 2024, average home prices in Toronto are $12,504 per sq. ft, while in the notoriously expensive city of Los Angles, that number is only $4,760 USD, and in San Diego, it costs $7,520 per sq. ft.
Despite the slow year, Alain Forget, Head of US Sales and Business Development at RBC Bank, says the trend is likely to improve in the coming months. “With the expectation of lower interest rate trends for the rest of 2024 and 2025, there is greater potential of U.S. mortgage financing in the year ahead," he says. “There are also a lot of Canadians who are currently on the sidelines, hoping for a better CAD/USD exchange rate. And if the CAD doesn’t rebound as rates go down, US mortgages may become an even more cost-effective – and attractive – option compared to an all-cash purchase.”
So, as Canadians increasingly set their sights on the US, where are they buying homes? In proverbial Canadian fashion, most are headed to warmer pastures, with 41% purchasing real estate in Florida, 23% in Arizona, 9% in Hawaii, and 6% in California. Smaller numbers are also moving to New York and Texas, with each state gaining 4% of Canadian buyers. Of these purchases, 37% were for homes in resort areas, indicating that many Canadians are buying recreational or retirement properties "close to beaches, golf courses, and other warm-weather lifestyle amenities," reported RBC.
