Canadians top the list of foreigners who bought homes in the US last year, ringing up 13% of the 54,300 home purchases between April 2023 and March 2024, spending just under US$6 billion on their new homes south of the border. Next in line were buyers from China and Mexico at 11%, followed by India at 10% and Colombia at 4%. The information was compiled in an annual survey conducted by the National Association of Realtors (NAR) in the US, which says the 54,300 transactions were down 37% from the previous year. A report from RBC Bank attributes the decline in sales to high inflation, high interest rates and limited inventory, adding the US housing market saw its lowest overall level of sales since 1995 as many potential buyers waited on the sidelines RBC also says economic factors likely played a role in buyers’ approaches to purchasing, with 69% of Canadians paying for their US properties with cash, an increase from the 51% of all-cash buyers the year before, despite the Loonie’s weaker year-over-year performance against the US dollar. This is likely due to higher interest rates throughout 2023, a trend some expect will reverse in the coming months. “With the expectation of lower interest rate trends for the rest of 2024 and 2025, there is greater potential of US mortgage financing in the year ahead,” says Alain Forget, head of US sales and business development at RBC Bank. “There are also a lot of Canadians who are currently on the sidelines, hoping for a better Canadian/US dollar exchange rate. And if the Canadian dollar 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.” .A total of US$42 billion was spent by foreign buyers, says the NAR report, led by the Chinese, who spent US$7.5 billion, compared to the $5.9 billion spent by Canadians, India ($4.1 billion), Mexico ($2.8 billion) and Colombia ($0.7 billion) in the top five. The NAR survey found low supply and pent-up demand kept housing prices strong in the US, increasing on a year-over-year basis and, at the end of March 2024, unsold homes were 14% above the level the year before. The relative affordability of US single-family homes helped to offset the cost to buy for many foreign buyers, says the RBC report. The average home price per square metre in Toronto as of June 2024 was US$12,504, compared to $7,520 in San Diego-Carlsbad CA, $4,920 in Naples-Imokalee-Marco Island FL, $3,620 in Miami-Ft. Lauderdale-West Palm Beach FL, $6,280 in Honolulu HI and $4,760 in Los Angeles-Long Beach-Glendale CA. Canadians preferred locations were in Florida (41% of sales), Arizona (23%), Hawaii (9%), California (6%), New York State (4%) and Texas (4%). Of Canadian buyers, 49% purchased a home for vacation use and of those more than two-thirds were single-family homes, while townhomes and condos represented 18% and 8% of sales, respectively.
