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Canadians May No Longer Be Top Foreign Buyers Of U.S. Real Estate

An article from Business News Network

Alain Forget, the head of sales and business development at RBC Bank, is watching to see whether Canadians retain their top spot in the rankings of international buyers of U.S. properties this year.

The data, which come from the National Association of Realtors south of the border, have been slightly delayed but are expected to be released in early July. They will detail purchases between March last year and March, 2014.

Canada, China, Mexico, India and the United Kingdom have historically accounted for the bulk of foreign purchases of U.S. properties, with China and Canada showing the strongest growth in recent years, according to the realtors’ association.

But Mr. Forget says that, with rising U.S. housing prices and a weaker Canadian dollar, he’s not entirely certain Canada will retain its title this year.

“I am still confident that we will see Canadians in No. 1 or maybe No. 2,” he says. “But, for example, in South Beach and Miami, Europeans, Russians and Brazilians have been very active buyers of luxury condos over the last year.”

The Canadian dollar, which topped $1 US for much of 2011 and 2012, weakened last year and has recently been trading at around 93 cents. A stronger Canadian currency makes it more attractive for Canadians to buy properties in the U.S. Many economists are expecting the loonie to slide below 90 cents in the year ahead.

The growth in U.S. home prices, which had been on a tear, is moderating but still strong. Housing prices in 20 major cities rose 10.8 percent in April from a year earlier, according to figures released in June from the S&P Dow Jones Indices.

Mr. Forget says that, while U.S. home prices have risen significantly in the last couple of years as the market recovers from the subprime mortgage crisis, Canadian retirees can still buy cheaper homes in many southern locations than they can at home.

“I just received the statistics for the month of May for southeast Florida, places like Palm Beach and Broward County,” he says. “And the median price for a single home is $282,000. The median price for condos and townhouses is $135,000.”

The average selling price of an existing home in Canada during May was $416,584 Cdn.

Canadians accounted for 23 percent of U.S. sales to foreigners in the realtors’ 2013 survey, up from just 10 percent in 2007. That growth came as Mexico’s share fell from 13 percent to 8 percent, and the United Kingdom’s share dropped from 12 percent to 5 percent. China, meanwhile, rose from 5 percent of sales to 12 percent.

Foreigners bought about $68.2-billion US worth of existing homes in the U.S. in the 12 months leading up to March, 2013, down from $82.5-billion a year earlier, and accounting for about 6.3 percent of the total sales. Of the property sales to foreigners, about half were to people with permanent residence outside the U.S. while the other half were to recent immigrants or temporary visa holders.