Canadians outspend other foreign real estate buyers in the US

Despite a sharp slowdown in foreign real estate activity in the US, Canadians are buying more residential properties than any other international group, a new report from RBC revealed.

Foreign purchases of US properties fell dramatically from April 2023 to March 2024, the banking giant said, based on data from the National Association of Realtors (NAR). Transactions involving international buyers totalled $42 billion, down 21% from the previous year. The number of properties bought by foreign buyers also dropped by 37%, with just 54,000 sales in the same period.

Even as other foreign buyers pulled back, Canadian buyers increased their market share to 13% of all foreign transactions, making them the largest group of foreign buyers, ahead of Chinese, Indian, and Mexican buyers (each accounted for 11% of foreign purchases).

“While the US real estate market has been dealing with some challenging economic factors – inflation, higher mortgage rates, climbing prices and limited inventory – Canadians can still find deals south of the border,” the report read. “And they have been buying properties, as demonstrated by Canada’s place at the top of the foreign buyers’ list.”

Canadians find value in US market

While high inflation, rising mortgage rates, and a strong US dollar have reduced the purchasing power of many international buyers, Canadians have been relatively less affected.

The Canadian dollar only depreciated by 3.6% over the past year, compared to a much steeper decline in the Chinese yuan, which fell by 9.4%.

However, Chinese buyers still led in total dollar value, spending $7.5 billion on US real estate compared to Canada's $5.9 billion in purchases.

The relatively higher home prices in Canada’s largest cities, such as Toronto and Vancouver, have also helped Canadians absorb US real estate prices that may seem more affordable in comparison. For example, the price per square meter in Toronto in June ($12,504) was more than double that of Los Angeles ($4,760) or Honolulu ($6,280).

Most in demand properties

Nearly half (49%) of Canadian buyers purchased US homes for vacation purposes, with the majority opting for single-family homes. Condos and townhomes represented 8% and 18% of sales, respectively.

Popular destinations for Canadian buyers included Florida, Arizona, and Hawaii, which saw an increase in interest from Canadian purchasers.

Florida remained the top destination, with 41% of Canadian buyers purchasing homes there, followed by Arizona at 23%. Notably, Hawaii saw a significant year-over-year increase in Canadian purchases, rising from 2% to 9% of total transactions. In total, 37% of Canadian home purchases were made in resort areas, reflecting the preference for second homes and retirement properties near beaches, golf courses, and other warm-weather amenities.

“Consistent with previous years, Canadians are buying in their favourite US destinations – namely Florida and Arizona – while interest in Hawaii has increased. With a concentration of homes purchased in resort areas, it’s clear Canadians are buying for the sunshine and the lifestyle the southern US states can offer,” RBC said in the report.