Canadians set record with U.S. real estate shopping spree
New report says Canadians spent $19 billion US on homes south of the border in the past year
New Brunswick's Joel Levesque had no idea he was helping set a record when he bought a home in Fort Myers, Fla., back in April.
The 63-year-old semi-retired public affairs professional wanted a place to escape for the winter and didn't feel like waiting around for the loonie to gain ground on the greenback.
"There is no such thing as a great time. We said the heck with it, we're just going to do it," he said from his home in Fredericton.
Levesque used his savings from downsizing his Canadian home and bought a brand new, two-bedroom, two-bathroom house with a swimming pool. He and his wife plan to spend five months a year in the Florida sun.
"It's all a matter of what your priorities in life are and our priority right now is to make sure we never see snow or ice again as long as we live."
He's not alone. Canadians are buying up American housing in record numbers, spending $19 billion US between spring 2016 and spring 2017 — an all-time high, according to a report from the U.S.-based National Association of Realtors (NAR).
The figure may come as a surprise given the relative weakness of the loonie against the U.S. dollar. But experts say the shopping spree is being led by two groups: retirees who don't want to wait for the exchange rate to improve and investors looking to cash out of the hot Canadian real estate markets in Toronto and Vancouver.
Bargains down south
Economist Lawrence Yun with the National Association of Realtors says those red-hot Canadian markets have allowed Canadians to build up their equity, and with prices still rising at home, they're looking to spend elsewhere.
"Canadian consumers are seeking out bargains and they see big bargains south of the border," Yun said.
Canadian Jay Phillip Parker, who heads the Florida division for Douglas Elliman Real Estate, one of the U.S.'s largest brokerages, says the report's findings aren't surprising given the pent-up demand in Canada.
"If you look at the average price of real estate across most major metropolitan markets globally, South Florida is an extraordinary bargain," he said.
|Scottsdale, Ariz.||$418,700 US|
|Palm Springs, Calif.||$307,500 US|
|Orlando, Fla.||$165,200 US|
Real estate broker Brent Leathwood with Cross Border Realty in Sarasota, Fla., says he's seeing a steady stream of investors who feel the Canadian real estate market is near its peak and want to park their money elsewhere.
Leathwood, who helped Levesque find his Florida home, says today's buyer isn't as currency sensitive as people may think.
"The exchange rate and the markets only really affect how much house they can buy, not whether or not they want to buy a home," he said.
Canadians were the second biggest foreign buyer of U.S. residential real estate, behind only the Chinese, who spent $31.7 billion US, leading the list for the fourth consecutive year.
Florida was the leading destination for Canadian buyers. Not surprisingly, the other top states are also warm: Arizona, California, Texas and Georgia.
Canadians selling, too
The NAR survey also found that Canadians led the way in selling U.S. real estate. It estimates 22 per cent of all international sales were by Canadians.
That doesn't surprise brokers like Diane Olson of Glass House International Real Estate in Arizona, who said she's seeing more sellers than buyers.
Many, she said, are taking advantage of the low Canadian dollar to profit from the gains they've made in recent years.
Many of their properties had appreciated, many of them doubled in value or even more, so we called it the reverse perfect storm.- Diane Olson, real estate broker in Arizona
She said many bought in 2010, when the loonie ended the year nearly on par with the U.S. dollar. At the time, prices were cheap because of the U.S. housing collapse, creating a perfect storm for Canadian house hunters.
In fact, the previous high for Canadians spending in the U.S. housing market was $17.1 billion in 2010.
Olson said in 2016 especially, Canadians she worked with took advantage of the opposite conditions, a low Canadian dollar, coupled with high U.S. housing prices, to sell U.S. property.
"Many of their properties had appreciated, many of them doubled in value or even more, so we called it the reverse perfect storm."
Parker says one way to explain the $19-billion figure is that Canadians are generally buying more expensive properties in the U.S.
The survey found Canadians spent an average of $247,283 in 2010, compared to $560,844 in 2017.
"The wealthier Canadians are now buying much more expensive product and I think that's a growing trend."
* Sources for graphic: Canadian Real Estate Association and Zillow.com