Canadians looking for more affordable homes are increasingly looking south of the border for real estate investment, according to a new report. Foreign investment in U.S. real estate surged 49 per cent year-over-year for the 12-month period ending March 2017, according to new data released by the U.S.-based National Association of Realtors. Total foreign investment in U.S. residential property reached a new record high of US$153 billion, up US$51.4 billion from the previous 12-month period.
Canada’s share amounted to US$19 billion, more than double the US$8.9 billion it contributed in 2016. China remained the largest contributor with US$31.7 billion.
The NAR’s chief economist Lawrence Yun acknowledged the role the rapidly accelerating real estate markets in major Canadian cities played in the rise in foreign investment, noting that while U.S. home values are rising due to inventory shortages, “prices in five countries, including Canada, experienced even quicker appreciation.”
The average selling price of homes in Toronto increased 33.2 per cent year-over-year, according to the Toronto Real Estate Board’s figures for March 2017. Greater Vancouver saw its sales dip 30.8 per cent year-over-year in March 2017 thanks to a shortage in residential property, according to the Real Estate Board of Greater Vancouver data.
“Some of the acceleration in foreign purchases over the past year appears to come from the combination of more affordable property choices in the U.S. and foreigners deciding to buy now knowing that any further weakening of their local currency against the dollar will make buying more expensive in the future,” Yun added.
Foreign buyers paid a median price of US$302,290 over the period, with approximately10 per cent paying over US$1 million.