06 May
Throughout the pandemic, the Canadian housing market has been in a frenzy with mortgage originations growing at a record pace. However, at the same time, many Canadians have been purchasing property worth billions of dollars south of the border. In 2021, approximately $5 billion CAD worth of real estate was purchased by Canadians in the US, making Canada the largest country of origin for foreign buyers of US property.
However, the mortgage application process for first-time buyers in the US is not easy as compared to Canada. Nevertheless, Canadians have a long history of purchasing property within United States, for a variety of reasons such as relocating or for career reasons, purchasing an investment property or a second home etc. It is important to highlight that Canadians made up one-quarter of all US home purchases by foreign nationals. In 2012, Canadians purchased properties worth collectively at $20 billion CAD.
Consequently, this number of purchases has been declining over the past few years and was further eroded during the pandemic. In 2021, Canadians bought 8,800 US properties, worth a collective $5 billion CAD. The majority of purchasers fall into the category of investors, over-wintering Canadian Snowbirds and small portions of purchases were made by Canadians who emigrated to the US. Nearly 800,000 Canadians travelled to the US in 2019 and is the largest relocation of Canadian citizens since the 1980s.
âThe 2020 pandemic, and even the first half of 2021, had a large effect on Canadians buying US properties. For the second half of 2021, and into 2022, buying is at an all-tie high with many Canadians taking vacation and seeing the large price difference between Canadian real estate and US real estate in generalâ said Donaldson, a Toronto-based broker, who facilitates US purchases through referral partners.
How to Buy a US Property?
Those Canadians who are interested in purchasing a property in the US have three options available to them. The first option is to purchase the property completely on cash.This option is favourable for individuals who have the funds to purchase a property in cash.An interesting fact to note is that 66 percent of Canadian buyers have made an all-cash purchase in the last year.
For those Canadians who do not have the ability to purchase property via an all-cash deal, they can either use funds from their existing HELOC on their Canadian property or obtain a mortgage. Mortgages can be obtained from both Canadian lenders and brokers that are licensed to arrange US mortgages from American lenders and brokers.
However, it is imperative to consider that there are very few Canadian brokers that are licenced to arrange mortgage products in the US. Also, the obstacles faced for applying a mortgage through Canada is a significant one. The time and effort required to wade through all of the regulations is a big hurdle.
