When Canadians travel, some people might head to the cottage or a hotel, while others take flight to their second home abroad.
Some Canadians own homes across the globe. While select international homeowners buy property for investment purposes, most opt for a home in a foreign destination strictly for vacations.
“It’s very clear the primary motivation for Canadians who buy internationally is to have a vacation home,” said Sharon von Schoenberg, Manager of Global Strategy and Relations with the Canadian Real Estate Association (CREA).
Citing data from the National Association of REALTORS® (NAR) 2022 International Transactions in U.S. Residential Real Estate report, von Schoenberg explained more than half of Canadians who buy a home in the United States (58%) use it for a vacation property. This is the highest percentage among foreign buyers from countries like Brazil (15%) and Mexico (8%). Canadians also buy in the United States for residential rental (11%) and primary residences (16%).
So, where else are Canadians purchasing homes, and what are they looking for? We break down some of the data showing us where and why Canadians are buying internationally.
United States, Mexico, and Costa Rica rank as top destinations for international buyers
When buying a second home in another country, Canadians tend to opt for properties in South and North America.
According to CREA’s 2021 Profile of International Activity in Canadian Real Estate report, which is based on information reported by Canadian REALTORS® about their clients, 39% of Canadians who purchased a residence outside of Canada bought a home in the U.S., a drop from 54% in 2020 and 48% in 2019. Of those who bought homes in the U.S., most Canadians purchased in Florida (71%) and Texas (11%), up from 48% and 8% in 2020. Secondary homes in Arizona and California became less popular for Canadians in 2021, where 5% and 3% bought last year compared to 18% and 10% in 2020.
Tying for second place, 12% of Canadians who purchased outside of Canada bought properties in Costa Rica and Mexico in 2021, up significantly from 4% and 5%, respectively, in 2020. Last year, Canadians also bought properties in the Dominican Republic (5%), Portugal (5%), and the Bahamas (4%).
On a continental basis, most Canadians purchased a home in the Americas in 2021 (76%), followed by Asia (13%) and Europe (11%).
When making an international purchase, home buyers generally tend to factor in how many days they’re legally permitted to spend outside Canada for taxation and healthcare purposes. Ease of access to the second property through direct flights is one aspect to consider, along with ownership security. If a buyer is a Canadian immigrant, they may choose to buy a property in their home country for convenience whenever they visit family and friends.
Canadians buying abroad favour single-detached homes
Home buyers might weigh their options between a condo-style or single-family property, but when buying internationally, most Canadians tend to prefer the latter.
“Single-family is often the preferred [property type], followed by a condo,” said von Schoenberg. “A lot of that is dictated in the area they’re buying.”
CREA’s 2021 international data shows 42% of Canadians sought out a detached single-family home. However, fewer Canadians purchased detached single-family residences in 2021 compared to the previous year, down 3% from 45% in 2020. On the other hand, Canadians have been showing a greater interest in condos, with 35% of international Canadian buyers seeking out a unit in 2021 compared to 30% in 2020 and 2019.
When considering a property abroad, international buyers may look for specific traits and amenities. For instance, some purchasers want a view or close proximity to the beach or waterfront. Like it has across other markets, the pandemic has also shaped buyer preferences in international homes, like the property’s size and layout.
“If I’m now flexible and I can work from anywhere, the studio which might have attracted me for vacation only may not be as attractive to me now,” said von Schoenberg. “I might now want a one-bedroom so I can at least cordon off an area to work.”
Canadians are spending more, and home sales have risen in 2021 and 2022
When looking at where Canadians are buying internationally, prices and sales volume have increased over time—trends that could stem from pandemic and economic factors.
The median price of a home purchased by a Canadian in the U.S., as reported by NAR, was $416,000 USD in 2022, up slightly from $400,900 USD in 2021. This marks an increase compared to $292,300 USD in 2020 and $268,200 USD in 2019.
In 2022, Canadians spent $5.5 billion USD on existing homes in the U.S., totaling 11,300 home purchases. In addition, Canadians bought 8,800 homes in the U.S. in 2021, noticeably lower than 18,300 properties in 2020 and 19,900 properties pre-pandemic in 2019.
With inflation and interest rates on the rise, real estate markets are changing. von Schoenberg said some buyers are thinking twice about their decision to purchase abroad, whether they wait until they can afford their dream second home or reduce that wish list. However, the desire to have a second home outside of the country is still there.
Are you looking for advice on buying in another country? Consult the advice of an experienced REALTOR® to walk you through the process. If you’re a real estate professional, CREA Global offers a way for REALTORS® to connect through exclusive networking events. There’s also the option to become a Certified International Property Specialist (CIPS) for additional training on global business practices and how to assist international buyers.
Courtesy: realtor.caPosted by Infinity Admin on
Leave A Comment