In 2023, 10% of foreign buyers were Canadian: How did they do it?

In 2023, Canadian investors reinforced their pivotal role in the U.S. real estate market as the third-largest foreign buyer group, pouring $6.6 billion into investments and marking a decade-long trend of strategic engagement. This investment reflects not just the economic significance of Canadian involvement but also their continued trust in the U.S. market’s potential, solidifying a robust, enduring cross-border economic relationship.

Canadian Investment in U.S. Real Estate

For years, Canadian investors have strategically preferred regions offering economic stability and potential growth, like Florida, Arizona, and California. The attractiveness of the U.S. market becomes evident when comparing property prices. For instance, the price per square meter in Toronto is a steep $10,947, compared to more affordable rates in Los Angeles ($4,740), San Francisco ($8,250), and Miami-Ft Lauderdale ($3,170). Such price disparities illustrate the economic logic behind Canadian investment strategies, seeking greater value for their dollar in the U.S. market.

Canadians diversify their investments across the U.S., tapping into varied property types from urban condos in New York to Florida's beachfront properties. This strategic choice underscores their approach towards leveraging vibrant economies, tourism appeal, and property appreciation potential.

Florida: The Canadian investor’s preferred market

Florida stands out as a prime destination for Canadian investors, especially in Miami-Dade County, where they represented 4% of foreign transactions in 2023, totaling $252.6 million. This focus on Miami-Dade, with 87% of purchases made in cash and a median property price of $437,700, showcases Canadians' preference for liquidity and strategic purchasing power.

However, the trend towards all-cash purchases stems from challenges in securing traditional financing. Canadian banks' stringent criteria and the conservative nature of their mortgage programs create hurdles, including lengthy processing times and the necessity for in-person meetings. These banks emphasize personal income in their assessments, limiting investors to properties their income can support alongside existing financial obligations.

Navigating Financing Challenges

The trend towards all-cash purchases, while demonstrating financial capability, also highlights the significant opportunity financing presents. Access to financing can expand Canadians' investment horizons beyond what personal liquidity allows, opening up the U.S. real estate market in ways previously inaccessible.

At Milo, we understand these challenges intimately and have tailored our services to meet the unique needs of international investors. Recognizing the pain points in traditional financing—from lengthy processing times to restrictive lending criteria—we've pioneered a fully remote online mortgage application process. Our approach is designed to alleviate these barriers, making financing for U.S. properties more accessible to Canadians. By considering the broader financial picture rather than focusing solely on personal income, we aim to unlock new opportunities for Canadian investors, enabling them to enhance their portfolios and capitalize on the potential for growth in the U.S. real estate market.

The strategic investment moves by Canadian investors, especially in cash purchases, spotlight both the challenges of traditional financing and the vast opportunities that innovative financing solutions present. As we move forward, the ability to access tailored financing options like those offered by Milo can transform the landscape for Canadians looking to invest in the U.S. This shift not only enables Canadians to bypass traditional hurdles but also opens up a wealth of opportunities for growth and diversification in their real estate investments, ensuring their continued success in the U.S. market.

Source: Miami Realtors; National Association of Realtors

The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.