When Canadian
travel, some people might head to the cottage or 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 purpose, 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 Cosa 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.
Source By: CREA