GARRY MARR
The Vancouver Sun
They are a group of foreign buyers who took out record levels of currency from their country in the past year to buy residential property in the U.S., though only a minority plans to take up permanent residence. The buyers? Well, they might not be who you think.
Canadians bought a record US$19 billion worth of property in the United States last year, surpassed only by the Chinese who purchased US$31.7 billion, according to a report out Wednesday from the Washington, D.C.based National Association of Realtors.
But few south of the border seem to care about the influx of foreign buyers from the north.
“Well, perhaps they will start thinking about it in some hot markets,” joked Doug Porter, chief economist with the Bank of Montreal about some type of foreign tax on Canadians, mentioning an article he recently read about affordability issues in California.
Porter noted a number of U.S. states do have tax implications for Canadians, a common method being homestead taxes which provide lower property levies for state residents, and Canadians selling property also face a withholding tax.
But they are not are direct as the 15 per cent tax on foreign buyers imposed in Ontario and British Columbia to help control prices in and around their largest cities, a surcharge that hits U.S. buyers.
“I think foreign investment is still quite welcome; after all, it helped put a floor under the market during its worst days in 2008-12,” said the economist, referring to the U.S. housing market crash.
Canadians purchased 33,819 properties in the United States, the top five destination by state Florida, Arizona, California, Texas and Georgia. Those numbers pale in comparison to the 69,135 purchases in 2010 when the dollar was near par but Canadian activity has perked up over the past year thanks to rapidly rising domestic prices which appear to have helped finance stateside purchases.
“You’ve got equity in your houses that enables you to potentially move it to the United States and diversify your real estate portfolio,” said Danielle Hale, managing director of housing of research at the NAR.
The realtor group looked at sales over a 12-month period from April, 2016 to March, 2017 and saw an almost 26 per cent jump in purchases from a year earlier among Canadians.
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