Canadians Investing in US Real Estate

62 Replies

Low interest rates, favourable exchange turn U.S. into hotspot

EVEN FOR INVESTORS IN CENTRAL CANADA, WHERE THE METROPOLISES OFFER DIMINISHING RETURN ON INVESTMENTS, THE UNITED STATES OFFERS DENSELY-POPULATED MARKETS WITH STRONG FUNDAMENTALS AND NO SHORTAGE OF RENTAL DEMAND.

All across Canada real estate prices continue to rise at an incredible rate making buying an investment property an increasingly difficult task. The Canadian government has mismanaged the real estate market so insidiously that investors may find themselves struggling for cash flow and high ROI. This has many looking South of the border for investment opportunities.

Savvy Canadian real estate investors have, for years now, known about real estate hotspots south of the border, and with the pandemic catalyzing interest rate cuts courtesy of both the Bank of Canada and the Federal Reserve, there’s arguably never been a better time to invest in the United States.
“Over the last two months, we’ve seen record-high requests for mortgage preapprovals from Canadians looking to buy real estate here in the U.S.,” said Alain Forget, RBC Bank’s director of business development. “A lot of Canadians are COVID- and winter-fatigued and they are getting ready to make a move, and of course the U.S. market in a state like Florida has a lot to offer.”

The US real estate market (in contrast with the Canadian real estate market) was built on capitalist ideologies, less red tape, more incentives to develop, and real estate friendly tax rules, meaning there is a far greater opportunity for higher returns. Investors always go where the returns are.

https://www.canadianrealestatemagazine.ca/.../low...

Homebuyers face stiff competition in South Florida as northerners arrive — with cash

AS HOMEBUYERS JOSTLE FOR A DWINDLING SUPPLY OF HOUSES IN SOUTH FLORIDA, LOCAL BIDDERS ARE FINDING THEMSELVES IN A GROWING COMPETITION WITH OUT-OF-STATE PEOPLE WHO ARE OFFERING CASH ON THE SPOT.

The new work-from-home economy has caused a major shift in how real estate works around the world. In the US, what's happening now is people are fleeing highly taxes, expensive cities with cold winter weather (i.e. New York) and heading to tax-friendly states like Florida. Spotting this long-term trend early enough can make you a long-term fortune.

“I’m amazed by the number of New Yorkers who are moving here permanently,” said Craig Studnicky, CEO and president of the Related/ISG brokerage firm in Miami. “They’re not just buying second homes. This isn’t just normal winter traffic. It’s the most dynamic market I’ve ever seen. These are prominent homeowners moving here permanently. I’ve never seen this in South Florida before.”

Real estate investing isn't rocket science. Just think about it, if you were working from home where would you want to live? I know I'd choose somewhere like Florida with the warm weather, low taxes, and hundreds of miles of ocean front.

New Yorkers Fleeing for Florida

Want Warm Weather, Low Taxes, and Waterfront Property? So do Many Others.

“THE DEMAND HAS BEEN OFF THE CHARTS,” STERNBERG SAID. “THE STARS ARE ALIGNING FOR SOUTH FLORIDA.”

One thing that Canadian real estate simply can't compete with is the combination of down south weather, ocean views, and low taxes. Globally speaking, there are certain US states that provide real estate opportunities that Canadian cities simply can't match. This is certainly the case with many South Florida areas that have demand from buyers US buyers and buyers around the globe:

The buyers are from California, Connecticut, New Jersey and New York, said developer Ophir Sternberg, CEO and founder of Lionheart Capital. Most work for a private equity firm, hedge fund or bank.
Sternberg credits South Florida’s warm weather and tax savings for drawing buyers to his project and other condominiums during the pandemic.

https://www.miamiherald.com/news/business/real-estate-news/article249767193.html?fbclid=IwAR27aUYWc_I-0SAsIVBH8eo7pibHw9bm_42--tEi48VcTB5bL1j585_M_GI

Is talk of an overheated housing market full of hot air?

IS THE MARKET OVERHEATED WITH SPECULATORS AND INVESTORS, OR ARE THE FUNDAMENTALS OF SUPPLY AND DEMAND DRIVING PRICES HIGHER?

“There aren’t any signs of speculation. The majority of transactions are for owner-occupied properties—that’s what we’re seeing—and we don’t have foreign buyers,” Woodhouse told CREW. “Why is it so hard to understand we haven’t kept up with building housing? More Canadians are living alone than ever before. The notion of the Bank of Canada increasing interest rates to slow down the real estate market is laughable. That’s a notion put forward by people incapable of doing math, because a quarter-point increase to the average mortgage, which is $400,000, raises it by $60.”

https://www.canadianrealestatemagazine.ca/.../is-talk-of...

Robust fundamentals driving Texas’s multi-family sector

Warm weather, low taxes, and low levels of regulation have businesses and people flocking to the Lonestar State. The population of the major Texas cities is projected to skyrocket over the coming decades as many flee higher tax (and colder) states.

Between 2010 and 2019, Dallas-Fort Worth gained 1.35 million new residents, and the 2020-2029 forecast calls for an additional 1.39 million residents. You have tremendous growth, and it all comes down to jobs.”
The Sun Belt states are the beneficiaries of significant interstate migration in the U.S., and with a deluge of new residents, the multi-family residential sector is slated to see voracious demand, particularly over the next decade.
“From 2010 to 2019, Houston gained 1.28 million residents, and the 2020-2029 forecast is another 1.24 million, so when you look at Houston and Dallas-Fort Worth, there’s a huge population boom, and it will drive the economy for the next two to three decades,” said Ferguson.

Population growth leads to higher real estate prices as the economics of supply and demand push prices higher.

https://www.canadianrealestatemagazine.ca/.../robust...

Looking for the reasons why Canada's housing prices are rising faster than in the U.S.

RAPIDLY RISING REAL ESTATE PRICES IN CANADA AND DIMINISHING RETURNS HAVE CANADIAN REAL ESTATE INVESTORS LOOKING SOUTH OF THE BORDER

Real estate is heavily regulated in major cities across Canada which makes keeping up with demand very difficult and costly. When supply can't keep up with demand, prices rise. The supply-demand imbalance has gotten so out of whack that prices across the country are skyrocketing. The problem with skyrocketing prices is that it makes finding cashflowing assets more-and-more challenging as rents simply can't keep up with prices.

Canada’s average housing prices were 46 per cent higher as of December than comparable prices in the U.S., according to a report released earlier in January by the Bank of Montreal (BMO).

https://financialpost.com/real-estate/looking-for-the-reasons-why-canadas-housing-prices-are-rising-faster-than-in-the-u-s


Tampa Bay rents keep rising, while in some cities they’re falling. Why?

INVESTORS SEE OPPORTUNITY IN TAMPA BAY’S APARTMENT BUILDINGS. THAT COULD SPELL BAD NEWS FOR THE PEOPLE RENTING THEM

A February report by real estate brokerage Redfin found that the Tampa Bay area had a net inflow of 47,000 people last year, the fourth-highest nationwide, just behind Phoenix, Dallas and Orlando. Meanwhile, New York, Los Angeles and Chicago lost the most residents last year, according to the report, which cited Redfin’s own research in addition to Census data.

https://www.tampabay.com/.../tampa-bay-rents-keep.../...

'It's crazy. There is no inventory.' Housing industry veteran marvels at real estate boom

The USA housing market simply hasn't kept up with population growth and there is now a shortage across the country. "We've been under-building for the last 15 years," said Mezger.This is the exact opposite situation as the 2008/2009 subprime housing crisis in which developers built TOO MUCH housing and eventually crashed the market. Not only is the USA, like Canada, severely short on housing, but building costs and construction delays are going to make catching up very difficult.

It's the polar opposite of what the company faced during the subprime bust that began around 2007, when the housing market was gripped with a massive oversupply problem that took almost a decade to correct. Construction of new homes collapsed in the aftermath of that crisis and never recovered. The supply of new homes remains very low today.

When a high demand resource is in short supply, as an investor, you want to own as much of that resource as possible!

Housing Shortage Across USA


Tesla now hiring for 300 jobs in Austin area; Exec hints at opportunities to partner with local businesses
LOCAL RESTAURANTS IN THE FACTORY? RECRUITING DIRECTOR SAYS MANY KINDS OF LOCAL BUSINESSES NEEDED

It's not overly-difficult to spot a real estate boom, just follow the businesses and follow the money

The company has said it plans to eventually employ about 5,000 people with an average annual salary of about $47,000. But that may be a low estimate: Manufacturing experts have said 15,000 jobs could be created at the gigafactory because of the scope of the carmaker's planned operations.
Companies have flocked to Central Texas for years, though the pace appears to have accelerated during the pandemic. Many manufacturing and technology-focused companies have announced moves to the Austin area in the past few months, though it's hard to know how many have specifically followed Tesla.

https://www.bizjournals.com/austin/news/2021/03/30/tesla-hiring-for-gigafactory-in-austin.html?ana=TRUEANTHEMFB_AU&csrc=6398&utm_campaign=trueAnthem%3A%20Trending%20Content&utm_medium=trueAnthem&utm_source=facebook&fbclid=IwAR0czv-N607AqbJUlPTUg02U-oBDg-6Eho4IT9sF33887jXNs6jRB8xSF10

Corporate interest in Frisco, TX is heating up, city official says

The city currently has 43 active companies looking to set up shop

Right now we’ve got about 43 active projects in the pipeline. Just to give you some perspective, pre-pandemic we were running in the mid-30s on a good month. We’re very excited about the pipeline we’re working with right now. The lion's share of our projects are from the East and West Coast, but one of our team members is also working on two international projects right now.

https://www.bizjournals.com/.../relocation-station-frisco...

Most movers to Dallas-Fort Worth coming from Los Angeles, Chicago, New York, study says

Some 11 percent of Americans have already moved in the past year, some by choice and others by necessity, according to the survey. DFW is a beneficiary of what the Zillow report terms the Great Reshuffling, which could cause millions of additional households to enter the real estate market as a result of the pandemic.

https://www.bizjournals.com/da...

Snippet of data highlights how LA, Bay Area are pushing Austin's population into overdrive

11% of Americans have moved in the past year, report says; 'Great Reshuffling' is on


This is what happens when your state is completely mismanaged. Governors who think taxing citizens and corporations is a good long-term strategy are often sorely mistaken. Once a breaking point is reached, they will simply leave.

https://www.bizjournals.com/au...

Coinbase early investor expects many of crypto's future big successes will likely be in Miami, Austin

Check out this quote:

“These are new tech hubs for people who, for various reasons, don’t feel at home in San Francisco, whether it’s the homeless, or the crime, or the taxes, or the hostile business environment.”

https://www.bizjournals.com/.../coinbase-investor-bullish...

Another tech startup trades West Coast for booming Austin scene

Markaaz plans to hire as many as 70 people by the end of this year and aims to expand the Austin workforce to about 150 by the end of 2022, according to Opportunity Austin, the Greater Austin Chamber of Commerce’s economic development initiative. Jobs advertised on the Markaaz website include software engineer and content manager.

https://austin.culturemap.com/.../04-08-21-another.../...

Oracle Corp. reveals River North tech hub plans with record-breaking 8,500 jobs

The thing I love about the US real estate market vs Canada is that the US has MASSIVE multi-billion dollar global corporations that fuel the economy, whereas, Canada is fueled mostly by tight supply, socialist policies, and immigration.

https://www.bizjournals.com/na...

Originally posted by @Scott Innocente :

Oracle Corp. reveals River North tech hub plans with record-breaking 8,500 jobs

The thing I love about the US real estate market vs Canada is that the US has MASSIVE multi-billion dollar global corporations that fuel the economy, whereas, Canada is fueled mostly by tight supply, socialist policies, and immigration.

https://www.bizjournals.com/na...

Totally agree.  The long term outlook on the fundamentals cannot sustain this insane market.  Prices are up 50% in one year in the nearby to you Chatham market.  

Exodus from California, high-tax states driving unprecedented real estate boom

The pandemic has people re-thinking how and where they live their lives.

Healy, who is based in Dallas, said hundreds of people per day are moving to his city. He pointed out that 70% of the people moving in are from California and increasing "luxury price points."

https://www.ktvu.com/news/exodus-from-california-high-tax-states-driving-unprecedented-real-estate-boom?utm_campaign=trueanthem&utm_medium=trueanthem&utm_source=facebook&fbclid=IwAR29Okrfjcwu8-LdBpg9wxXejDHWwMS3S5li737aJMZ9EO-sRhYef1CxN0M

Retro Fitness moves headquarters in West Palm Beach

RETRO FITNESS, A GYM CHAIN PREVIOUSLY BASED IN NEW JERSEY, IS THE LATEST COMPANY TO RELOCATE TO SOUTH FLORIDA FROM THE NORTHEAST

Business are tired of lockdowns, high state taxes, and government bureaucracy and are flocking to Florida, which could be the next New York or California of the USA.

Retro Fitness Moves HQ to FLA

The US has themselves a housing crisis

Real estate investors across Canada have watched housing prices explode over the past five years because we don't have enough houses to meet demand. The same fundamental drivers are now in place in the US making real estate south of the border a very interesting investment opportunity.

Simply put, when there is more demand than supply, prices go up. The US is short nearly 2 million homes which could take 5+ years for supply to catch up to demand. In the meantime, like we've seen in Canada, prices will continue to skyrocket across the US. Might be a good idea to expand your portfolio south of the border as soon as possible.

Record-high lumber prices add as much as $30K to the cost of building a house

Windsor desperately needs new, affordable housing, which is quickly becoming an oxymoron. With rising building costs, labor, and material shortages, and a lack of centralized land to build on, there are not enough houses to meet rising demand. The new work-from-home economy has people flocking to more affordable cities like Windsor while retaining their corporate earnings from big companies in Toronto. 

These high income earners are often selling their residences in the GTA and purchasing double the house for half the price here in Windsor.

Simply put, until supply and demand come into balance, prices will continue to rise.

https://www.cbc.ca/news/busine...

Tech jobs, sun, and no income tax: experts explain why Florida is poised to keep growing even after the pandemic

More and more workers are moving to Florida during the pandemic — and the sunny climate isn't the only reason why.Top companies are opening new offices in the state, and the rise in remote working is giving staff more freedom to choose where they want to live.Florida's population grew by 2.7 million — or 14.6% — between 2010 and 2020, according to US Census data. This is double the rate of overall US population growth.

https://www.businessinsider.co...

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