In recent years, Canada has seen a significant influx of foreign buyers purchasing real estate in major cities like Toronto and Vancouver. With the average home price more than 11 times the median household income after taxes, Canada has now become one of the most unaffordable housing markets in the world. In an effort to cool down the housing market and make homes more affordable for Canadians, the Canadian government has implemented a ban on foreign homebuyers, except for landed immigrants, workers on temporary visas, refugees, and some international students. The ban officially began on Jan 1, 2023, and will remain in place for at least two years.
The Canadian government’s measures to restrict foreign buying in the housing market may pose challenges for foreign investors looking to purchase property in North America for stability. However, it also presents an opportunity for them to explore Canada’s neighbour to the south, the United States, as a more viable and inclusive alternative.
The U.S. real estate market is large and diverse, and foreign investors have the same rights as a U.S. citizens when it comes to purchasing property and earning a return on their investments.
According to a report by NAR, international buyers purchased $59 billion worth of U.S. residential properties from April 2021 – March 2022. Although that roughly makes up only 2.6% of the trillion-dollar market, it’s significant.
There are several potential benefits to investing in U.S. properties as a foreign national, including:
- Potential for high returns: The U.S. real estate market has historically been stable and has the potential for high returns on investment.
- Diversification of investment portfolio: Investing in U.S. properties can be a way to diversify a foreign national investor’s investment portfolio, spreading risk across different markets and assets.
- Opportunity to invest in a stable economy: The U.S. economy is one of the largest and most stable in the world, providing a secure and predictable environment for real estate investment.
- Potential for rental income: Foreign nationals can earn rental income from their U.S. properties, which can be used to offset the cost of the investment or provide a steady stream of passive income.
- Potential for appreciation: U.S. properties in many states appreciate in value over time, providing investors with capital gains.
- Tax benefits: Foreign nationals may be eligible for tax benefits on their U.S. real estate investments, such as deductions for mortgage interest and depreciation.
When comparing investing in the U.S. vs. Canada, there are a few key factors to consider, such as property prices and rental yield.
Regarding property prices, the U.S. generally offers more affordable options than Canada. According to data from Zillow, the median home value in the U.S. is currently around $357,300, while in Canada, the median home value is around $717,000. This means that investors in the U.S. can purchase more properties or invest in higher-priced properties for the same amount of money.
In addition to lower property prices, the U.S. also offers higher rental yields. According to Mashvisor, the average rental yield in the U.S. is currently around 6%-7%, while in Canada, it’s about 2%-3%. This means that investors in the U.S. can earn a higher return on their investment through rental income.
Another advantage of investing in the U.S. is the diversity of the market. The U.S. real estate market is large and diverse, with different regions and cities offering various investment opportunities. For example, investors can choose to invest in a bustling metropolis like New York City or a quieter, more suburban area like the suburbs of Atlanta. This diversity allows investors to find the best investment opportunities to match their goals and risk tolerance.
O’ Canada, in our opinion, the U.S. real estate market offers several advantages over Canada, such as lower property prices, higher rental yields, and a more diverse market. As Canada is “closed” for these opportunities now, perhaps now may be the time for investors to look down south, America.
America Mortgages has one job – providing high quality, market rate mortgage loans tailored specifically for foreign nationals and U.S. Expats, and no one does it better.
Our loan programs do not require the borrower to have any U.S. credit history. In lieu, we accept international credit reports from the borrower’s home country or country of residence. As a super broker that offers U.S. mortgage loans in all 50 states, America Mortgages has a solution for almost every situation where a non-U.S. resident requires U.S. mortgage financing. The fact we approve 97% of our foreign national loan submissions highlights our expertise.
Schedule a call today with one of our U.S. mortgage specialists to start your journey today! www.calendly.com/u-s-mortgages
Looking for international mortgage loans globally, including the U.K., Australia, Canada, France, Portugal, Spain, Italy, Singapore, Hong Kong, Japan, Thailand, Philippines, Dubai, and other locations? Visit our parent company Global Mortgage Group (GMG), at www.gmg.asia