Canadians Become Biggest Sellers of US Property, Bring Equity Home
Data shows that Canadians now have a new reputation, as the biggest sellers of US property. Many of whom are bringing those cash windfalls home.
While Canadians have long been recognized as one of the biggest buyers of American real estate, current trends show they may have equally, or more of an impact on these two major economies as they cash out of the United States, and look for property investments closer to home.
Canadians have dominated US property markets like Phoenix, AZ in recent years. New according to both AZ Central and the Calgary Herald, Canadians have been less significant buyers since 2016. As many as 8 out of 9 have been selling up and cash out.
This is certainly in part just to get ahold of the cash they have gained from substantial rises in equity since 2011. However, some are certainly recognizing this as a smart time to take the nearest exit, before the market changes. Data and trend tracker Zillow notes that some major US metros have already peaked. It forecasts that growth of Phoenix home values will slow by around 70% for the next year, and has turned cold. This trend could be compounded and accelerated by broad US tax reform which aims to slash a variety of real estate related tax breaks and deductions. This includes eliminating or minimizing property tax, mortgage interest, and state and local tax deductions. Americans worry that this will not only drive up the cost of homeownership fast, but evaporates many of the benefits, and could serious hamper the market.
Meanwhile, we’ve seen the Canadian commercial property market prove to be strong, with notable and fast sales of shopping plazas in Western Canada. This and the fact the nation is drawing in hot tech companies, with the potential to land Amazon’s second global headquarters is making for an exciting time to buy and invest Canadian.
Even among those who may be wary of selling their US property for fear of tax penalties, there has been a return of foreign national financing. This can help Canadian investors recapitalize and leverage their equity positions in the US, and expand their portfolios back home.
Canadians have been reversing their real estate activity in the US in a big way. They are currently some of the most active sellers in markets, like Phoenix. Whether it is an outright sale, or taking advantage of cash out refinance options, this is a sizable amount of capital Canadian investors are freeing up. Much of which could be invested back in Canada in the months ahead.