Canadians bought more U.S. real estate than almost anyone else!

From April 2016 to March 2017 Canadians spent $19billion buying U.S. properties, according to the U.S. National Association of Realtors.

Put another way, Canada was only behind China for all foreign purchases of U.S. real estate in 2016.   That’s an incredible stat that deserves more attention.

And what’s not been talked about is where Canadians are getting the money to buy these U.S. properties.  It isn’t so easy for a Canadian to borrow money from US Bank.  So, instead, Canadians are borrowing in Canada by refinancing the mortgage on their house, or getting a secured line of credit.  This is called leveraging.  Borrowing to invest isn’t a bad thing.  Most Financial Planners and advisor promote this.

THE STATS SHOW WE CANADIANS ARE SAVVY INVESTORS

Yet, all we keep hearing about is how Canadians are borrowing and spending like foolish children. And that’s just not true.  Here’s some numbers from 2016 …

• Canadians have around $2trillion in total personal debt.
• Of this, $1.3trillion is mortgage debt.
• The rest is personal loans, car loans, credit cards, etc.
• Canadians personal assets are worth a record $12.3trillion.
• That’s a record net worth of $10.3trillion.  Wow.!

I bet most of you didn’t know that?  And who could blame you.  Reading all the doom and gloom stories would make you believe we are in financial trouble.  And that’s just not the case.

Here’s a few more stats.

• Canadians, with a population of just 39 million, are buying up more U.S. real estate than any other foreign country except China.  By the way, China’s population..??  1.379 billion.
• We aren’t just buying, we are selling U.S. real estate too.   In that same 12 month period, Canadians accounted for the most properties sold by foreigners.   22% of all foreign sales were by Canadians.
• US. real estate has doubled in several markets over the last 7 years.
• Many purchases were done in 2010, when the Canadian $dollar was at $US0.93.
• Last year, the Canadian $dollar was at $US0.76.
• Do the math.  Buy for $US150k in 2010 (costs you $CAD162k).
• Sell for $US300k in 2016 (= $CAD394k).  That’s a gross profit of $CAD262k.
• That’s a 240% Return On Investment.  Not bad, eh?

*some stats from the Fraser Institute

NOT BAD FOR US IRRESPONSIBLE CANADIAN SPENDERS.. LOL!!

If you’re still buying into the rhetoric that Canadians borrowing irresponsibly, or that we need more controls to limit how much we can borrow, or more controls to limit what we can spend on, well, maybe these stats will put a stop to that way of thinking.

People want to own their home.  People want to invest in real estate.  It’s the Canadian dream.  It’s also a proven winner for building and maintaining net worth.    Maybe the Federal govt should go back to encouraging home ownership, instead of discouraging it with tougher than ever before mortgage rules… but that’s a discussion for another day..

CONGRATS CANADA!   You’ve done pretty good over the last 10 years!   And you deserve some credit.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca