Photo: James Bombales
Although foreign buyer taxes have been introduced in two major Canadian metros over the past two years, Americans are still choosing their neighbour to the north as a prime spot for buying property.
In fact, Americans ranked Canada as the third best country abroad to invest in property, according to WIRE Consulting’s 2018 survey, published Wednesday.
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Canada was a top choice for American investors despite the introduction of foreign buyer taxes over the past two years.
The BC government introduced its foreign buyer tax in August 2016 and the Ontario government followed suit, implementing a similar levy in April 2017. Royal LePage sales representative Tom Storey tell BuzzBuzzNews that the taxes did cause a short-term slowdown in the markets, but over time both markets started to rebound.
“I don’t think foreign buyer taxes will have a long-term effect,” Storey tells BuzzBuzzNews.
WIRE Consulting, an international real estate consultancy, says Americans chose Canada as a favourite real estate hot spot due to its geographical proximity, lower taxes and familiar environment.
“Research has shown that different criteria come into play when Americans decide to make a real estate investment in one of these major markets, and can be closely linked to their standard of living as well as their financial means and investment plans,” reads the report.
Mexico came in first place for the best country to invest in property, followed by Costa Rica.
Storey isn’t surprised that Americans favour Canada for property investment because of the good deal on the price they’re getting.
“The main reason why Americans would look at Canada as a good investment opportunity is that we are on sale to them, just strictly based on the dollar. We’re already 25 to 30 per cent off that they can get in our market,” Storey tells BuzzBuzzNews.
Although foreign buyers have to make a downpayment of roughly 35 per cent on Canadian property, Storey says Americans can find inexpensive housing around the country.
“It’s more affordable in certain pockets of Canada — Toronto and Vancouver are the outliers because they’re expensive — but you can get a great place in Montreal for $400,000 Canadian, which is fairly affordable living,” he says.
To Storey, booming economic fundamentals in Canada, such as rising immigration, low unemployment rates and relatively low interest rates will continue to attract American investors.
“Although, in the past eight months the key rate has gone up three times, they’re still historically low. And borrowing money at three per cent is still slightly lower than what they can get in the States right now,” says Storey.