【Copywriting】 Realty Focuz – The growth of Canadian Dollar is hitting the US real estate market
This article is written for https://realtyfocuz.com/(Real Estate Focuses Web Development Company) and shared by Restobox
The growth of Canadian Dollar is hitting the US real estate market
The Canadian Dollar received a hike and rose above 80 cents on the morning of 24th July. This happened after a stagnancy of almost two years as the Canadian Dollar had remained at 80 cents since June 30, 2015. This growth is therefore refreshing and a direct result of Canada’s positive growth assessment by the International Monetary Fund (IMF).
As reported by the IMF, the growth forecast for Canada had to be revised due to the buoyant nature of the domestic demands which propelled the growth to 3.7 per cent in the first quarter. Some indicators have suggested resilient activities during the second quarter. IMF even went out to state that Canada’s growth rate could potentially exceed that of the US this year.
The prediction about the declining rate of fiscal growth in the US is made after various fiscal policy changes made in the US recently. Add to that; there is a marked uncertainty about the fiscal policies. Once can never be sure of their timing or their nature. This makes the policies less expansionary and therefore results in a receded market expectation of fiscal stimulus.
The Canadians have been snapping up U.S. real estate
Real estate prices in Canada are so high that in the first quarter of 2017, it was assumed that paying for shelter would have taken up almost half the income. As a result of this escalating price and unaffordable homes, Canadians have started to move down south over to the US. This is based on the reports released by the US National Association of Realtors or NAR. This year, the US residential real estate has mostly seen foreign buyers. A substantial number of sales in the International Activity Profile feature Canadian buyers.
This year, foreign buyers and immigrants have spent huge amounts on the residential properties. The period between April 2016 and March 2017 itself recorded a spending of $153 billion. This is a drastic improvement, with almost a 49 jump from last year. This surge was also largely influenced by the increased number of Canadian buyers who spent $19 billion during this period as against a spending of $8.9 in the previous year.
Although the value of the Canadian was seen to be almost constant in the two reports conducted earlier by the NAR, the Canadians have increasingly invested in the US real estate. The Canadian dollar was at a constant low against the US dollar except for some recoveries in the spring and summer of 2016.
Danielle Hale, the managing director of housing research with NAR reportedly told that Global News that the real estate prices in Canada have hiked so much that it is now making a considerable influence on the US property market. Now, even the US real estate is emerging as quite competitive. The numerous cities with lower prices have been acting as the major incentive for attracting Canadian buyers. The increase in demand has led to a price increase in the US as well. However, they are not as high as the US.
The price hike in the US market can be easily seen by comparing the current average purchase price with that of the previous year. The prices have climbed from $332,072 in 2016 to $560,844 in 2017, which is, in fact, a drastic increase. The increase in the median price was $223,310 to $288,615 this year. This was also the result of a drop in the number of nonresident foreign buyers from 80% to 73%.
The non-residential buyers are mainly interested in buying properties before their month-long visits to the US. They also prefer properties that belong to the less expensive category and sell them off once their trips are over. This explains why most of the buyers are interested in holiday destinations such as Florida and Arizona which saw 37% and 17% of the purchases respectively. However, Minnesota also saw some buyers from Canada. These were the population who resided in the US for work, study or other purposes.
Although the Canadian buyers are at an all-time in the US, they are still nowhere as compared to the Chinese buyers. This year, the Chinese spent $31.7 billion in real estate as against $27.3 billion in the previous year. The Chinese have therefore made a huge impact on the property market as always. It has been estimated that this year, the Chinese buyers spent an average of $781,801 which is almost 39% more as compared to the Canadian buyers.
The average purchase prices for Chinese have, however, received a setback as the figures were as high as $936,615 in 2016. Hale told global news that this could be potentially due to the increasing controls over the capital in China, resulting in a decreased outflow of the money. This could be one of the factors affecting the number of Chinese buyers in US property market. However, the other thing to be noted is that the number of buyers remained the same. There was a decrease only in the amount invested.
The Chinese buyers are most often interested in California. This area receives almost 37% of the buyers. This high rate of investment could also be due to the similarity of the Californian and Asian cultures. Other Chinese buying activities are concentrated in Texas, Florida, Illinois and New Jersey with 11%, 8%, 7% and 5% buyers respectively. After an implementation of a 15% foreign buyer’s tax in the Metro Vancouver region, many Chinese customers have also shifted to Seattle as mentioned in the reports published on RealtyFocuz, obtained from a Forbes issue.
Despite the fact that the US property buyers are at an all-time high, the non-resident buyers from China and Canada are constantly declining. This might indirectly affect the property market as it has been reported that the average purchase price among the non-resident buyers is always higher than the resident foreign buyers. If the resident foreign buyers spend $473,469, the non-resident buyers can go as high as $626,814.
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