US Land Border reopening presents investment opportunities for returning Canadians

by Corben Grant on 06 Nov 2021

The US-Canadian land border is finally set to reopen on Nov 8th, spurring many snowbirds to once again make plans to head south. While many may choose to stay for a short period, others are making more long-term plans to invest in US property.

This article will offer you everything you need to know about the Border reopening. It will also explain how investors can take advantage of the US real estate market.

What you need to know about the border reopening

After 19 months of closure, the land border between the US and Canada will reopen to Canadian travellers on Monday, November 8th. Previously, the Border was only open to some essential travel, though Canadians could still enter the US through air travel. While Canada opened its border to Americans back in August, the US has held off on welcoming Canadians until now.

With the ongoing pandemic, many people have been wary of air travel. Vacationers who traditionally choose to drive south have also been forced to remain at home until now. As a result, travellers should expect potentially long waits at the border as many people try to cross over in the coming weeks.

Canadians hoping to cross the Border after reopening must be fully vaccinated against Covid-19 and should be prepared to submit proof of vaccination. Canadians with mixed vaccination can travel across the border, and children under 18 are exempt from the vaccine requirement entirely. One final condition is that returning Canadians are required to present proof of a negative Covid-19 test conducted less than 72 hours before their re-entry.

For the most accurate details, see the official US border FAQ website.

Is now the time to invest in cross-border real estate?

The prospect of investing in property south of the Border is not a new idea—it’s just something that most people weren’t thinking about these last 18 months. But now Canadians are seeing the sunlight at the end of the tunnel. Investing may suddenly be on their minds.

Say goodbye to Canadian winters

One of the major reasons that Canadians are drawn to the US real estate market is the same reason that they are drawn to vacation there; the US enjoys much warmer climates than most of Canada, and Canadian winter conditions are all but unheard of in the southern sunbelt states.

This is reinforced by statistics of where Canadians choose to buy their properties in the US. The largest number of Canadians chose to buy homes in the state of Florida. This state has been the most popular choice for many years. The other most popular locations for Canadians were the sunny states of Arizona and California, both of which enjoy year-round warm weather.

US market overall more affordable, even after the exchange rate

Another major factor attracting Canadians is affordability—an area where the US is currently doing much better than Canada. We spoke to Alain Forget, Head of Sales & Business Development at RBC Bank and a Canadian with 17 years of experience in cross-border banking who has lived in Florida for 21 years, to learn more.

Alain highlighted the average price of a US home, currently around $350,000, is well below the Canadian average, even after the exchange rate. When adjusted, that comes out to just around S435,000 CAD at current exchange rates. For comparison, the average home in Canada cost $686,650 in September 2021—and even more in major metropolitan areas.

“That really shows that—for Canadians who want to look at buying for the lifestyle, for long-term asset diversification, and ROI—there's still a lot of buying opportunities in those markets,” said Forget. “Canadians invested $4.2 billion in US properties in the last year, and the Canadian average residential purchase price for that period was $474,000 US. That amount of money can buy you much more real estate in the sunbelt states than you can get in the GTA, Vancouver Metro, or Montreal.”

“The main reasons why people are buying are lifestyle, weather, and of course the long-term return on their investment. However, they can also buy much more space under the sun than in Canada for the same amount of money.”

Three reasons why it is a good time to consider buying US property

For Canadians looking to buy, it is as good a time as any to consider a US property investment, says Forget. He highlighted three reasons why that may be the case.

Firstly, many Canadians were who were looking to buy simply weren’t ready or able to due to travel restrictions, financial concerns, and health and safety concerns around Covid-19.

“Now that land borders are opening this week, we will get a lot of Canadians who were thinking or contemplating to buy in the last two years, and then they had to say, ‘Nope, we've got to wait.’ Now, it's time that they can come back, and are maybe looking to not miss the window of opportunity now open to them.”

Another reason is the ease of working from home making it easier than ever to choose where you want to live, rather than having your job choose for you.

“People now understand, because of what we learned in the pandemic, that we can work from anywhere,” said Forget. “You can work from the US and enjoy the weather here, even if you're a business and you're based in Toronto or Montreal or Calgary or Vancouver. So, you have all these active boomers who can work remotely saying, ‘Well, I can work under the sun for a few months or a couple of weeks at a time and go back and forth.’ If you do go that route, however, make sure to seek professional cross-border advice for immigration and tax concerns that may arise from an extended stay.”

Finally, thanks to historically low-interest rates, affordable home prices, favourable exchange rates, and a tight rental market, Forget argues that buying a home is the wise choice for those planning on vacationing with a long-term horizon.

“There are people who retired already in the last few years, and they simply want to escape the Canadian winter. Now, they are looking at the rental market, which is challenging right now from an inventory and availability standpoint, but also because it's getting very expensive as well. So, honestly, if somebody is looking to spend three, four months each year in those sunbelt states on a long-term basis, it's much more cost-effective to buy a property and enjoy the appreciation of value on the long-term investment horizon rather than to spend $15,000 to $30,000 or more each year on rent. It is worth doing a cost-benefit analysis based on your own personal circumstances to find what is really the best option for you.”

How easy is it to buy property cross-border?

The US is one of the most popular foreign destinations for Canadians for good reasons. However, investing over the border is not exactly the same as buying at home in Canada

“The buying process is similar and it's not,” says Forget. “One of the issues that I have seen from Canadians is they assume that everything is the same in the US as it is in Canada, and it's not. You have to remember when buying a property as a Canadian in the US is that it is a different country, which means you have to comply with US laws, rules, regulations, business practices, and terminology. You need to be familiar with all these things so as not to fall into costly traps.”

There are a lot of considerations that extend beyond just the purchase, explained Forget.

“You need to do your homework. You need to seek professional advice on issues around the real estate asset itself and the transaction—and beyond that. You need to work with a professional real estate agent and get professional advice on legal and tax issues, as well as financing. As a US national residential lender dedicated exclusively to Canadian clients, RBC Bank can help you on all these points or connect you with qualified professionals.”

Forget describes RBC Bank’s US services as “holistic.” Not only can they pre-approve you for a US mortgage based on your Canadian credit and assets, but they can also help you navigate the legal, tax, and insurance concerns that come along with cross-border property ownership. Their program called Home Plus Advantage is designed to offer full-service support for Canadians. It even offers a free e-guide you can download right now to get you started on your journey from dreaming to doorstep.



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