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Canadians Are Buying Second Homes South and East of the Border

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Arif Harji
by Arif Harji on December 13, 2018

BLOGS

Canadians understand the need and the value of vacation getaways. We live in the best country in the world; we seek respite from winter angst in the warmer climes.

Our quest to escape the cold spans the inverted sunny triangle south of the border from Florida to California’s West Coast, and then east to Arizona--and even further south to the Caribbean’s treasure, the Dominican Republic.

Those Canadians not into tropical pursuits have also reached across the pond to Britain and the villas of sunny Portugal, where the volatility of currency exchange has lured many a canny Canadian into out-of-country real estate investment. 

The Sunshine State Beckons

The Canadian yearning for winter getaways has fueled the real estate market in the USA for decades. Eastside Canadians have typically opted to invest in Florida, one of the top vacation destinations. A Florida condo, for those who qualify, can be had for as little as 3.5% down with FHA approval—20% for the less well-heeled.

Westerners following the Canadian geese migration due south

Western Canadians have opted for a more direct southern route towards vacationing and buying second homes in California coastal destinations from San Francisco to San Diego. If you are considering purchasing a vacation home in California, you could be looking at condo prices ranging from $300,000 to north of $1 million.

Balancing out the bicoastal focus of Canadian vacationers and investors, the Grand Canyon State, Arizona, with its warm, dry winters, has attracted snowbirds from all over Canada. The affordable real estate market has burgeoned, despite concerns over future dwindling water resources.

Scottsdale, Arizona, for example, has drawn interest from both Eastern and Western Canadians and deserves attention because of its growing investment opportunities. 

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The Dominican Republic welcomes Canadians…

Then there is the well-kept secret of the Dominican Republic. Occupying the eastern half of the Island of Hispaniola, the Dominican Republic provides a welcoming environment for northern tourists and real estate investors. The island has become a hub for Canadian snowbirds and a popular gathering for winter getaways.

According to Lief Simon, a Global real estate investor and editor of Live and Invest Overseas, the Dominican Republic is ripe for excellent yields and flexible financing for global real estate investors.

 

 

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Looking across the pond

Then there is Great Britain’s planned break away from the European Union. The BREXIT vote spurred a 10 percent devaluation of the British pound, which provides a sterling opportunity for Canadian investment in business and real estate in the UK.

Britain, once the most expensive prime real estate market in the world, second only to Hong Kong, has seen a scant 1.8% increase in housing prices, according to www.moneywise.com. This has led to the speculation that the devaluation of the British pound will prompt new interest in real estate investment. 

Portugal villas are more plentiful…

Another warm European destination that has drawn Canadian investors, especially in buying vacation homes, has been in Portugal. If you want to walk the beaches of Estoril and enjoy your summer fill of Mateus Rosé, your chances in finding that Portuguese dream villa has increased substantially, making that country an attractive lure for vacation home buyers.

Finally, consider the cosmopolitan lure of fluctuating currency exchange rates…

One currency’s weakness is another’s strength. Over the past eight years, the Canadian dollar has weakened somewhat against our U.S. neighbors. In 2010 we had a 1:1 exchange rate. As of April 2018, Canadians need an additional 30 cents to buy one American buck.

The news isn’t all bad, especially if you invested in U.S. real estate during the last decade and wanted to cash out. That devaluation works in the Canadian investor’s favour. It amounts to an additional 30% return on investment for Canadian that purchased their vacation properties over the last decade. 

Want to go outside Canada for a second home?

You may be approaching retirement or have a portion of your nest egg to invest. Why not combine your annual winter escape to the beach with a second home purchase? Mixing business with pleasure could earn you a return on your investment through a vacation rental service that will look after your property and help you generate the income that might meet your monthly payments.

There are other great reasons why real estate is a significant investment. Real estate investments always increase over time with better returns than the stock market—minus the volatility.

Again, that second home can double as a vacation getaway and generate a return on your investment. Unlike most depreciating assets, you can enjoy the property while it increases in value.

If you are thinking about spreading your wings and are considering purchasing a vacation or investment property outside of Canada, download your free guide to learn all about buying a property outside Canada. 

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