How Does Canadian Real Estate Compare to the U.S

If you’re looking to invest in Canadian real estate as an American citizen, you need to be aware of some key differences in the markets. While the countries may be neighbors, the way transactions are done varies, so if you’re looking to take advantage of the hot real estate markets in cities such as Toronto, Montreal, and Vancouver, there are things to keep in mind.

 

Average home prices

Just because the value of the American dollar outpaces the Canadian dollar at the moment, don’t assume houses in Canada are any more affordable than in the U.S. In fact, the average home price in Canada is significantly higher, even with the exchange rate figured in. According to PropertyShark, the average home price in Canada is over $475k, while in the U.S it’s only just over $303k.The culprit is the fact that that great recession of 2008 didn’t have quite the same effect on the Canadian market as it did in the U.S, so the housing bubble never really burst, and home price increases have been outpacing the U.S for years now.

 

City to city

Of course, just like in the U.S, it depends on the city. The two most expensive markets in Canada are without a doubt Vancouver and Toronto. It’s estimated that Vancouver stands as the second most expensive housing market in North America, just behind San Francisco. The rest of the ten most expensive cities are American, but Toronto’s there at number 11 while Montreal rounds out the top 20.

 

Different rules

According to the Brel Team guide, for a non-resident to get a Canadian mortgage, you’ll have to put down a 35% downpayment, but you’ll also need a Canadian bank account, which must be opened in person in Canada. Also – you’ll need to put down a standard 5% deposit with the seller when your purchase is accepted, with the key difference in Canada being that if you change your mind, the seller may get to keep the deposit rather than refunding it. 

 

Taxes

Canada also has a host of taxes you’ll be responsible for paying as a property owner. According to Investopedia, you’ll need to pay the land transfer tax, which varies depending on the province. Typically, it’s somewhere in the area of 1% on the first $200,000 and 2% on the balance. Then, there’s the property tax, which is based on the assessed value of the property and varies depending on where the property is located. There are also municipal taxes, and school taxes as well. Finally, if you’re buying a rental property as a non-resident, you can opt to pay 25% of the net income minus expenses. Significantly, if you sell the property as a non-citizen, there’s a 50% withholding tax.

Leave a Reply

Your email address will not be published. Required fields are marked *