Foreign buyers in the USA

Move over China, Canada has become the top foreign investor in US real estate.

A report from commercial brokerage Marcus & Millichap, as reported by the Tampa Bay Times, found that, “an influx of cash-laden foreign investors, especially from Canada and South America, are targeting assets in Tampa Bay for lower entry costs and higher initial yields.”

It’s all pointing to signs of limitless, massive growth opportunity.

While opportunities across the United States are, in fact, limitless for Canadian investors, the key to investing well is to identify hot spots others have not identified. Take Phoenix, Arizona, for example, where Talia Jevan Properties Inc.’s High Income Real Estate has been aggressively buying property.

“Phoenix became one of the most battered real estate regions in the country,” noted Harmel Rayat. “Nowadays, the region just finished securing $430 million in deals in 2013 alone thanks to higher occupancy rates, falling unemployment, and opportunities for strong population growth.”

Read the full article here.

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patriotz
Member

@vangrl: “Brad Lamb was saying on BNN today that foreign ownership of condos is around 50%,”

Well then it must be true. Condo marketers never lie about that kind of thing, do they?

Lamb is sort of Bob Rennie meets Rob Ford.

patriotz
Member

The wording of this article is very misleading. Canada has historically been the top foreign investor in US RE – not surprising since it’s the only large developed country anywhere near the US. For example players like Olympia & York and Campeau, as well as huge numbers of Mom & Pop investors and vacation property ownners.

China is only a recent player.

William
Guest
William

Three friends of mine sold their investment condos recently and all took big losses on them.

Just because there is a reasonable volume of sales does not mean that prices are going up.

RFM
Guest
RFM

William #3
This is interesting anecdotal information. Do you have more details, such as whether they bought the condos as pre-sales, bought in a new building, size of condos and location. Also, why did they sell? What did they do with the proceeds (if any) of sale?
All that additional information adds to our understanding of market trends.
Thanks for sharing.

Loon
Guest
Loon

Here is my doomer prediction for the national RE market, 2015/2016:

Toronto’s condo excesses flood the market, several large developers are unable to move the units and file bankruptcy.

The contagion spreads to national banks causing a freeze on financing for condo projects in major areas, ie Vancouver. This leads to the first wave of job losses in construction and FIRE industries.

RE sales and prices begin to creep lower, simultaneously rates tick up. This leads to a panic sell off of RE, which begins the vicious downward spiral resulting in more job losses.

HAM finally loses interest in Vancouver and prices revert to their long term average. The families that do hang on are underwater for at least a decade. Joe public concedes that real estate may not be the best investment.

Or something thereabouts.

Westside Realtor
Guest
Westside Realtor

Sounds reasonable to me Loon.

Full of “ifs”, but every bubble has its day and finds its pin/brick wall eventually.

And we are way way overdue.

Boombust
Guest
Boombust

#6

Right you are.

And, don’t forget the saying, “The bigger they are, the harder they fall”.

cris
Guest
cris

noon, how is your prediction different from the one in 2008? Yah, the year is different.

My prediction is Burnaby Metrotown areas will be a traffic hell hole, inferno in 2016. Bring water supply and emergency kits with your expedition to Metrotown.

Enigma
Guest
Enigma
This article is no big surprise. Canada and the US have been each others’ biggest trading partners for as long as I remember/cared, so it makes perfect sense that property investors would behave similarly if circumstances would warrant it. So it wouldn’t be a big surprise to me, either, if it’s found that the foreign investors of Greater Vancouver real estate are predominantly Americans. The best data source I’ve ever found was from Landcor data, in their report “A Decade of Peak Performance” published Feb 2010 available at http://store.landcor.com/market/reports/Metro_Vancouver_2010_Report.pdf In it, they attempt to determine the countries of foreign owners of GV real estate. In their breakdown, over 50% of foreign-held properties are owned by Americans. The next biggest single country? Hong Kong, at apx. 15%. I’m certain their methodology could always be improved upon, but to date this has… Read more »
Enigma
Guest
Enigma

Sorry. Hong Kong is obviously not a ‘Country’, but I found it interesting that Landcor separated Hong Kong, Taiwan and China for the purposes of preparing their report. But I really don’t want to start a Taiwan question debate or anything else like that.

bullwhip29
Guest
bullwhip29

@ Loon August 14th, 2014 at 8:11 am

if this happens, we’ll see the CPP team up with CMHC and use our money to get into the REIT business. as far as HAM is concerned, they love sales and getting free stuff. the better the price, the more pushing, shoving and spewing venom

Joe Mainlander
Guest
Joe Mainlander

Re: #9

According to Landcor there were 4,350 properties owned by foreigners in 2010 in Metro Van. That’s out of about 900k total dwelling units.

If true, that’s only 0.5%.

crikey
Guest
crikey

What? Does this mean all the recently minted Canadian from China are *already* done with Canada so quickly buying in the U.S? 😉
I know too well that for many Canada is just a freebie-laden stepping stone to the true goals of many families — to have the pride of living and working in the U.S.
😉

Boombust
Guest
Boombust

#13

Pride of living and working in the US?

Have you been to any other province besides BC? I’ll bet you don’t know squat about your own country.

Sad.

Enigma
Guest
Enigma

@Joe Mainlander: “According to Landcor there were 4,350 properties owned by foreigners in 2010 in Metro Van. That’s out of about 900k total dwelling units.”

On the report’s Methodology page, they indicate a total of 677,483 properties. I’m not disputing your ~900K number (I’ve seen this, too), but perhaps the difference is attributable to the precise region considered and/or the moment the data was collected.

If it’s 677K, it’s still ~0.6%, which is an order of magnitude smaller than I’m accustomed to hearing about.

Also of note in the report is the breakdown of property types owned by foreigners: It’s mostly condo/apartment ownership, with SFD at <25%.

Joe Mainlander
Guest
Joe Mainlander

@#15 – GVRD Metro Van Housing Handbook 2014 (2011 stats) states 890k for ‘occupied dwellings’. Landcor states ‘properties’. Perhaps they are leaving out purpose-built rental units and basement suites.

Still, if less than 1%, foreign buyers are insignificant.

Mondo Condo
Guest
Mondo Condo

“Toronto ‘Condo King’ debunks CMHC study” BNN

http://www.bnn.ca/News/2014/8/14/Condo-King-debunks-CMHC-study.aspx

Toronto has a Condo King?! I though Bob Rennie was the Condo King.

Can a nation have two kings? I think they need to both go on a TV reality show to battle it out.
Condo King: East vs West.

Many Franks
Member
Active Member

@Mondo Condo: Here’s a thick slice of idiocy…

But is 50 percent [investor ownership of condos] such a bad thing? Lamb believes the massive discrepancy in the numbers is coming to the rescue of young urbanites starved for apartments and unable to buy houses.

“In Ontario we haven’t built any apartment buildings really in the last 45 years. If we aren’t building apartment buildings and people can’t afford houses, where are they going to live? The market has picked up where the purpose built housing market has left off. We build apartments that are 300 to 700 square feet for young people to live,” said Lamb.

As though the two are totally unrelated…

patriotz
Member

@16: ” Perhaps they are leaving out purpose-built rental units and basement suites.”

They are not leaving out anything. Many properties (a property is something with its own title) have more than one dwelling, so more dwellings than properties.

“Still, if less than 1%, foreign buyers are insignificant.”

Foreign owners not foreign buyers (stock not flow). Probably foreign buyers are higher but still in single digits.

patriotz
Member

@18: “Realtor and developer Brad Lamb – known as Toronto’s “Condo King” – says half of Toronto’s condominiums are in the hands of investors. More than double the 17 percent stated in a Canada Mortgage and Housing Corporation (CMHC) report released last week. ”

We have already established that the CMHC report does not indicate that the total % of condos owned by investors is 17%. Next Lamb is quoted as talking about % of buyers which is not the same as % of owners, without any comment from the writer. Useless article.

I would not be at all surprised if 50% of buyers (not owners) in Toronto or Vancouver are investors.

Joe Mainlander
Guest
Joe Mainlander

#19 Yes.

Interestingly, for the last ten years sales were usually in the 35k-50k per year range, both side of Fraser. (less in ’08 of course)

So, even if all those 4400 foreign owned properties were bought in the last ten years that would still be around 1% of sales volumes. Unless Landor is way off, it does not appear that foreign ownership could have any significant impact.

Bull! Bull! Bull!
Guest
Bull! Bull! Bull!

once they get PR or immigration, they aren’t foreign anymore. even if they aren’t actually in the country – see canada’s exit loophole and new treaty to share entry exit info with east asian countries.

Loon
Guest
Loon

@Bullwhip # 11

I’m not convinced that CPP/CMHC will be the knight in shining armor that you suggest. With waves of foreclosures and write downs, they’d most likely wait on the sidelines until it’s too late like most gov orgs.

HAM usually like to by premium status symbol products, by that time Canadian real estate may look like an investment for ‘poor people’. Perhaps we will have PAM (poor asian money) buyers by then ?

This is hypothetical situation but it must be discussed and explored as it is entirely possible, so I thank you for your comment.

CONservatives
Guest
CONservatives

liberals know that HAM is a myth and that this bubble is fueled easy credit thanks to the CONservatives.

http://www.liberal.ca/newsroom/just-the-facts/reality-check-budget-2013-conservative-record-skilled-workers-immigration/

patriotz
Member

@23:

CPP is already a major RE owner. Interestingly only 15% of holdings are in Canada:

http://www.cppib.com/en/what-we-do/real-invest-overview.html

CPP owns the same kind of RE as REIT’s – i.e. large properties. SFH or condos would make no sense for such an investor even if the price were reasonable.

Also it should be noted that contrary to what a lot of people think, CPP is not controlled by the federal government, but jointly by it and the provinces and the feds cannot give it orders what to invest in.

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