A Comparison Between The Real Estate Industry In Canada And The US
Choosing a new home for buying or renting might be a difficult task for many families and investors. You have to consider lots of critical factors when you want to buy a new home.
For example, the country and city, neighborhood and surrounding area, the size and number of rooms, the age of the building, the home’s style, and many other factors are of great importance for buying/renting a home.
When you want to invest in the real estate market, these factors will be even more critical. In particular, the country you choose to invest in can really make a big difference. Among all countries, Canada and the USA have the hottest real estate markets.
If you want to invest in these countries, you’d better be able to compare them in detail. Here are the most important differences between their real estate markets.
Canada’s real estate statistics
With 9.98 million square Km, Canada is the 2nd largest country in the world with just over 37.59 million population.
Canada has recorded more than 59,159 transactions in October 2020, which has increased by 32% compared to the same month in 2019.
Moreover, the average price in the real estate market in Canada is currently around $607,250 CAD, which has increased by 16% compared to the previous year.
It’s also good to know that the average Canadian has to pay 56% more for buying and 25% more for renting a new home compared to ten years ago. Moreover, Canada’s homeownership has decreased by 2% (from 69% to 67.8%) compared to ten years ago.
Now it’s good to know the differences between home prices in different regions of Canada. Based on Condoly, one of the best condo assignment companies in Canada, top cities in the Canadian real estate market are Vancouver, Toronto, and Montreal:
Greater Vancouver
Vancouver is the most expensive area across Canada and is the only city with 7-digit prices. The average price in this area has risen by 5% and reached $1,060,000 compared to 2019, and the total number of transactions has also increased by 29% YoY.
Greater Toronto
Toronto is the second most expensive area in Canada, with an average of $897,700 in October 2020. This number has increased by 13% compared to 2019. Also, the total number of transactions in Toronto has increased by 24% compared to 2019.
Montreal Metropolitan
Average prices in Montreal Metropolitan in 2020 have increased by 15% compared to 2019. The average price in the Montreal Metropolitan area is $418,000.
USA’s real estate statistics
The U.S. is the 4th largest country in the world, covering around 9.8 million square Km. It has a population of more than 328 million and is the 3rd populous country in the world.
The average price of new homes in America in August 2020 was around $312,800 USD, which has decreased by 4.34% compared to the same month in 2020.
The volume of real estate transactions is anticipated to reach $478 billion USD, less than $500 billion USD in 2019.
The average home price in America has increased by 24% compared to ten years ago, which shows softer inflation in the real estate market.
This is also good to know that the Canadian dollar has lost 25% of its value compared to the USD, which will put more pressure on the buyers in Canada. So a real estate investor from the U.S. might be able to take advantage of this trend. Also, homeownership in the U.S. has decreased by 5% from 67.8% to 64.2% since ten years ago.
Top cities in the American real estate market are:
Manhattan, N.Y.
The median home value in this area is $1,013,400 USD, which is not affordable for many people. Manhattan prices have dropped 5.3% compared to the previous year. Rents in Manhattan are approximately $4,119 USD, which is four times the national average.
San Francisco
The average home price is $1,195,700 USD, which has gone up 3.0% over the past year. Rents in San Francisco $3,590 USD are more than three times the national average.
Seattle
The median home price in Seattle is $758,200. This price has fallen by 2% from September’s all-time high ($800,000), which still shows a 3% increase over last year. Average rents in Seattle are around $2,100, which is clearly higher than the national average of $1,460 USD.
Banking in Canada vs the U.S.
One of the most important factors for investing in the real estate industry is the banking system in the country.
Here is a comparison between the banking systems in Canada vs the U.S.:
In the U.S., you have hundreds of banks with countless varieties in lending policies and conditions. Even licensing for mortgage brokers varies across each state, and surprisingly, in some states, there is no need for testing or licensing.
Bank regulation is controlled by each state and the federal government, and it’s possible to have different criteria from one bank or lender to another.
In contrast, there is only one federally regulated Bank Act in Canada that controls all the banks all over the country. Also, there are only 5 major banks across Canada that control countless branches in all cities.
These banks have got many brokerage companies that lend funds for mortgages. Mortgage brokers in many provinces in Canada should have extensive training and pass the licensing test.
Conclusion
Housing is a lot pricier in Canada than it is in the U.S. It might have several reasons, including the increasing number of immigrants heading for Canada. As an investor, you need to consider all the differences between the countries to choose the best option.
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