Buying U.S. real estate may not seem like the most appealing idea for Canadian investors right now. But the biggest drawback is not the tension and threats coming from the White House.
It’s fear of daily headlines.
While serious investors should not totally ignore the news, they should also take a longer-term view about the prospects for property of all types south of the border, experts say.
“The short answer to whether it’s a good time to buy in the United State is that it depends,” says Dennis Mitchell, chief executive officer and chief information officer of Starlight Capital, a subsidiary of Starlight Investments, a global real estate investment and asset management firm based in Toronto.
“Real estate is a long-term investment,” he adds. “The daily news about tariffs and trade may be alarming right now, but investors who are looking to allocate to real estate should expect to hold their investments for a minimum of two to three years.”
Despite the turbulent cross-border state of affairs, the U.S. economy is particularly strong now compared with Canada’s and other national and regional economies. “In the context of which economies are strong and growing, the timing is good for U.S. real estate,” Mitchell says.
At the same time, prospective investors should still be aware of the potential downsides, says Carol Sadler, partner, cross border taxation, with Achen Henderson CPA in Calgary.
“There are a number of factors in play that make this not the best of times, but the biggest one today is the dollar,” she says,
“The exchange rate makes it a tough time to buy,” Sadler adds. “If you’re selling U.S. property it’s a different story, of course. If you bought something 10 or 15 years ago, you were paying in dollars that were around $1.10 Canadian and now each U.S. dollar is worth about $1.40 in our money.”
While high-net-worth investors and family offices should focus on the long-term prospects, it’s still hard to ignore the daily news when considering whether to buy in the United States, Sadler says.
Airlines and travel agencies have noted, mostly anecdotally so far, a wave of cancellations by Canadians of trips to the U.S. both for business and for leisure. The trend has arisen after threats from President Donald Trump to impose punishing tariffs on Canadian goods and services, and his incendiary comments about making Canada into the 51st state. That might affect the long-term value of U.S. vacation properties, for example.
“Ask yourself: What is the purpose of your purchase? What’s the plan? If it’s a leisure property, for example, is it for your own use or are you also thinking of some rental income? Who in your family is going to use it? Will your kids and grandkids want it eventually?” Sadler says.
The cross-border business climate may also be a factor in a commercial purchase such as an office building or shopping centre. A survey by market research group YouGov of corporate travellers showed that 85 per cent of Canadian small and mid-size businesses said that “U.S. tariffs or trade restrictions would decrease their businesses’ cross-border corporate travel for trade business activities.”
There’s significant demand for housing [in the U.S.] and not enough supply.
Dennis Mitchell
It’s possible that companies whose employees travel less frequently between Canada and the U.S. may have less need for cross-border office space. But a decline in cross-border business travel doesn’t preclude opportunities for Canadian investors looking to buy U.S. real estate, Mitchell says.
“If you’re talking about property such as data centres, for example, Microsoft alone says it’s going to invest [US]$80 billion in AI-enabled data centres in fiscal 2025,” he says.
Another investment opportunity may be U.S. residential property, Mitchell adds.
“There has been underinvestment in U.S. housing going back to the 2008 financial crisis. So there’s significant demand for housing and not enough supply. There’s also a huge demand for more seniors’ housing as baby boomers get older,” he says.
Not all U.S. markets are strong, he adds: “There are red flags in markets with declining populations and weakening job growth.”
The way to invest in U.S. real estate depends on how much money is available to the investor, Mitchell says.
“If you’re an average Canadian with investable capital in the range of tens to hundreds of thousands of dollars, you’re probably looking at a publicly traded real estate investment trust (REIT). High- or ultra-high-net-worth with millions to tens of millions can look at direct investments in real estate that will be for longer duration and have less liquidity,” he adds.
The ultra-wealthy can also invest through private REITs that are not traded on public markets, notes Adrian Spitters, a British Columbia-based author and private wealth advisor. “Private REITs have unique advantages that allow them to navigate challenging economic conditions,” Spitters wrote in an article published online on Feb. 3. “They have reduced market volatility because their value is tied to property performance rather than daily stock price fluctuations.”
Even as cross-border tensions keep unfolding in real time, today’s headlines are less important to the serious investor than long-term issues such as legacy planning and cross-border taxation, Sadler adds. In some cases, the ultra-wealthy may be subject to U.S. capital gains and inheritance taxes, and it’s essential to get the help of a cross-border tax professional who can iron out the details, she says.
“If you leave out the news and look at the structure of cross-border taxation for Canadians who buy in the U.S., there haven’t really been any great changes since around 2017” when Trump was previously in office, she says.
Mitchell agrees that the long-term big picture should stay in focus for investors.
“A lot of the reactions right now are to headlines generated largely by Donald Trump,” he says. “But Donald Trump is only going to be the president for four years. People investing in commercial real estate or residential real estate in the United States are doing so for a period that exceeds the next four years.
“There’s volatility in the market and a shortage of buyers right now,” Mitchell adds. “This can be an opportunity to invest in one of the strongest real estate markets on the planet.”
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