It might be hard to believe, but Canadian Real Estate has barely kept up to the return on a U.S. Savings Account over the past five years

In general, the more your city attracts foreign home ownership, the higher the return was on your home over the past five years.  Even if foreign investment was relatively low, just the fact that foreigners could buy homes with roughly the same amount of capital as five years ago, raised the floor on home prices in Canada's two largest housing markets.
    The amount of foreign ownership didn't really matter much, just the fact that foreign capital would pay a certain amount for a home, regardless if any foreigners were bidding on the home, created a higher floor for all the greater Toronto and Vancouver homes.
    The housing price index in Vancouver has risen less than 2.2% annually over the past five years when priced in U.S. dollars.  A five-year CD at a U.S. bank account would have matched the return on a greater Vancouver home.  Let's face it, most non-Canadians don't have much of their savings in Canadian dollars.  This means while it is getting harder for Canadians to buy a home in greater Vancouver and Toronto area, while non-residents can continue to pay close to the same amount as five years ago.


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Credit Card Nerd Math

Back in March 2012, you could buy an American dollar for $0.9964 Canadian dollars.  In March 2017, you would need $1.3333 Canadian to buy an American dollar.  Buying an American dollar in 2012 and selling it in 2017 would net you ($1 ÷ $0.9964 x $1.3333) = $1.338 CDN for a 33.8% return.
    A 2.2% coupon on your U.S. funds over 5 years would net you 49.18% return once converted back into Canadian dollars.  The math works like this; $1.338 x (1.0225) = $1.4918, which is just above the rate of return on a greater Vancouver area home according to CREA's composite home price index.



Return on Housing over the past five years in Canadian and U.S. Dollars

Composite HPI

March 2017

5 Year Return CDN

5 Year Return USD

Aggregate

$587,200

45.76%

8.93%

Greater Vancouver

$919,300

49.16%

11.47%

Victoria

$578,300

31.88%

-1.45%

Greater Toronto

$772,500

70.93%

27.74%

Calgary

$435,500

14.7%

-14.28%

Greater Montreal

$317,200

9.77%

-17.97%

USD Savings 0%

$0.9964

33.8%

0%

USD Savings 1%

$0.9964

40.6%

5.1%

USD Savings 2%

$0.9964

47.7%

10.41%

USD Savings 3%

$0.9964

55.1%

15.93%


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A Wake-Up Call

If you are from outside Canada, it hasn't gotten any more expensive to buy a home in Canada, unless you factor in the 15% foreign buyers tax.  In fact, if you are buying outside of the two major housing markets, you could be paying a whole lot less.
    Note: We are not saying house prices are not going to decrease, they very well could, but probably not by as much as you think.  Although that could change if the Canadian dollar increases in value or if the local governments turn off foreign investment in the housing sector.


Sources:
Home price benchmark index
Present Value Calculator