The Canadian dollar recently fell to its lowest exchange rate against the US dollar since 2003. This decline is leading to ever-increasing economic impacts on Canadians. This impact, coupled with the recent devaluation of the local currency, has meant that everyday essentials like groceries and gasoline have now become inaccessible to many people. According to poll results from Angus Reid, 63% of Canadian residents were feeling financial strain in February. They flew to the US 13% less and drove 23% less to the US than in 2019. The US Travel Association has recognized Canada as the number one market for international visitors to the United States. A 10% increase in Canadian travel would result in a truly impressive $2.1 billion in additional spending and creation of 14,000 jobs.
The wave effect from the declining Canadian dollar can easily be seen in the real estate sector as well. According to the National Association of Realtors, Canadians are the largest group of foreign buyers of American real estate. In 2024, they accounted for just 7% of all home purchases! Today, Florida and Arizona account for the majority of Canadian home transactions. This has led to realtors in these states receiving calls from Canadians wanting to unload their homes. At the same time, other long-term Canadian snowbirds are re-evaluating their plans to establish a longer-term residence in the United States.
Economic Impacts of a Weak Canadian Dollar
The decline in value of the Canadian dollar has made the costs of travel to the U.S. even higher for Canadians. With the rapid increase in prices for everyday goods such as groceries and gas, making weekend trips across the border is no longer as attractive of a proposition. Consequently, air and land travel from Canada to the US is down sharply. Flight bookings from Canada to the U.S. have dropped dramatically. From March until September, they dropped by over 70% each month.
The economic cost of limiting Canadian travel would be extremely high. The US Travel Association just released a dire prediction. In fact, a 10% drop in Canadian visitors would mean the loss of billions of dollars in revenue and tens of thousands of jobs throughout the United States. To put a finer point on it, this underscores just how critical our Canadian tourists are to the US economy.
Shifting Real Estate Dynamics
SmartBrief on Real Estate needs to keep you informed of the new real estate landscape amid changing economic headwinds. As Canadians represent the largest group of foreign buyers of US real estate, shifts in their purchase habits can make a big impact. Canadians have historically shelled out billions of dollars into neighboring states such as Florida and Arizona. The economic climate today has them rethinking these investments.
Foreign Ownership Realtors are already claiming to get calls from Canadian buyers wanting to sell the houses they own in the United States. The latter group is motivated enough to sell at significant loss just to get out of the market.
“Some of the clients I have been dealing with want to sell at any cost, even at a loss.” – Share Ross
The sentiment is echoed across the country, where many Canadian snowbirds are rethinking their plans and their future in America.
“A number of them are considering alternative destinations to the US next year. Some want to sell their US properties.” – Stephen Fine
Trade Tensions Escalate
This economic tension between our northern neighbor and the United States is mutually compounded by continuing trade disputes. The Canadian government recently announced retaliatory tariffs on billions of dollars worth of American goods in response to US tariffs on Canadian auto imports. Prime Minister Mark Carney has called these tariffs a “direct attack” and breach of trade agreements.
“It is clear that the United States is no longer a reliable partner.” – Mark Carney
In light of these challenges, Canada is looking for ways to diversify their trade partners into other countries. This strategic realignment comes as a key effort to reduce risks from a reliance on the US market, particularly in the face of rising trade tensions.
