It’s Time for Canadians to Explore Alternative Second-Home Destinations to the U.S.

Canadians have long been one of the biggest foreign-buyer cohorts of U.S. real estate, often flocking to sunny second-home locales like Phoenix and Miami. 

Last year, Canadians made up 11% of foreign buyers in the U.S., buying up $5.5 billion in real estate, according to the National Association of Realtors. Nearly three in five of those purchases were vacation homes.

But with the Canadian dollar’s sharp loss in value against the greenback in recent years, it’s more expensive than ever to buy in the U.S. The Canadian to U.S. dollar exchange rate is currently at 0.74, falling from a five-year peak of 0.83 in May 2021. A decade ago, the Canadian dollar traded at roughly equivalent to the U.S. dollar.

With the weaker Canadian currency, it may be time to explore alternative second-home destinations beyond the U.S. Here are three markets Canadian buyers could consider where they might have more purchasing power:

More: Requesting Home Repairs? For Many, It’s Time to Ask for Everything

Portugal

The Canadian dollar has been growing increasingly stronger against the euro in the last five years, with one dollar buying €0.62 in March 2018 to around €0.71 today, according to analysis by the Dow Jones Market Data team. 

Portugal may be an ocean away, but it has been growing in popularity among second-home buyers in recent years, particularly among North Americans.

“It wasn’t very often we saw Canadians buying property in Portugal, but I would say that six months ago they started to show up,” said Ricardo Costa, CEO of Luximos Christie’s International Real Estate in Portugal. “The currency has a lot to do with it.”

The country’s capital, Lisbon, is a seven-hour flight from Toronto. But more popular with buyers is the southern Algarve region, with its golden cliffs set against the sparkling blue Atlantic. Even in January, the south of Portugal sees average highs of around 60 degrees Fahrenheit.

More: Established Neighborhoods Are Still a Safe Bet in Overheated Munich and Frankfurt

The spot is a favorite among British buyers, who make up nearly 70% of Luximos Christie’s clients there, Mr. Costa said.

Many foreign buyers are attracted to Portugal for its low cost of living, proximity to other European countries, and the quality of life.

“People feel that the country is safe, and small,” Mr. Costa said. 

Prices can range from around €1 million (C$1.435 million) for a villa at the lower end to €8 million for homes within resorts or other highly coveted areas.

Buyers of properties priced over €500,000 also qualify for Portugal’s golden visa program, which would allow them to obtain a fully valid residency permit there.

Mexico

While the Canadian dollar rose sharply against the Mexican peso in 2020, it has since fallen back to pre-pandemic levels, with an exchange rate of about one dollar to 14 pesos.

Even though the Canadian dollar might not go as far as it did a few months ago, Mexico still has plenty to offer in terms of luxury real estate at a price point lower than what’s available in the U.S. market.

The beachside city of Puerto Vallarta is one of the main destinations for second-home buyers from North America. Once a quaint fishing village nestled in the mountains, today Puerto Vallarta is one of the country’s most popular getaways. More than a destination for all-inclusive resorts, Puerto Vallarta is also home to a growing food scene and plenty of local galleries and storefronts.

“It’s a tourist town yet you can get away from tourists without a problem,” said Michael Garcia, marketing director of LPR Luxury International, a real estate agency based in the city.

More: Austin’s Luxury Home Sellers Shouldn’t Be Scared off by the Market Slowdown

Gaining the most traction there are “made-for-Airbnb” condos, which include locked-off rooms where owners can keep personal items as they rent out the property the rest of the year, Mr. Garcia said. Ocean-view condos go for the equivalent of C$500,000, whereas a luxury single-family home up in the hills might sell for closer to C$1 million or more.

Because of its large number of Canadian and American residents, Puerto Vallarta is also home to familiar stores from north of the border, such as Costco, Walmart and Sam’s Club.

Those looking for spots off the beaten path might head to Ixtapa, Zihuatanejo and Troncones, all located on the coast of the mountainous state of Guerrero. 

“Often Canadians are looking for places that are not as Americanized,” said Jeanne Donnadieu, a broker with Mexico Sotheby’s International Realty. 

While more and more resorts are springing up in Zihuatanejo, the city has so far maintained its small-town flavor.  

More: Do Geothermal Systems Heat up Home Values?

Brazil

For the same reasons Canadians look to Mexico and Portugal—good weather and a lower cost of living—they’ve also had their eyes on Brazil.

“The culture is very vibrant,” said Mike Smith, owner of property consultancy Brazil Beach House. “It’s 100% authentic Brazilian—you couldn’t be mistaken for being in Canada or America.”

In 2020, one Canadian dollar grew from 3.12 Brazilian real to 4 real. While the rate has since stabilized to around 3.8 Brazilian real, it’s still a good moment to invest in Brazilian real estate.

The country offers several options for residency, Mr. Smith said. One of them is via property investment: Those making a real estate purchase of 1 million real or more can apply for residency. Alternatively, Brazil offers a retirement visa, which offers residency to those with a monthly income of $2,000 or more. 

Mr. Smith said most of the Canadians he works with opt for Brazil over Mexico or the U.S. because they have some sort of connection to the country.

More: Big Canadian Cities Offer a Moment for Long-Hesitant Home Buyers

“Often, it’s not a random choice to come down to Brazil,” Mr. Smith said. The country—with its less-developed infrastructure, and stark inequality—tends to attract the more intrepid traveler, attracted to the country’s uniqueness and natural landscapes. Most second-home buyers in Brazil tend to come from Portugal and the U.K., according to a study by Knight Frank. 

“There are epic natural attractions in terms of mountains, waterfalls and tropical beaches,” Mr. Smith said. “It is the whole package—but it’s not for the faint-hearted.”

For those who do make the move, there are plenty of deals to be found. 

The northeastern state of Bahia offers miles of tropical coastline and is a focal point for luxury residential real estate development. Buyers there can find remote, sprawling villas surrounded by greenery or even properties on some of the private islands off the coast.

More: Heart Set on a New Build? Here’s Where Luxury Homes Are the Youngest

Prices in resorts along the northeast coast of Brazil are around C$452,000, or C$1,919 per square meter for villas and C$2,568 per square meter for apartments, according to a study by Knight Frank. Within the few ultra-luxury resorts, average values currently range between C$4,000-C$4,700 per square meter. 

For a more laid-back surfer vibe, Mr. Smith suggests Pipa, popular with international visitors and surfers. Homes there go for between C$200,000 to C$1.5 million, and tend to fetch good rental returns.

“In terms of property prices, you can get fantastic luxury homes at very affordable prices compared to North America and Europe,” he said.

Click for more in-depth analysis of luxury lifestyle news