Canada vs. Washington State: Investment Housing Trends

With economic instability around the world, many people wonder if it’s time to relocate to a new state or country. Washington state and Canada share a border, with large cities just a few hours away.

It’s common to wonder if life will be better on the other side, so let’s compare housing trends to help you understand if making a big move will be worthwhile.

Housing Prices

Housing prices in Canada are decreasing, but they are still higher than in Washington and other parts of the United States. The country is experiencing a housing crisis, with prices exceeding what most residents can afford. This is stressing the economy and causing many people to consider relocating or downsizing. 

Washington houses are slightly more affordable, but they are still increasing year over year. That isn’t stopping buyers from scooping up the properties. The number of homes sold is increasing, while the time on the market has also slightly increased.

Washington may be a more attractive investment for investors based on housing prices. The median price is slightly lower, suggesting you can make a better profit on the property. The real estate market also significantly contributes to the state’s financial health.

The economic contributions of real estate to the state’s gross domestic profit are second only behind information. This includes the real estate purchase, rental, and leasing sectors, which is a fantastic sign for investors. It’s a booming industry that makes such a significant impact that the state will take moves to protect it if the market starts to soften.

Cost of Living 

The cost of living is more affordable in Canada than in Washington. On average, you’ll pay less for meals at restaurants, groceries, transportation, and childcare in Canada. Additionally, the average rent in Canada is lower than in Washington.

This is partially due to Canada’s average salary, which is much lower than Washington’s. The cost of basic necessities is also reduced to address this wage disparity. A person’s money may go further in Washington than in Canada, especially if their salary is significantly higher.

There are some exceptions to the rule. For example, milk may cost more in Canada, while many clothing and apparel items will cost roughly the same in both places. Toronto, Vancouver, Mississauga (Ontario), and Markham (Ontario) are among Canada’s​​ most expensive cities, so they have higher living costs than other places within the country. To compensate, the average salary may be higher in these metropolitan areas. 

Financing 

The traditional mortgage options are similar in Canada and Washington. You can get conventional loans with fixed or variable-rate interest terms. However, more options are available in the United States, especially if you want to secure an investment property.

DSCR loans are only available in the United States for U.S. properties. Canadians looking to invest in the U.S. may be able to secure one, but you cannot get a DSCR loan for a Canadian property.

These loans help investors buy and finance properties based on the projected income they will receive from the rentals. You should be able to cover the mortgage payments, insurance, property taxes, HOA dues, and other incremental costs. Your DSCR ratio should be at least 1.25 to provide a comfortable margin of error in an emergency.

Ultimately, Washington is a better option for creatively financing a home, rental property, apartment building, or other investment property. There are various financing options, so even if your credit score isn’t ideal, you may still be able to secure funding for investment properties. 

Taxes

Generally, the average Canadian pays more in taxes than Americans. These taxes fund the country’s healthcare and social services, which are universally available to all residents. While many Americans pay for their healthcare privately, they also pay into a federal healthcare system called Medicare and Medicaid.

Canada’s maximum income tax rate is 33 percent, which is lower than the 37 percent maximum federal tax rate in the United States for the most wealthy. Property taxes vary from 0.5 to 2.3 percent of a home’s value in Canada, while in Washington, they are around 0.98 percent.  

However, more tax deductions are available in the United States, so investors may be able to write off more on their taxes at the end of the year. These deductions may mean they pay less than they would for the same income and properties in Canada.  

Conclusion

Living in Washington state versus Canada comes with pros and cons. If you want to purchase an investment property, you may get a more favorable return on your investment in Washington. Property prices are lower, and you have more tax write-off options. While it has a higher cost of living, the average salary in Washington is higher than in Canada.

Additionally, with more financing options, including DSCR loans, investors can creatively finance their investments regardless of their income stream or credit score. In the short term, you may want to invest in Washington.