The Influence of Canadian Investment on U.S. Residential Property Values

Earl Benson, Julia Hansen, Arthur Schwartz and Gregory Smersh

Journal of Real Estate Research, 1997, vol. 13, issue 3, 231-249

Abstract: This study is an examination of the impact of foreign investors on an American residential real estate market. Point Roberts, Washington, a real estate market that is dominated by Canadians, is the focus of the analysis. Utilizing a ten-year database of home sales, the empirical analysis suggests that the Canadian/U.S. dollar exchange rate and market conditions in nearby Vancouver, British Columbia, strongly influence Point Roberts residential property price levels. A rising Canadian dollar seems to motivate increased demand for Point Roberts property by Canadian investors, for example. The sensitivity of real estate prices to exchange-rate changes appears to be a three-to-six-month lagged function. In general, it appears that a higher Canadian dollar will increase the Canadian demand for Point Roberts real estate which, in turn, leads to higher transaction prices. In addition, transaction prices in Point Roberts are slightly more volatile than are prices in the Vancouver market.

Date: 1997
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DOI: 10.1080/10835547.1997.12090880

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