Maybe you have seen ads in the media about foreclosure deals down South. However, in any investment scenario, you need to do your due diligence thoroughly, and weigh the upside potential against the downside risks. Emotion and hype should play no role in decison-making. While there are lots of people enthusiastically selling real estate in the U.S. who prefer to concentrate on the upside, here is my opinion of the downside risks. (But I feel buying real estate in Canada is the preferred choice over buying outside of Canada, for many different reasons).
In my opinion, the current U.S. real estate market is too volatile and unpredictable relative to prices a year or so ago, might not be a better deal a year or so from now. Quite apart from price points, there are many other factors to consider when investing in real estate outside of Canada.

Reasons for U.S real estate market risks
To provide context, here is a brief summary of the market. Several years ago, developers had excess inventory due to a housing boom. Many lenders gave money to borrowers who otherwise would not be eligible for mortgages, due to their credit rating, income, or down payment to get into the market. In many cases, the mortgage interest rates were discounted for the first two or three years, as a further incentive, with the rates to be adjusted upwards by the lender at the end of the discounted rate period. With most lenders, there was also a sizeable penalty if a borrower wanted to change lenders at the end of the discounted rate period. As the discounted rate period ended, many owners could not afford the higher mortgage payments set by the lenders, could not afford the penalty, or could not find another lender. As most of the borrowers had little equity, they had little to lose by walking away. This scenario created a massive foreclosure environment, which caused house values to erode, depending on the geographic location or type of property. Hence, the ripple effect of reduction in property values in many regions of the U.S., and the associated loss of consumer confidence and tightening of lender credit criteria.

There are many borrowers who have discounted mortgage rates that will soon revert to whatever market rate the lender may choose to set. So the downturn is not about to end anytime soon.

All the above facts contribute to a volatile and risky marketplace for any investor. Investment is one thing. High-risk speculation is another. Most people don’t have the skill sets, experience, or comfort to be knowingly exposed to those financial risks. The Canadian marketplace is a far more stable environment within which to selectively invest in real estate.

Other Factors to Consider
There are other investment or financial factors to assess also, which many Canadians who are potential buyers in the U.S. forget—because they do not do realize these issues exist, or do not do their re-search beforehand. All the following steps involve financial expenses or risks to you.

1. Tax Implications
If you buy any property outside of Canada, you are required by the Canada Revenue Agency (CRA) to report any income from your investment. You will pay tax on that income, net after any allowable expenses. You will also be required to declare any income from that U.S. property to the Internal Revenue Service (IRS) in the U.S. You could have a double-taxation problem. There are different tax rules in the U.S. There could be a foreign tax credit between Canada and the U.S. that may apply between each country. There could also be exemptions that you are eligible for. You need to know all these issues before you buy. Possibly, state taxes could also apply.
If you sell your U.S. property there could be U.S taxes based on the sale price, not on the capital gains tax as in Canada. You would also have to declare your capital gains on your U.S. property on your Canadian tax return.
If you died and owned U.S property, there would be tax triggered in the U.S. In addition, there would be a deemed disposition of your U.S. property from a CRA perspective, which has capital gains tax implications.

2. Filing requirements
You will need to file the appropriate documentation with Canadian and U.S. tax authorities each year with the associated professional fees to assist you in doing so.

3. Need for Professional Advice in Advance
As you can see, tax and estate planning advice from experts both in Canada and the U.S. is essential in advance of any purchase. You don’t want to rush into a purchase decision in haste. You want to make sure you are taking advantage of all the tax planning strategies available.

4. Management of your Property
If buying an investment property out-side of Canada, you will have to hire a professional property management company to assist you, or do your own owner-direct marketing on the various websites available for that purpose.