Canadian real estate investors are increasingly retreating from the U.S. market due to rising geopolitical tensions between the two countries, redirecting significant capital back into Canada's housing sector. In 2024, Canadians were responsible for 7,100 U.S. home purchases, primarily in popular vacation destinations. However, the current political climate has prompted many to reassess their investment strategies and shift focus toward domestic opportunities. Recent data indicates that over 80% of Canadians now prefer to keep their real estate investments within Canada, with approximately one-third suggesting this change will be permanent. This shift in investor sentiment could have a substantial financial impact; the exit of just 100 Canadian buyers from a single U.S. state could lead to an estimated $80 million in lost transaction volume. This change aligns with an ongoing trend, as Canadian purchases of U.S. property have been declining by an average of 14.5% annually from 2019 to 2024, reaching their lowest point in 15 years—even below levels observed during the peak of the COVID-19 pandemic. Should this retreat continue, U.S. states that traditionally attract Canadian buyers stand to lose hundreds of millions in real estate activity. Florida alone could face losses exceeding US$653 million over the next two years, while Arizona may see a $366 million decline. Other favored regions such as Hawaii, California, and New York are also projected to experience significant downturns. As a result, Canada’s own recreational property market is poised for renewed growth, particularly in vacation-oriented regions. Markets like Ontario’s cottage country, which began the year slowly, are expected to benefit from increased interest. Forecasts suggest a 4% rise in the average price of Canadian cottages in 2025, with the majority of real estate professionals reporting stable or increasing demand. Meanwhile, some Canadians who had previously considered moving to the U.S. are now reconsidering, though not all are returning to Canada—some are exploring alternatives in less politically volatile countries. For those selling U.S. property, the process can be complex, involving tax obligations such as a 15% withholding by the IRS and required reporting to the CRA. Maintaining U.S.-based financial accounts can help minimize conversion and transfer fees, and expert advice is recommended to manage the legal and financial intricacies involved.