Originally published September 15, 2016 at 1:48 pm Updated September 15, 2016 at 9:05 pm
By Mike Rosenberg -Seattle Times business reporter
A growing wave of money from China and other foreign countries is pouring into the Seattle-area housing market, helping drive home prices even higher. And since July a new tax on international buyers in Vancouver, B.C., long a popular market for home seekers from China, has focused even more global interest here.
Seattle saw more inquiries from mainland-Chinese homebuyers than any other American city in four of the last seven months, according to Juwai.com, China’s biggest real-estate site for buyers looking in North America.
Historically, Seattle had attracted less real-estate money from China than Los Angeles, New York and San Francisco.
But the region’s upward shift only accelerated after British Columbia enacted a 15 percent tax on foreign buyers in the Vancouver metro area. Searches by Chinese home seekers for Seattle have more than doubled, while they’ve been cut nearly in half in Vancouver, Juwai says.
“I’m even seeing some Vancouver agents come down and pairing up with a Seattle agent and showing property here,” said Anna Riley, a Windermere agent who sells to many foreign buyers on the Eastside. “It’s a bit like plugging a hole in a dike — the water will spring out somewhere else.”
Local real-estate agents say they’ve seen a sharp rise in foreign buyers recently, both those looking to move to the Seattle area and those buying the homes merely as investment properties, sometimes keeping them empty.
The Puget Sound region’s biggest attraction for many foreign buyers is that its housing costs — while soaring higher in recent years — remain far lower than peer West Coast hubs or other international hot spots.
“When they look at Seattle, they think wow, everything seems like a screaming deal,” said Mei Yang Broker who specializes in Chinese clients for Realogics Sotheby’s International Realty.
She said Chinese buyers tend to come in with all-cash offers, and they have “made this area a lot pricier.”
“On the one hand, (local) sellers love it: ‘All right, I’m getting an all-cash offer with no contingency,’ ” Yang said. But for local buyers, the overseas interest means “they certainly face competition. Some buyers are not happy; foreign buyers pose a threat, or strong competition.”
Some real-estate brokers and buyers are worried the region will follow in Vancouver’s footsteps. There, local officials who pushed for the foreign-buyer tax say international buyers helped price out longtime residents and often left investment homes empty, reducing the overall housing stock and helping prices soar more than 30 percent in a year.
Overall, buyers from China bought about $1.6 billion in homes across Washington last year, according to the National Association of Realtors. The state drew 6 percent of the $27 billion that Chinese spent buying U.S. homes last year, putting Washington behind only California, New York and Texas.
Still, the Seattle region is nowhere near catching up to the land rush experienced in British Columbia, which had about $760 millionworth of home sales to Chinese buyers just in a one-month stretch earlier this year, according to news reports.
Chinese money now accounts for about 55 percent of all homes purchased by foreigners in Washington, the Realtors association says.
Most of those purchases are still in the suburbs, particularly in wealthier areas on the Eastside.
According to Juwai, Chinese buyers are predominantly targeting luxury homes, with an average price of $1.2 million.
Tracking the exact influence of foreign money on the local housing market is tricky because there are no data tracking international buyers in specific cities. But it’s likely had an impact on prices in at least some places — especially on the Eastside along Lake Washington, where real-estate agents say Chinese buyers have concentrated their money because of good public schools and a rising Chinese population.
The area of West Bellevue, Medina and Mercer Island has seen home prices skyrocket 125 percent in the last five years — twice as fast as the rest of King County. That area now has a median home cost of $1.3 million, more than double the price for the rest of the region, according to sales data from the Northwest Multiple Listing Service.
“It’s definitely helped in driving prices up,” Riley said. In some parts of the Eastside, in particular, she said “we’ve had a large influx of international buyers coming in. They’re the buyer about 50 percent of the time right now.”
At a $3.5 million lakefront listing in a gated Kirkland community last week, Realogics broker Lili Shang and another bilingual staffer showed Chinese buyers around, handing out pamphlets in Mandarin. A Chinese buyer had a pending purchase of the 4,300-square-foot home earlier this year, but after financing fell through, the owner put it back on the market — asking an extra $200,000 after seeing strong interest and local prices continuing to soar.
Amy Chen, an immigrant from China who now lives in the area, came by to scope out the home, though it would likely be for friends. Her family already has a lot in Bellevue they’re subdividing to build multiple homes. She said Chinese buyers are becoming more attracted to the area largely because they feel comfortable putting their money into a hot market that’s still somewhat affordable.
“The economic future of this place will be very bright,” Chen said through a translator, citing big local companies such as Microsoft and Boeing. Chinese people, she said, “like to invest in a market that’s really live. The more it goes up, the more they want to buy. They want to be along for the ride.”
Wei Tang, who lives in Nanjing, northwest of Shanghai, used video chats this month to buy a $180,000 Sammamish condo without ever stepping foot in it. He said he plans on purchasing even more local real estate soon, after being attracted to the area by its low price relative to other big cities, good educational opportunities and clean environment.
“Seattle has definitely become a lot more attractive, especially in recent years,” Tang said by phone from China, speaking through a translator.
Tang added that some of his friends have bought property in Vancouver, and he looked for real estate there, but the new tax helped push him toward Seattle.
Matthew Moore, Juwai’s president of the Americas, said the site’s data showed two-thirds of Chinese buyers cited education (typically for their children) as their primary motivator for choosing Seattle. That was followed by lifestyle and travel opportunities (favored by 24 percent of buyers) and investment potential (16 percent).
“There’s just been substantially more awareness and notoriety of Seattle in China,” Moore said. “More press, more articles, more media attention.”
A visit from Chinese President Xi Jinping to Seattle a year ago drew a lot of attention to the city, followed by a trip by Seattle Mayor Ed Murray to China earlier this year. And a popular 2013 Chinese movie set in Seattle continues to be cited by buyers as their first introduction to the city.
There has also been an increase in nonstop flights between China and Seattle. The state’s lack of an income tax is attractive, along with its clean air and access to water, which can be hard to come by in China. Local institutions like banks, stores, hospitals and schools have hired more Chinese-speaking workers.
Moore said part of the reason for Seattle’s rise to the top of most-searched American markets is that other major cities had “already had their gold rush” in recent years, and it’s Seattle’s turn now.
He expects the city to remain among the top destinations for Chinese real-estate investment because it has strong “fundamentals” that foreign buyers look for, like the local economy and public schools.
“Those funds (from foreign buyers) are starting to surge, and I think we’ve only seen the beginning of it,” Peter Orser, director of the University of Washington’s Runstad Center for Real Estate Studies, said at a housing affordability summit on Thursday.
Still, on a global scale, Seattle remains behind other top international destinations such as Toronto, Melbourne, Sydney and London for Chinese capital seeking residential real estate, Juwai’s data shows.
Even though their impact on the real-estate market isn’t clear, foreign buyers have served as a primary target for some longtime locals looking to pin the local housing crisis on something, or someone.
Even real estate agent Shang, who came to the Seattle area from China 27 years ago and now does about $20 million in sales per year mostly to Chinese buyers, is concerned.
She and Riley, the Windermere broker, both say about half of their Chinese buyers occupy the homes they purchase, and the other half keep them vacant or rent them out, often to other Chinese families.
“I don’t like to see the newcomers kicking the native residents out,” she said. “It just doesn’t seem right. They’ve been here for generations, and now their children cannot go to a good school? So hopefully we don’t repeat Vancouver and everyone will be happy 10 years from now.”
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