Seattle Real Estate Sees Surge In Chinese Interest After Vancouver Enacts 15% Tax
Ellen Sheng, Forbes, 3/2/17
Chinese buyers are flocking to Seattle after Vancouver, a former favorite of those looking to invest in property abroad, imposed a 15% tax on foreign investment.
According to Juwai.com, an online real estate listing site that is popular in China, searches for properties in Seattle more than doubled after the new tax went into effect in August, drawing more inquiries than any other American city and beating out past favorites Los Angeles, New York and San Francisco. Searches for Seattle on the site jumped by 125% in November.
Seattle area real estate agents say interest has been on the rise for the last two years, dovetailing with migrating tech workers from Silicon Valley. The result? Homes in upscale Seattle suburbs such as Bellevue and Redmond, which is home to Microsoft, and known for some of the best schools in the state, have seen home prices increase more than 16% last year. Home prices on Mercer Island, another affluent area on Seattle’s Eastside, rose more than 13% while homes in the Redmond and Carnation area rose 15.8%.
“Once Vancouver started talking about the tax, we started to see an uptick just then. Investors were seeing what was going to happen,” said Matt van Winkle, broker owner of RE/MAX On the Lake in Seattle. Now, van Winkle says, it’s common to see one or two all-cash offers among the numerous offers flooding in for properties in the $1.25 million and up range.
“The higher the price point, the greater the percentage of Chinese buyers,” said Dean Jones, principal and owner of Realogics Sotheby’s International Realty in Seattle. Chinese buyers made up less than a quarter of buyers in 2014 but to about 35% of buyers in 2015 and now about 50% or more in 2016 in the most popular neighborhoods.
Jones noted a sharp uptick in interest from Chinese buyers that started in 2014 when Canada abruptly reversed 60,000 applications for resident visas, mostly from Chinese applicants. At the same time, the Obama administration increased the multiple entry visa program from one year to 10 years for Chinese nationals and also increased the student visa program from one year to five. The more generous visa terms encouraged visitors to buy second homes, Jones explained.
Attractive But Still Affordable, For Now
The Seattle region has experienced the fastest-growing home prices for metropolitan areas in the U.S., according to S&P/Case-Schiller. Agents say Chinese buyers are drawn to Seattle’s schools, clean air and scenery as well as sizable Asian population (Bellevue’s population is about 30% Asian) as well as relative affordability and no state income tax.
The city also rose to prominence in Chinese popular culture after the 2013 box office hit Beijing Meets Seattle became one of China’s top-grossing movies of all time. In the film, the mistress of a Beijing business mogul travels to Seattle to give birth to their lovechild. The film is credited with boosted Chinese tourism to Seattle as well as property sales. Ironically, the film was actually shot in Vancouver.
“The Chinese know the influence the Chinese have–creating a self-fulfilling prophecy about a rising home market and healthy investment returns. They have seen the impact of other ‘discovered’ markets like Vancouver, San Francisco and Los Angeles so while Seattle was overlooked for years, it’s suddenly become the belle of the ball,” said Sotheby’s Jones.
Despite the price increases, Seattle is still relatively affordable when compared with other west coast cities such as San Francisco or Los Angeles.
Meanwhile, the influx of buyers has created a bustling market for new construction. For $900,000, buyers looking in Bellevue can buy a “tear down” generally meaning an 1,800 square foot home built in the 1950s that’s not been updated. In its stead, the average size of new homes being built is about 4,800 square feet. Developers such as JayMarc have started marketing in Mandarin Chinese and giving options for wok kitchens in their home plans. Builders have also started building second kitchens for smokier foods and second suites–ideal for visiting grandparents.