Since Vancouver, B.C. passed a tax on real estate sold to foreign buyers, many (including us) have been speculating on the impact, if any, it will have on Seattle’s already busy market. Zillow’s Chief Economist, Svenja Gudell, listened, thought, and wrote an analysis of the situation.
“it seems unlikely that Seattle will see a large increase of foreign buyers closed out of the Vancouver market.“
Just because they’re having trouble up there, doesn’t mean they’ll suddenly shift down here. While the two cities may be close and similar, we are in different countries, and they may prefer to return to buying in Vancouver after the tax implications are better understood. Years of acquisition in Vancouver mean at least somewhat of an established culture, familiarity, and habits. And, the Canadian dollar is cheaper than the US dollar.
The tax’s dramatic impact may have more to do with reactions before and after the announcement.
“Knowing the looming deadline, it is likely many foreign buyers pushed their timelines forward to make sure they closed their purchases before being subjected to the tax.“
It is possible that, even if there is an impact, it will be in the market for expensive homes, places that are appealing to people with significant wealth. The effect may be contained.
Opinions and analyses are necessary. Eventually, data will reveal the reality. That’s true for Vancouver. It’s true for Seattle.
The tax was imposed in July. Vancouver’s sales were down 33 percent in September. If there’s an effect, we’re probably already experiencing it. We’ve heard anecdotes from the high-end market on the Eastside.
Gudell points out that Vancouver’s unaffordability happened with only 5 percent (to possibly 15 percent) of sales going to foreign buyers. Knowing Seattle’s percentage would be an interesting comparison.
Regardless of speculations and prognostications, there are opportunities for those in the industry. Zillow just launched a resource center for Chinese buyers looking to buy in the U.S.
We’re interested in many opinions and analyses. Do you agree? Do you disagree? If you’re in the industry, are you already seeing data that suggests a shift?