Since Vancouver initiated a 15 percent foreign buyers real estate tax we’ve been wondering if Seattle would become more popular with investors from China. First, we heard about a jump in search traffic. Next, we heard anecdotes about agents shifting their marketing and fielding queries. Now, Bloomberg is reporting a surge in sales, particularly on the Eastside.
“About half of the homes sold in Seattle’s suburbs are going to Chinese buyers, with many of the transactions requiring the use of interpreters, international banks and multiple escrow deposits, according to Dean Jones, chief executive officer of Realogics Sotheby’s International Realty.“ - Bloomberg
As we’ve mentioned before, even though those of us in the area see Seattle’s market as unbelievably hot, it may get much hotter because investors outside the area see Seattle as inexpensive. Look at the Bay Area, and of course Vancouver, and see that our houses are more affordable. Add in our growing economy and we become an attractive package for investors. We see traffic. They see return on investment.
A check of Zillow’s median house values shows Seattle at $611,500, King County at $518,400, and Bellevue at $743,500. At the same time, San Francisco is at $1,113,600, and San Jose is at $840,100. The benchmark price for a detached home in Vancouver, BC (not exactly the same as the median house value, but an approximation) is $1,139,592 (USD), down from the $1,190,612 from before the foreign buyers tax was initiated. If you thought the prices would gravitate to some norm, and given the choice, where would you put your money? Most of us who have a home here have already made that decision. Add in an existing 15% growth in our markets and our real estate can look much more attractive, even if it isn’t occupied.
The trend may be difficult to quantify because data on buyer identities is difficult to collect. Maybe the effect won’t be strong, as Zillow’s Chief Economist asserts. If, half of the house sales in the suburbs are going to Chinese buyers, however, then increased demand without an increase in supply should increase prices. That may be hidden in a continuation or an acceleration of our current price growth. Stay tuned.