Vancouver housing tax pushes Chinese to buy $1-M Seattle homes
SINCE Vancouver announced a tax on foreign property investors, Chinese investors — the largest pool of foreign capital — looking for a place to put their cash, are forced to look elsewhere, pushing demand to cities such as Seattle and Toronto.
Vancouver, which has seen detached-home prices double in a decade, joined areas including Australia and Hong Kong in taking steps to slow housing demand after an unprecedented surge of foreign investment. Chinese buyers, in particular, are accelerating purchases overseas, spurred by a weakening yuan, rising prices at home and the perceived safety of real estate. They’re also venturing farther afield as costs soar in some of their favored markets.
Home- purchase inquiries from China have jumped in Seattle and Toronto since the Vancouver tax was announced, according to Juwai.com, the country’s largest overseas property Web site.
For Vancouver investors, Seattle is a lure because it’s a waterfront city just a few hours away by car. It’s also more affordable than other West Coast destinations. Toronto, as one of the world’s financial capitals, already has an established base of foreign investment in condominiums and a large Asian population.
“Chinese money isn’t going to sit and wait,” said David Ley, a Vancouver-based professor at the University of British Columbia’s Department of Geography, who focuses on housing. “Investors are going to find another city,” and Toronto and Seattle are the top two contenders, he said.
RISING SALES
While there are no figures specifically showing purchases made by offshore buyers, brokers say demand in Seattle and Toronto has been robust, particularly for the high- end properties Chinese investors tend to favor. In Seattle, about 12% of all homes this year sold for at least $ 1 million, double the share over the last decade, according to brokerage Windermere Real Estate. Single- family home prices in King County, where the city is located, jumped almost 15% in October from a year earlier, data from the local Realtors association show.
The average price of a Toronto home rose 23% in November from a year earlier, while sales soared almost 17%, the local real estate board reported Dec. 2. In Vancouver, meanwhile, sales have plunged since July and were down 37% last month compared with the prior year.
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. That’s up from about 30% last year, he said.
“This is Vancouver 2.0,” said Mr. Jones, who lived in the Canadian city about two decades ago, when the capital flow from Asia started to accelerate. “A lot of the same motivations and goals are being replicated in Seattle.”
Regardless of where the unprecedented flow of money out of China and Hong Kong goes, it’ll find a home as Asian investors look for a safe place to invest their growing wealth.
“The key point for Chinese investors is still, ‘Let’s move that money out of China, you never know what will happen to it,’” said Gordon Houlden, director of the China Institute at the University of Alberta. “So they’ll go to Seattle or Toronto.” — Bloomberg