Real estate data suggests that the number of foreign purchases in the Puget Sound region is increasing. An uncertain but growing portion of homebuyers appear to be headed this way from Vancouver, British Columbia, in the wake of a recent —and unfavorable — tax change.
In a Bloomberg article on the “Seattle pivot” released December 2016, Realogics Sotheby’s International Realty (RSIR) broker Lili Shang attributes a surge in Seattle purchases to Vancouver’s 15-percent tax on foreign homebuyers, enacted in August 2016. The tax is meant to help cool Vancouver’s soaring real estate, but the outcome of the tax has pushed demand to cities like Seattle and Toronto — specifically from Chinese homebuyers and investors.
“The tax was the trigger of this new wave of investment now coming to Seattle,” Shang told Bloomberg. “Why pay more for the same thing?”
Shang has grown even more confident that the housing demand has shifted south of the Canadian border. “I think people realize that Vancouver is no longer a fun place to invest,” she told the Wall Street Journal in February.
The tax exacerbated a trend that had already begun by June of last year: In the second half of 2016, Vancouver witnessed a year-over-year reduction in homes sold. By the year’s end, the number of sales greater than CN$1 million was down by 16 percent compared to 2015, according to Sotheby’s International Realty Canada’s (SIRC) “Top Tier Report.”
Further supporting the notion of the Seattle pivot, data from international property portal Juwai.com includes statistics from recent surges in Chinese inquiries on its site for Pacific Northwest and Toronto real estate. The data also clearly shows a steep drop in Vancouver inquiries. In fact, for the second half of 2016, the average monthly number of Vancouver home searches by Chinese declined by 43 percent, while Seattle witnessed an average increase of 66 percent. This percentage coincides with higher sales in some of the most affluent neighborhoods on Seattle’s Eastside that are popular with Chinese buyers: Bellevue, Medina, Hunts Point, Clyde Hill, and Yarrow Point. The Eastside saw its number of sales increase by 12 percent in October, 54 percent in November, and nearly 20 percent in December when compared year-over-year.
This flip-flop in regional preference has been dramatic. Just two years ago, Chinese wealth-reporting group Hurun showed Vancouver as the third-ranked destination for wealthy Chinese immigrants with Seattle ranking fifth. By fall 2016, those rankings reversed, with Seattle placed at No. 3 and Vancouver at No. 6.
Of course, not all new buyers in Puget Sound are coming directly from Vancouver. Some foreign buyers with plans to invest in Vancouver real estate are considering Seattle as a compellingly cost-effective and livable alternative to Vancouver. According to Matthew Moore of Juwai.com, “The secret is out. Seattle’s a great place to live. Even the Chinese know it. There is no question that the tax in Vancouver is [shifting] some buyers to Seattle. How long will it go on? That depends in large part on what happens north of the border. If Vancouver stabilizes or comes roaring back, you could see interest in Seattle decrease.”
We don’t see that happening any time soon. Job-related relocations generated by our tech-based economy complement the flow of new immigrants to our region, and the Puget Sound economy continues to feed the local boom. A report from Axiometrics shows Seattle having the second-fastest pace in the nation for job growth — and fifth for number of jobs added (62,500 for 2016).
RSIR Owner and CEO Dean Jones presciently spotted a plausible shift of overseas buyers from Vancouver to Seattle a while back. With this foresight, RSIR has been seeking out overseas buyers for years. Now these efforts are bearing fruit to the benefit of our ever more culturally diverse communities and, financially, to local real estate sellers and developers. In 2016, at least 30 of RSIR’s million-dollar home sales went to Chinese buyers, but even more notably, all of the firm’s top sales in Eastside neighborhoods were to incoming Chinese.
In 2013, RSIR began to take concrete steps to introduce Chinese buyers to opportunities in the Pacific Northwest, and began launching distinctive service platforms: the Asia Services Group in 2014, and the WeChat channel and Seattle Luxury Living magazine in 2015. Today, the Asia Services Group is home to more than a dozen brokers specialized in the language and logistics of Asian homebuyers. These platforms have improved accessibility and brought the Seattle story to life for thousands of recent and prospective buyers in our communities.
For more information on the “Seattle pivot,” visit rsir.com/blog.