Photo: Edmund Tse/Flickr
Chinese homebuyers may not be redirecting their house hunting efforts to Seattle, after a foreign buyer tax was implemented in Metro Vancouver late last year.
Despite many predictions of a surge in Chinese homebuyers focusing their interest to Seattle’s housing market, Senior Economist of the real estate listing site Zillow.com Dr. Svenja Gudell, says that hasn’t been the case.
“It’s been pretty steady in terms of viewership since the tax,” Gudell tells BuzzBuzzNews. “We concluded there wasn’t a meaningful impact by the tax at least to drive Chinese traffic. And having said that we’re very keenly aware that there’s a lot of Chinese interest in the Seattle market,” she adds.
In August 2016, the BC government enacted a 15 per cent foreign homebuyer tax in Metro Vancouver in an attempt to cool one of the nation’s hottest housing markets.
After the tax was introduced, the provincial government observed a drop in foreign buyers in Metro Vancouver, as they only made up three per cent of residential real estate sales in October 2016 compared to just over 13 per cent of sales from June to August 2016.
Many West Coast markets in the US, including Seattle, have been hot spots for Chinese homebuyers, according to Zillow who published data last week on Chinese buyer activity in Seattle.
But according to the company’s analysis of its data, foreign buyers’ interest in Seattle’s housing market didn’t spike at all after the introduction of the tax.
Researchers first analyzed visits to homes nationwide listed for sale on Zillow.com from both China and Brazil throughout 2016.
Knowing that many Chinese buyers do invest in Seattle, Zillow chose Brazil as a control group, as the groups of home shoppers are similar in size within their respective countries. Many Brazilians focus their home search in Florida which also made it a good choice, according to Zillow.
From its data, Zillow found there was no increase in the number of Chinese shoppers in the US market in the weeks after the foreign buyer tax was implemented. Instead, the trend remained steady for both Chinese and Brazilian shoppers visiting for-sale homes across the globe.
It’s not clear what kind of housing Chinese buyers are targeting in Seattle but upon doing research with real estate agents, Gudell says Chinese buyers don’t usually settle for conventional homes in most markets.
“They tend to be interested in new construction and more often at the higher-end of the price range,” she says.
Zillow also analyzed the number of site visits to homes listed for sale from shoppers in China and Canada in the state of Washington.
In the months after the Vancouver tax took effect, the number of Chinese visitors to Washington State home listings actually grew slower than the number of Canadian visitors, adding to Zillow’s argument that the Vancouver tax had no effect on Chinese traffic to Seattle.
At the beginning of this year, the Chinese government began cracking down on currency exchange, enforcing a yearly conversion limit of $50,000 USD and adding stricter rules where proof is needed for what the funds will be used for.
In its report, Zillow notes they haven’t seen any evidence of these new regulations impacting Chinese home shopping behaviours in Seattle but Gudell says it’s more likely to have an effect than the influence of Vancouver’s foreign buyer tax.
“There could potentially be a future impact there and I do think that the potential impact there is larger than a potential impact from the Vancouver tax but we haven’t seen any meaningful shifts quite yet,” says Gudell.