Photo: Atomic Taco/Flickr
It has been 15 months since a foreign-buyer tax was implemented in Metro Vancouver and Chinese buyer inquiries for the region haven’t collapsed, says Juwai.com.
Instead, inquiries remain flat but it appears the levy is working to push some Chinese buyers south of the border to Seattle, according to the international listing website.
“Vancouver’s tax is working by driving a share of buyers to other cities, especially Seattle. It has taken the froth off of the top,” Byron Burley, Juwai.com Vice President, tells BuzzBuzzNews in an email statement.
Juwai.com is a China-based real estate search site that allows homebuyers in the country to view property listings spanning 89 countries.
According to Burley, currently Chinese buyer inquiries are neither up or down in Metro Vancouver but are rather “flat as a pancake.”
In August 2016, the foreign-buyer tax was introduced in the region to cool red-hot sales activity and stop further erosion of housing affordability.
Immediately following the levy, the amount of foreign buyers involved in residential real estate transactions in Vancouver dropped from 13.2 per cent between June 10 to August 1, 2016 to 0.9 per cent between August 2 to August 31, 2016.
However, Burley says Chinese buyer inquiries in Metro Vancouver haven’t significantly declined or increased since the levy was implemented. In the first half of 2017, Chinese buyer inquiries increased 8.7 per cent compared to the same period in 2016.
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“There is the same number of Chinese buyers in Vancouver in the first half of 2017 as in the prior half — and indeed as in the half year before that,” says Burley.
But are Chinese homebuyers turning to Seattle and other North American cities to avoid Metro Vancouver’s foreign-buyer tax?
According to Burley, Juwai.com receives more inquiries from buyers who are open to searching for property in more than just one city.
“Our team in Shanghai gets more inquiries now from what we call ‘and-or’ buyers. They say they want to look at properties in Vancouver ‘and’ Seattle or ‘and’ Toronto,” says Burley.
He notes that 50 per cent of Chinese buyers on Juwai.com begin their hunt for a home without knowing which city they want to purchase in.
“When these uncommitted buyers compare Vancouver prices plus the tax to what they can get somewhere else, sometimes they decide it’s not worth it. If they can get a similar home and lifestyle for less, it’s pretty appealing,” says Burley.
Online US real estate search site Zillow says there’s no method to measure if Vancouver’s foreign-buyer tax is pushing Chinese investors into Seattle because it’s difficult to track sales purchased by a buyer abroad.
Currently, Seattle is one of the US’s hottest housing markets, but fierce demand is bumping up against limited supply.
“Inventory itself remains incredibly constrained relative to the demand for homes. And a very small fraction of that demand would be coming from purely investment-purpose foreign buyers,” Skylar Olsen, senior economist at Zillow, tells BuzzBuzzNews.
In September, inventory was down 32 per cent year-over year in the city.
Even if foreign buyers were opting to invest in Seattle over Vancouver, Olsen says the amount of potential vacant homes in the city would be a minor factor contributing to Seattle’s skyrocketing prices.
“In terms of someone buying the home and leaving it vacant, that would be a very small fraction and by no means driving the meat in everyday movements of the Seattle market.”