Realogics Sotheby's International Realty Tracks Impact of Vancouver's 15-Percent Transfer Tax on Foreign Buyers; Diverts Demand to Seattle
Chinese Real Estate Portal Juwai.com Cites 86% Declines in Vancouver Searches and 143% Increase in Seattle
Realogics Sotheby’s International Realty (RSIR) released analysis today on the recently imposed 15-percent foreign buyer transfer tax of real estate in the Vancouver metro area and increased interest, most notably from Mainland Chinese, in the Seattle metro area. In the report entitled “SEATTLE: Is it Vancouver Déjà Vu?,” RSIR Research Editor William Hillis tracked home sales volumes of detached houses in Vancouver that plunged by 44.6 percent year-over-year in August  and while still higher year-over-year, average detached home prices fell 16.7 percent from July, the sharpest monthly decline in 39 years.  New listings were also down 18.1 percent from July.  In Richmond, Vancouver, and Burnaby, the number of sales fell a bit more steeply against the long-term trend: by 50 percent, according to real estate insiders.
Matthew Moore, President of the Americas for Juwai.com, a popular residential real estate search portal in China noted significant changes: “Juwai.com buying enquiries to Seattle increased by 143 percent in August 2016, compared to one year earlier. Meanwhile buying enquiries to Vancouver dropped by 81 percent during the same period, with all of that drop concentrated in the premium end of the market.”
“It’s too early to tell if this is going to be a sustained market correction or just cause for pause,” said Brad Henderson, President and CEO of Sotheby’s International Realty Canada. “The new tax is less likely to change the demand long term, but rather get priced into the market over time. Alternative cities, like Victoria, Toronto and even Seattle will benefit in the interim.”
Dean Jones, President and CEO of RSIR noted a spike in web-based traffic, property inquiries and online conversations regarding the tax. His WeChat article entitled “Seattle Need Not Fear Vancouver’s Phantom Towers,” posted on August 16th was shared more than 1,000 times on the social media platform that boasts 600 million subscribers, mostly in China. His property views on Juwai.com increased 156 percent from July to August.
“History may be repeating itself south of the Canadian border,” said Jones of Vancouver’s global arrival over the past two decades. “Savvy investors recognize the opportunity as do other stakeholders from Chinese developers to Chinese airlines—everyone agrees the Seattle area is fundamentally well-positioned. Fortunately, overseas demand is on top of our domestic housing drivers like job growth, increased population and wealth generation. The Pacific Northwest already leads the nation with median home price increases and rent growth.”
In August 2016, the median home price of a detached home in the Seattle/Bellevue metro area was $670,000, an increase of 9.8 percent year-over-year. By comparison, median prices in San Francisco at $1,106,400  and in Vancouver at $1,214,250  (US) were higher than Seattle by 65.1 percent and 81.2 percent, respectively.
“Luxury in the Pacific Northwest is still a relative bargain,” observes Jones. “In a global market, a record price can be quickly rendered a great value, especially when compared with West Coast peer cities”
RSIR reports their top pending sales in August 2016 were a $5.49 million waterfront estate in Juanita and a $4.85 million equestrian estate in Bridle Trails – both will set neighborhood price records and each were sold to a Chinese buyer. While foreign demand is significant, accounting for up to half of the luxury home sales in some popular Eastside neighborhoods, Jones says the region’s housing market is responding more so to domestic transfers and a lack of supply. According to the Department of Licensing, 18,420 out-of-state drivers obtained a Washington driver’s license in August 2016, an increase of 8 percent for the trailing 12 months from the prior year led by inbound residents from California, Oregon and Texas, which accounted for a third of the relocations. For the same period there were 416 newly registered persons from Asia (102 from China), of which 37.5 percent recorded a resident address in King County. Census data suggests Asians are the fastest-growing demographic in the region, most notably on the Eastside.
In response to increasing demand, RSIR and Tiger Oak Publications will reprint an encore edition of the all-Mandarin Seattle Luxury Living magazine this month in time for the inaugural flight of Xiamen Airlines, which will soon offer routine, non-stop flights from Shenzhen and Xiamen to Seattle – the third airline to service growing demand between SeaTac International Airport and numerous ports in Mainland China. The first printing of the popular magazine distributed 25,000 copies and generated more than 50,000 downloads on WeChat.
Jones and Ben Briggs, Executive Vice President of Briggs Freeman Sotheby’s International Realty based in Xiamen, China are also collaborating on a new Mandarin book that features Seattle entitled "Chinese Institutions’ Definitive Guide to USA Commercial Real Estate," which is scheduled for distribution by November 2016.
For more information, visit a newly launched website at www.RSIR.com/Asia-Desk.
 Brent Jang and Tamsin McMahon, “Vancouver Home Sales Hit Four Year Low in Wake of Foreign Buyers Tax,” The Globe and Mail, September 2, 2016.
 Jesse Ferreras, “Vancouver Average Detached Home Prices See Worst Slide in 39 Years,” Huffington Post Canada, September 2, 2016.
 Laura Kane, “Vancouver Real Estate Board Notes 26 Percent Drop in August,” Macleans/Canadian Press, September 2, 2016.
 July 2016 data from Zillow (http://www.zillow.com/san-francisco-ca/home-values)
 In Canadian dollars, $1,577,300.