Foreign buyers overlooking Vancouver, heading to Seattle at 'frenetic' pace
Chief economist says a foreign buyers tax would be likely to go to court if implemented in U.S. city
Seattle hasn't historically been known as a hotbed for foreign investment, but real estate experts say that home sales there have seen a dramatic shift upward since Vancouver brought in a foreign buyers tax.
"A lot of people who were looking in Vancouver are automatically looking further south now to Seattle," said Matthew Gardner, chief economist with Windermere Real Estate in Seattle.
"(There's) no question there's a knock-on effect given your tax situation relative to foreign buyers … frenetic is the best way to put it."
In August 2016, the province introduced a 15-per-cent-tax on foreign home buyers in Metro Vancouver in response to the region's skyrocketing housing prices.
Seattle is one of the fastest growing real estate markets in the country — Gardner said more than 1,000 people are moving there each week, the majority leaving California where home prices are at record highs.
He said that, of all sales to foreign buyers, half are to people from Asia.
The recent influx of foreign buyers has become a hot topic among residents as the impacts of that growth and change are felt.
"I call it the Loch Ness monster or Bigfoot of real estate," said Roger Valdez, director of Smart Growth Seattle, a land use advocacy group.
"When people see prices go up, and there's lots of money pouring into the city, and new people are coming in, there's a kind of angst that kicks in," said Valdez.
"People are worried. They are afraid of the construction. They are afraid of the growth. And, frankly, some of them just want it to stop."
Sales data released Monday showed the average price of a single detached home climbed 17.6 per cent to $735,000 US from $625,000 at this time last year.
By comparison, the Real Estate Board of Vancouver released new numbers in September that showed the benchmark price for a detached home in Metro Vancouver was $1,617,000.
Foreign buyers tax 'difficult to implement'
Talk of adapting Vancouver's foreign buyers tax has escalated right alongside the city's real estate prices.
Council member Lisa Herbold wrote a letter to the City Attorney's office in June asking whether similar measures could be brought in to address what she called "upward pressure being caused on home prices by this influx of investment."
The response was a clear no.
In the state of Washington, the state legislature would be responsible for this type of real estate taxation. Similarly, in B.C., it wasn't local governments that brought in the foreign buyers tax, it was a provincial government move.
"Unless we start knocking off fairly large chunks of the constitution, it's going to be very difficult to implement a foreign buyers tax," said Gardner.
"If they try and implement it I guarantee it will go to court."
But Valdez says the debate over whether Seattle will follow in Vancouver's footsteps and implement a foreign buyers tax is far from over.
"Our council has been quite the outlaw when it comes to state law. I wouldn't be surprised to see them pull something like this, and follow Vancouver's model if they can."