Chinese money is pouring into Seattle and making homes crazy expensive
With China’s economy slowing, a flood of money is trying to find its way out of the tightly controlled mainland economy. And while you might not pay much attention to the ebbs and flows of international capital, you should — especially if you’re trying to buy a house in certain West Coast markets.
An excellent story in the Wall Street Journal suggests that some of that money is now pouring into Seattle, putting upward pressure on home prices in a market that already has some of the least affordable mortgages in the U.S., according to Zillow. By some measures, it’s the most expensive market in the country outside California, another popular destination for Chinese homebuyers.
Chinese real estate investment is increasingly influential across the country. A report last year from the Asia Society found that Chinese buyers spent at least $93 billion on U.S. residential real estate between 2010 and 2015. Chinese residential real estate investments grew at around 20 percent a year over that period. Chinese buyers bought about $29 billion in U.S. homes in 2015, the Asia Society said, making China the largest foreign source of residential home purchases.
This inflow of foreign capital can have real impacts on domestic buyers.
Just ask the folks up in Vancouver, B.C., Canada. A yearslong influx of Chinese money has driven housing costs sharply higher there, making the coastal city one of the least affordable cities on earth.
Officials in the province of British Columbia enacted a 15 percent tax on foreign buyers last year in response to growing discontent among those priced out of the market. That tax, along with 1 percent tax levied by the city of Vancouver on empty houses — aimed at foreign buyers who use houses as investments rather than residences — seems to be slowing the surge of cash into Canadian real estate, and diverting it south of the border.