Survey: Is it a good thing that Seattle becomes No. 1 U.S. market for mainland Chinese homebuyers?
By Wen Liu Sept. 29, 2016
The Seattle Times reported on Sept. 15 that Seattle had become No. 1 U.S. market for homebuyers from China, based on the number of inquiries received in recent months by Juwai.com, China’s biggest real-estate site for buyers looking in North America. The inquiries accelerated after British Columbia introduced in July a 15% tax on foreign buyers of real estate in Metro Vancouver. In dollar amount, buyers from China bought about $1.6 billion in homes in Washington in 2015, still way behind California, New York and Texas. Chinese money, however, now accounts for about 55% of all homes purchased by foreigners in Washington. Considering that on the one hand, Washington welcomes foreign investment, on the other, foreign buying helps drive up home prices for locals, here is the question:
Do you think it is a good thing or not that Seattle becomes No. 1 U.S. market for mainland Chinese homebuyers, not only in number of inquiries but also in dollar amount someday, and why?
The following are responses, in the order they were received, from some of our China hands, scholars and watchers. You are welcome to add yours in Disqus.
Bob Anderson, founding president, Washington State China Relations Council; long-time trade consultant to Snohomish County:
Based on current economic trends in China, I suspect real estate purchases will flatten out, and even decline this next year. As in all financial activities, fluctuations always occur, reflecting economic movement. I believe China is in a downward dip.
Steve Harrell, Professor of Anthropology, UW; Curator of Asian Ethnology, Burke Museum:
I think it’s a bad thing; housing prices are already so high in Seattle that only elites can afford to live here anymore. But I don’t believe in restricting who can buy homes, so Seattle just needs to figure out a way to deal with it that can preserve what affordability is left. Chinese buyers are not the only ones who are driving prices up, after all.
Gordon (Guoping) Feng, graduate student, China studies, Jackson School of International Studies, UW:
It is definitely a good thing for any city to become the No.1 destination for the international flow of money (or talent). This in-flow brings investment, people, and talent (no denying that money goes together with talent), and a prosperous image to the city. An out-flow of money, people or talent is a sure sign of recession, as cities on the Dust-belt like Detroit clearly shows.
Karl Weaver, OEM Biz Dev Director - North America & Northeast Asia, Oasis Smart SIM:
Seattle is already projected to be just like Vancouver, and that might just be fate, or Yuan-Fen as the Chinese say. We should study more what happened in Vancouver and apply solutions here, no matter if it is politically incorrect. The only real question is how much greed and corruption has already seeped into the housing boom. You cannot question what is happening now, you can only try to fix any problems occurring with regulatory constraints. You have to also look at the impact of Cloud Computing on the tech worker influx from California, actually, from China and India. A lot of Chinese and India tech labor has decided to invest in creating WA State companies, where they might previously consider Silicon Valley. We are witnessing a huge change in ethnicity demographics on the Eastside housing market and that is just a fact. Smart people from all over the World realize the value of living and working here for work-life balance. The best way to sum it up is from the 1990s movie “Field of Dreams” with Kevin Costner saying “If you build it, they will come”. Oh, yes they will. It would be interesting to measure how many foreign house purchasers are in the technology sector.
Greg Youtz, Professor of Music, Pacific Lutheran University; chair, Tacoma-Fuzhou Sister City Committee:
We've seen this before- Californians moving here and driving up prices in the '70's an '80's, now Chinese in the 2010's. Gentrification has mostly been an issue for poorer communities as middle class folks began moving back into cities. Now it's becoming an issue for the middle class competing with wealthy foreign investment. It always has been a problem, but now people with expectation of political agency are feeling the heat. Is it just economics? Or is it Karma? Or is it a recipe for a giant bubble as this new investment may or may not be permanent...?
Dan Abramson, Associate Professor, Urban Planning and Design, UW; serving on Int'l Association for China Planning:
I agree with Steve. Housing price inflation is probably the worst problem, but there are other externalities associated with this kind of speculative investment as well, depending on whether the buyers actually live in the homes they've purchased. Absentee landlordism can lead to vacant properties, poor maintenance, weak communities..., depending on how concentrated and extensive the practice is. And from what I understand, the majority of the homes so purchased are not in locations or of the type that can easily be rented or even used for AirBnB (which itself involves external costs to the community). So I would want to know what proportion of the homes purchased by distant investors (Chinese, Russian, Floridian, wherever...) are owner-occupied, and how are they distributed around the metro area? We don't have a good mechanism for tracking owner-occupancy with the purchase of properties, so taxing foreign buyers is maybe the closest proxy for that.
Carson Tavenner, Executive Director, The Tai Initiative; member, National Committee for US-China Relations:
It is a good thing. That is the basic answer. But the caveat for me is in the quality of effort put forth by both local community leaders and members and the incoming new immigrant families, to create a bridge over the difficult chasm of understanding often present -- especially at the typically high level of social class characterized by these home sales. Another issue is the fairness of the distribution of the benefits of this real estate income to many of the WA counties which should benefit from this increase in STATE wealth and not let it be focused only to the benefit of the already-wealthy in the neighborhoods in which it is found. In other words, if only King County really comes out a winner in this, there's going to be more problems statewide.
Bruce Ramsey, retired editorial writer of the Seattle Times; former editor at Asiaweek, Hong Kong:
Purchases stimulate business here, which generally is a good thing. I'm not so sure it's a good thing to attract offshore buyers who take up a new house or condo unit and then don't live in it. Empty units are an invitation for trouble. We have a hot market already, and this will increase prices. High prices are good for old homeowners who want to get out, but bad for young people who want to get in. I'm a homeowner; probably it benefits me. But on balance, I don't like it. I'm wary of having the city council "fix" it, because that group would make things worse. Probably the legislature would make things worse, too. I have little faith in regulators. I would grit my teeth and live with it.
(For more information on major events in Washington state-China relations, go to WA China Chronicle.)