British Columbia is considering adding a 15% real estate tax on the sale of all Vancouver area homes to foreign nationals and those purchasing from overseas. This naturally forces foreign buyers to look elsewhere and Seattle is the closest major city to Vancouver BC.
There’s no question that this tax increase would force more foreign buyers out of the Vancouver area but many did know exactly how extreme this migration would be. The national Chinese real estate website Juwai.com had a 143% increase in buyers looking in the Seattle region versus the Vancouver region from August 2015 to August 2016. Sales of homes in Vancouver drop nearly 45% in August and home prices fell nearly 17%. This was the sharpest monthly decline in nearly 40 years. New listings were also down over 18% from July 2015.
British Columbia’s government implemented the tax in order to combat speculation among foreign buyers that is fueling a surge in home prices. Sale prices in Vancouver were drastically on the incline up 30% annually before this tax went into effect on August 2, 2016. Comparatively, home prices in Seattle only rose 15% year-over-year.
Currently, it’s difficult to speculate if this tax increase will sustain the market or cause a serious housing drop. Many economists feel that the new tax will eventually get priced into the market over time, however, in the meantime, Seattle home sellers are set to benefit greatly. This is even more likely so for those in the high-end market. Juwai.com found that many of the inquiries to Vancouver homes were concentrated in the high-end or luxury market. Many Seattle economists feel that that wealth will now be transferred to the Seattle market. We are already seeing the effects of this has some of the highest priced and most recent sales were to Chinese buyers for waterfront homes and equestrian estates in Kirkland and Bellevue. Currently, foreign buyers already make up half of the luxury home sales in many parts of Seattle’s Eastside neighborhood.