Vancouver Housing Tax Pushes Chinese to $1M Seattle Homes (opens in new tab)

The article does say that, but as a Seattle resident, that really does not sound right to me. As a counterpoint, this article[1] in the Seattle Times says:

Chinese money now accounts for about 55 percent of all homes purchased by foreigners in Washington, the Realtors association says.

and

“It’s definitely helped in driving prices up,” Riley said. In some parts of the Eastside, in particular, she said “we’ve had a large influx of international buyers coming in. They’re the buyer about 50 percent of the time right now.”

That's 50 or 55% in some parts of the market, not the Seattle metro market as a whole. That's a lot more believable.

[1] http://www.seattletimes.com/business/real-estate/seattle-bec...

I suspect this is supposed to read "sold in some of Seattle's suburbs" and probably refers to Bellevue (and possibly Medina) which already has a strong Chinese community and is heavily favored by Chinese investors.

At this time, the article just says "About half of the homes sold in Seattle’s suburbs are going to Chinese buyers," — excluding Seattle proper.

I've spent a fair amount of time pulling together King County Recorder's office data, and I don't believe that number unless they're all doing business as... strings that look an awful lot like names.

I saw a stat that said 40% of condos purchased in Toronto (another crazy market) were bought by speculators. Foriegn sales are even lower (sub 10%) than in Vancouver.

These laws focused on foriegners are good for scoring political points, but they don't really address the issue.

>An unusually high number of Vancouver homeowners living in multi-million dollar neighbourhoods but reporting poverty-level incomes is a red flag that needs immediate government action, says NDP MLA David Eby.

>“The focus should be quite straightforward: are you paying your worldwide taxes inside British Columbia, or not?” Eby, who represents Vancouver-Point Grey, told reporters during a July 15 press conference.

>“If you’re not you should have to pay extra in order to pay for the public services that make this real estate so valuable: the environmental controls, the policing, the court system, the schools and the healthcare.”

http://www.metronews.ca/news/vancouver/2016/07/15/number-of-...

>Documents obtained by Eby also show 29 of those homeowners have also been able to take out a mortgage. “There’s a waitress that bought a $2.3 million property. And there was a casino dealer and a cashier who bought a $1.2 million property as well. Students, homemakers and waitresses, by definition, have very low or no incomes. Is this why MacKenzie Heights and other neighbourhoods throughout the Lower Mainland are reporting incredibly low incomes, despite real estate values being so high? Are the people purchasing these $1 million homes reporting poverty level incomes for tax purposes?”

http://www.news1130.com/2016/09/27/homemakers-students-own-1...

This statement assumes that cities aren't already increasing supply. The fact is that Vancouver is building more supply than at any other time in recent memory.

There are real physical limits to creating supply. There are limits in tradespersons available. There are limits in being able to review and approve buildings and it all takes time. The city of Vancouver has already increased development fees in order to be able to hire more people to review development applications faster and build faster.

In contrast to the real and known limits of supply creation, the scope of foreign speculative demand is unknown.

What happens when you increase supply and you don't meet demand? What happens if foreign demand increases to meet the new supply?

I'll stop laughing at this when I see the ability for reciprocal investment in source countries. Will that happen?

If so, at what point should we expect the Chinese militarily to park it's boats off the coast to protect its property?

Edit: fixed a word

Note that the Buy comparison is by square meter, which is much more reasonable. Price per Square Meter to Buy Apartment in City Centre is -60% in Seattle i.e. Seattle_price = .4*Tokyo_price.

It's not like there's such a huge disparity in rent prices vs. buy prices in either city. The main reason that Rent for Apartment (1 bedroom) in City Centre comes out 61% more expensive in Seattle is that their average 1BDR is more than double the size of a Tokyo 1BDR.

You say "foreign investment" as if they're looking to develop or improve the local economy and in the process make a profit. Many Chinese buyers have been targeting foreign real estate as a way to combat the fluctuations of their local currency, which is under suspicion of government manipulation. They're "investing" because there's nothing of long-term value in local areas, so they buy foreign properties in more stable markets. Without any consideration of the effect on the people living in that market.

> when foreign people want to buy something you have, that is called an export

Local goods that are shipped to foreign locations are called exports, and they're subject to significant extra taxation. Local resources such as land, water, food and energy that are bought and taken off the market to create shortages, thus increasing the cost of living for locals (thus increasing the value of your investment at the expense of others) aren't called exports. They're called market manipulation (or market speculation, if you're being generous).

> [Various comments about housing density]

Many of these properties lay vacant, which further drives up the cost of housing in already expensive locales. These buyers often aren't targeting areas for building commercial or high-density housing. They're buying multiple houses at the middle-class level, which contributes to an already vanishing middle class. The cost of houses and apartments in these areas has multiplied by 1.5x-3.5x the original value in a very short period of time. Unbalanced inflation like this perennial issue in the US given the lack of sufficient corporate oversight. Artificial inflation (beyond currency inflation) of the cost of living should be the prime issue for any major city.

Allowing them to buy and sit on valuable land that could be developed when they have no intention of development actually prevents us from increasing housing density in these high-demand areas. That's the whole reason they're introducing this tax. As long as there's some sort of time-limited exemption for actual construction and development that will cover people building new commercial and high-density housing structures, it's exactly the sort of thing we should be doing with our rate of population increase.

> rents were more reasonable in Tokyo

It's also perniciously difficult to rent in Tokyo as a foreigner. And when moving into a new apartment, locals will often pay a move-in gift of 3x the monthly rent as a tradition from post-war shortages. Japan also has a much more advanced public transit system, allowing for longer commute times and more stable pricing. China also doesn't allow foreigners to buy land or open businesses. In any case, Vancouver's and Seattle's current unreasonable rents are a factor from external manipulation, so once we curb the foreign investors who don't develop or use property, it should become much more competitive.