Seattle House Buyers

How difficult is it to be a prospective buyer in Seattle's housing market? It is not going to get easier...

Vancouver’s housing prices are actually the same, if not more expensive than the most expensive neighborhoods in San Francisco and Silicon Valley (we don’t talk about that a whole lot because they’re in a different country, and the economics at play in Vancouver aren’t necessarily the same economics driving US West Coast housing prices).  The average house price in Vancouver in May 2016 set a new record at $1.51 MILLION Canadian Dollars.  That was up 36.9% year over year.  If you already own a home you love the appreciation.  However, there is no quicker way to increase the socio-economic gaps between classes than to have a housing market increase this rapidly.  To put a lid on demand, Vancouver initiated a 15% tax on foreign buyers.  One of the biggest reasons for Vancouver’s housing appreciation has been the influx of Chinese money.  But with a new tax in Vancouver deterring those buyers in order to slow down the rate of appreciation, those buyers are now taking a closer look at Seattle.  According to Juwai.com, searches by Chinese home seekers in Seattle have more than doubled since Vancouver initiated their tax.  Searches in Vancouver by Chinese home seekers have been cut in half. 

Demand for Seattle real estate just increased thanks to our neighbors to the north.  This is going to help drive Seattle housing prices even higher in 2017. 

Read the full story of what’s going on here:  http://www.seattletimes.com/business/real-estate/seattle-becomes-no-1-us-market-for-chinese-homebuyers/?utm_source=referral&utm_medium=mobile-app&utm_campaign=ios

Happy Investing!

Today's blog courtesy of Kyle Bergquist, Guild Mortgage

Asian Investors

Dan Shin, real estate attorney with Inslee Best in Bellevue, spoke last Friday at Chicago Title's 2016 Regional Outlook class for real estate professionals. His topic was on foreign investors from Asia, particularly focused on the Chinese, Korean, and Canadian experiences.

Shin's family with Korean and Chinese backgrounds were immigrants to Canada, before he moved to the US. He explained many of the reasons why Asians were attracted to Canada, specifically due to the immigrant investor programs that granted permanent Canadian residency at the price of a five-year $800,000 interest-free, government-guaranteed loan, with no requirement to start or invest in a business. That program was terminated in 2014, and triggered a search by Asians looking for a safe haven to invest in real assets.

Currently, China, the world's second largest economy, holds $4Trillion in US currency. They are the largest holder of US treasuries, but many Chinese are looking for better returns by investing in real assets. Their own stock market has become increasingly volatile, while their economy is making a painful adjustment from an exporter to more domestic consumption.

A very popular 2013 Chinese romantic movie "Beijing Meets Seattle" sparked interest in the city of Seattle, just as the Canadian immigration program was winding down. Seattle-Bellevue housing prices are still comparatively inexpensive for Asian investors, in contrast to other world cities like Los Angeles, San Francisco, New York or London.

In addition, Seattle boasts a higher quality of life, with clean air, and good schools. It is an attractive market for foreign investors looking to mitigate their geopolitical risk and diversify or preserve foreign wealth.

The USA's EB-5 Visa program is now attracting a majority of Asian investors. The EB-5 Visa program provides a separate immigration visa for foreigners who invest capital and create full-time employment for US workers. 10,000 visas are awarded each year, with 85% going to Chinese investors. The program capped out for the first time in August of last year,

This foreign investment is a great driver of the US economy,generating over $13 billion in investment since 2008, and creating well over 29,000 jobs. EB-5 is exploding in the Seattle metro area, and a lot of big commercial, governmental and residential projects are being funded by Chinese investors.

A savvy investor will want to keep an eye on this trend for the Seattle real estate market. It will only be getting bigger!

Happy Investing!

Foreign Investment in Seattle

Another great training I attended last week was a clock hour class sponsored by Chicago Title that was a Regional Outlook for 2016. Featured speakers were Mike Appleby with Chicago's Builder Division in Snohomish county; Dan Shin, real estate attorney specializing in foreign investors from Asia; and Jennifer O'Neal, a cultural anthropologist specializing in foreign cultures.


There were several surprises to me in the content of this class:

• The Seattle metro area may very well be the #1 job market in the country, with a historic all-time low of 3.7% unemployment
• The Seattle area is projected to add over 1.2million people in the next 20 years
• Increasing the supply of buildable land, and dealing with water rights are two of the top issues addressing this population growth
• Seattle is the third most congested city in the US; we are #9 on the list of most well-educated states. Yet, the University District was recently named the most affordable, walkable neighborhood in the US.
•  The residential construction industry is the fifth largest local employer, ahead of Amazon, Starbucks, Nordstrom, and Costco.We are at an all-time high for the local construction industry.
• Zillow lists Seattle as the 2nd hottest residential market in the country, with prices estimated to rise 5% in the coming year. We had perhaps the fastest home price increases in the country in 2015.
• 40% of all Bellevue residents were born in another country
• 56% of area sales - and 40% of high end home sales - were to foreign investors, mostly Asian.
• The average college student debt is $35,000.
• As credit has tightened, an additional 5.2million people did not qualify for mortgages.
• One-third of all homebuyers now pay cash for their homes. 

Dan Shin's presentation was all about the explosion of Asian investment in the Seattle market, and it was fascinating. I will blog about that tomorrow.

Happy Investing!

• 
  

Good News Bad News

We are enjoying the greatest economy here in the Puget Sound area. However inadequate transportation planning could cut it short. There are other dark clouds on the horizon as well.

Jon Talton recently outlined a number of macroeconomic concerns in his January 30 article for the Seattle Times. China and other emerging economies dependent on Chinese investment have been struggling; oil and commodities prices have been collapsing; tech stocks may be overvalued; and there is trouble in the manufacturing sector, often a precursor to economic downturn.

The NY Times reported recently that American businesses are hoarding $1.9 trillion as a hedge against future economic turmoil.

While our tech industry has buoyed our local economy, other markets dependent on housing or manufacturing have been left behind in an uneven economic recovery. But there are several other concerns in Seattle's economy. Venture capital that fuels local tech start-ups actually declined in the fourth quarter of 2015. Boeing's employment numbers have dropped in 2015 to 79,238 employees versus more than 86,000 in 2013. Seattle risks overbuilding in its hot commercial market. Global economic slowdown has already impacted rail traffic dependent on coal and oil, and could also have significant impact on the new ports alliance between Seattle and Tacoma.

Chris Mefford, president of the research group Community Attributes, expects the metro Seattle economy to grow in 2016, albeit slower than in the past. Robert Kiyosaki has predicted a big crash in the national economy in 2016. Jason Dimond of JP Morgan Chase dismisses this possibility. The Federal Reserve puts it at a ten percent possibility; while Citigroup puts the chances at 65%.

What are you doing as an investor to prepare yourself?

Happy Investing!