Property Market Sleepless in Seattle

Despite never historically being known as a hotspot for overseas property investors, Seattle has now woken up.

Since the introduction of the 15 per cent foreign buyer tax in Metro Vancouver, many overseas property investors are instead looking south to Seattle.

Seattle is now one of the fastest growing real estate markets in the country, with more than 1,000 people moving there each week. Many from California where property prices have reached record highs, but also many foreign real estate buyers.

Recent data released for Seattle showed the average price of a single detached home climbed 17.6 per cent to $735,000 US from $625,000 at this time last year.

By comparison, the Real Estate Board of Vancouver released new data in September that showed the benchmark price for a detached home in Metro Vancouver was $1,617,000.

Seattle therefore has a long way to go if it is to reach the heady property price heights of its Canadian neighbour.

There has been talk of implementing a similar foreign buyers tax into Seattle, but according to Matthew Gardner, chief economist with Windermere Real Estate in Seattle, this is highly unlikely to happen.

Council member Lisa Herbold wrote a letter to the City Attorney’s office in June asking whether similar measures could be brought in to address what she called ‘upward pressure being caused on home prices by this influx of investment.’

The response made clear that this was not an option.

In the state of Washington, the state legislature would be responsible for this type of real estate taxation. Similarly, in British Columbia, it wasn’t local governments that brought in the foreign buyers tax, it was a provincial government move.

‘Unless we start knocking off fairly large chunks of the constitution, it’s going to be very difficult to implement a foreign buyers tax,’ said Gardner. ‘If they try and implement it I guarantee it will go to court.’

Proximity to the Canadian border and a US/Canadian mix of lifestyle, could mean that Seattle will appeal to overseas property investors interested in both the USA and Canada.

With prices only recently starting to climb and a long way to go to reach Vancouver heights, now may be the time to consider property investment in Seattle.