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Foreign Home Buyers Set Sights on Seattle

December 4, 2014

Foreign workers, many from China, are coming to Seattle and western Washington in increasingly larger numbers --and they're looking for homes. How a similar influx in Vancouver, BC, has made parts of that city unaffordable for Canadians, and why some worry the same thing could happen in Seattle.

Jenny Cunningham: This is a 1.5 million dollar house. A 2 and a half million dollar fixer. A five million dollar tear down. An 18 million dollar condo.

Vancouver Sun columnist Barbara Yaffe give a tour of her neighborhood where town homes sell for more than $1 million.

Barbara Yaffe: On the west side of the city a detached home is 2.3 million dollars on average.

Cunningham: Runaway real estate columnist Barbara Yaffe often writes about from her home office, in one of the world’s priciest cities.

And now it is time for a quick quiz. What is the most expensive city in North America? If you answered New York, San Francisco or LA, thank you for playing! The most expensive city in North America is Vancouver, British Columbia.

Cunningham: Yaffe, a business columnist for the Vancouver Sun doesn’t just chronicle unaffordable housing, she lives it. A year ago she bought a two bedroom townhouse for just over a million dollars.

Yaffe: The median household income in Vancouver, so that is usually two earners is about 72 thousand a year. It is not high compared to Canadian standards and it is not high compared to the house prices that people have to confront here.

David Ley:  The real estate sector largely denies that offshore investment t is driving the market in neighborhoods like the wealthier Westside of Vancouver.

Cunningham: David Ley is a professor at the University of British Columbia and the author of the book Millionaire Migrants a history of rich Asians who have moved to Vancouver, driving up real estate prices.

Ley showed us a neighborhood called Oakridge – the first place wealthy immigrants from Hong Kong settled in Vancouver in the 1990’s. Now there is a much bigger influx from mainland China where political unrest has spurred millionaires to move money, and sometimes themselves, to a safe place like Vancouver.

That inflow of wealth has made Vancouver so pricey, some well-heeled Chinese investors are looking for better values in a few key cities. And Seattle is one of them.

Frank Gong, an enterpreneur from Shanghai, recently bought a home in Bellevue.

Frank Gong: A lot of friends they say, “Oh, you will come to the US! There are lots of guns!” I say, “You watch too much Hollywood movies! It is very peaceful!”

Cunningham: On the day we met Frank Gong he bought a house! This young entrepreneur plans to move from a Shanghai condo to this 1.9 million dollar home in Bellevue with his wife and daughters.

Gong: This is also the main reason we choose Bellevue. We plan to move here because of the environment for living. But also we are considering the children’s education.

Cunningham: Gong owns a company that makes hardwood floors. In America, he plans to open a different business. And that’s not the only way he’s creating American jobs.

Local developers Christine Lee and her husband Omar are building a huge hotel and condo project in Tukwila, funded by the Lees and people like Frank Gong. The E-B5 Visa gives foreign citizens a way to get a green card in exchange for an investment of 500 thousand dollars in a development that creates 10 American jobs.

Christine Lee: Because all these people what do we pay to have them come into the United States? Nothing! Zero,but we help our economy so it is a fantastic program!

Cunningham: Local visa projects and lower home prices aren’t the only reason people from China are checking out our region. Seattle is lovingly portrayed in a movie called Beijing Meets Seattle.

Because of the popularity of the movie <em>Beijing Meets Seattle</em>, Seattle is seeing a growth in visitors from China.

It’s such a big hit that travelers from China just became Seattle’s largest group of overseas visitors. Guess we won’t tell them most of the movie was filmed in Vancouver, which is also experiencing a wave of travelers from the far east.

Stephen Pearce, Vice President, Tourism Vancouver: We’ve seen year over year growth in the double digits. We’ve gone from 60 thousand Chinese staying overnight to a quarter of a million this year.

Cunningham: Reinforcing the notion that when your town becomes the darling of the global rich, there will be winners and losers.

The Hotel Georgia is winning in two ways. Visitors from China love the luxury rooms and longtime locals are snapping up condos in a new high rise attached to the hotel.

Developer Bruce Langereis shows reporter Jenny Cunningham the view from an $18 million penthouse condo in Vancouver.

Bruce Langereis, President, Delta Land Development: We are now seeing people selling their home to offshore buyers and moving into our urban ranchers, our condos.

Cunningham: Developer Bruce Langereis…let’s put him in the winner’s column.

Langereis: China was going this way. And North America was going this way.. and thank you very much!

Cunningham: In the economic downturn the buyer of this penthouse couldn’t complete the transaction. Today developer Langereis can relist with confidence at 18 million dollars.

The view from a penthouse in Vancouver, priced at 18 million dollars.

Langereis: That feeling that Chinese are coming in to buy has only strengthened the market. Not necessarily driven up prices.

Cunningham: Tell that to this guy. Steve Kerr owns a construction company, but he can no longer afford his hometown.

Construction company owner Steve Kerr(on left) working on a multimillion dollar home in Vancouver's Shaugnnessy neighborhood. Kerr says he moved out of Vancouver because he can't afford to buy a single family home in his hometown.

Steve Kerr, Owner, Riverwood Homes Ltd.:  I purchased a home in Ladner which is probably about 40 minutes from the downtown core. Yeah, it is a tricky one. Because the people who are buying and building these multi million dollars homes is what keeps me employed.

Cunningham: A few blocks away, Caroline Adderson is documenting the disappearance of old Vancouver in a forest of sold signs. When orange plastic netting goes up, another home is about to fall.

More than four thousand single family homes have been demolished in five years—Adderson puts them on her Facebook page, Vancouver Vanishes.

Adderson: I bought a house in the neighborhood 15 years ago and that neighborhood barely exists. They build a giant mansion that would only be attractive to overseas investors.

Cunningham: It wouldn’t be so bad, Adderson says, if somebody lived in it.

Many homes in Vancouver are vacant. This formerly grand home once owned by a movie theater pioneer is burned, boarded up and for sale, most likely as a building lot.

Adderson: On my street there are 6 empty houses of this size and the effect is this hallowing out of the neighborhood.

Cunningham: Is there a lesson for Seattle?

Adderson: Don’t do it! Stand up.

Cunningham: Throughout Vancouver it’s estimated that about 7 percent of homes are vacant, many owned by speculators who are betting that eventually a millionaire, foreign or domestic, will want to build a new house on the lot. And as Vancouver takes its place on the global stage, Steve Kerr is going along for the ride.

Kerr: For sure it was difficult seeing it change, but that is what happens when you live in one of the most beautiful cities in the world, right?

 

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Jenny Cunningham

Jenny Cunningham’s favorite kind of story is the one she hasn’t done before. Whether it’s reporting for TV or writing for magazines, travel or tribulation, Cunningham likes discovering something new. At KCTS, Cunningham has covered everything from the history of Hanford’s race to build the atomic bomb to biodynamic wine to opera supernumeraries. Cunningham has been honored with television journalism's most prestigious awards including Emmy Awards and the Edward R. Murrow Award for Best News Series in America.

As a writer for magazines and newspapers Cunningham’s features have appeared in publications including the Irish Times, Sunset Magazine, Seattle Magazine, the Vancouver Sun, The Oregonian and Wine & Spirits Magazine.

Cunningham has a master’s degree in Broadcast Journalism from Northwestern University and she graduated cum laude from USC with a BA in Journalism and a BA in Theater

More stories by Jenny Cunningham

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Overall the video is very light on facts regarding root causes and it would be great to see more specific information on the many ways that our local laws and policies work in favour of speculative investors and large developers and place median-income home buyers at a disadvantage. The infamous Expo lands deal is an excellent place start as it paved the way to the investor-oriented development typology that has resulted in our current affordability crisis.

It's not hard to find the reasons we're faced with such dramatic housing problems in Vancouver. It's equally easy to find measures other cities have taken to prevent such a dire situation (especially in continental europe). (Even Hong Kong has now implemented policies to curb speculation in their real estate market!) Seattle, don't sleep-walk into this like we did.

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