Foreign buyers are leaving Vancouver en masse, instead heading to cities like Seattle and Toronto to invest in real estate, according to numbers provided to Global News from Chinese realty website Juwai.com.
Juwai.com is “where Chinese find international property” according to their website. They claim to have over 2.4 million real estate listings across 58 countries and have for a long time, marketed Vancouver to their clientele as an attractive place to purchase homes.
But the allure of Vancouver may be fading, according to numbers from the company that suggest there was an 81 per cent drop in buying inquiries in Vancouver in August compared to August 2015.
The recorded drop comes the month after a 15 per cent foreign buyers tax was introduced in Metro Vancouver to thwart off the foreign demand that has helped to fuel an unprecedented rise in home prices across the region.
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The demand may have shifted south of the border and to other cities across the country, according to Juwai.
Seattle property searches on the site grew by 143 per cent year-over-year in August, making it the third busiest month in the last three years for number of inquiries in the city.
In Seattle’s King County, the median home price increased 11 per cent to just under $500,000 in August, according to Northwest MLS.
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Juwai said Seattle is the number one city in North America for Chinese buyer inquiries. The U.S. National Association of Realtors reports Chinese buyers bought $1.6 billion worth of real estate in Washington state in 2015. That’s out of $27 billion spent across the country that year.
In comparison, data from the B.C. government found that international buyers invested $1 billion into B.C. real estate over five weeks from June to July.
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Foreigners hoping to purchase in Canada are now looking at Toronto, Calgary and Ottawa.
Toronto saw a 142 per cent increase in property inquiries in August compared to 2015, according to Juwai.
“Vancouver has been losing local and overseas buyers all year,” Matthew Moore, president of the Americas for Juwai.com, said. “The shift is towards cities with similar appeal but lower entry prices.”
He added that August was the single-highest ranked month for searches in Toronto in the last three years.
Tom Gradecak of Vancouver’s Westside Realty has multiple properties on the market listed for over $20 million. A foreigner purchasing a home at that price would incur a $3 million tax on top of the existing Property Transfer Tax.
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Prior to the tax, he said the majority of interest for a home at that price came from foreign buyers.
“We definitely noticed the slowdown, there’s no question,” Gradecak said.
He suspected that the proportion of foreign buyers on the Westside was as high as 25 per cent, much higher than the data provided by the provincial government.
He now says his wife has an American client who wants to sell his downtown penthouse because “he doesn’t feel welcome.”
“He brought a tech company up here from Silicon Valley… and moved a bunch of employees up here, and he’s basically saying that he’s out of here. He wants to sell his penthouse and likely move his business back down south.”
West Vancouver realtor Brent Eilers says he too has witnessed a “dramatic drop.”
According to Eilers, he has a waterfront property currently listed that has seen a little interest from offshore buyers. Had it been listed in May, he said, buyers would be bidding at over the asking price. Now, they’re asking how much under the asking price they could get it for.
“Foreign buyers are pissed off right now.”
MLS sales data obtained by Global News for a selection of homes sold under asking across Burnaby, Richmond, and Vancouver over the last 10 days show price drops between 3.5 and 20 per cent.
READ MORE: Two-thirds of B.C. residents say foreign ownership tax won’t cool real estate market: poll
Sotheby’s International Realty Canada reported this week that Toronto is set to lead Canada in the number of $1 million-plus residential sales this fall.
The city experienced the greatest year-over-year gains in sales over $1 million during the first half of 2016 with a 65 per cent increase in sales volume. Vancouver grew by 26 per cent.
“The two cities that have been at the forefront of the Canadian real estate market have been Toronto and Vancouver, and we are going to see a clear divergence between their performance this fall,” Brad Henderson, president and CEO of Sotheby’s Canada, said in a statement.
“Vancouver’s record-setting sprint will return to a more moderate pace, but Toronto’s market cadence is set to accelerate.”
While the long-term effect of the foreign buyers tax remains to be seen, evidence shows offshore money may be on the move elsewhere, but even Moore admits Juwai’s data may be premature.
“There can be big variations in the data from month to month, so trends sometimes aren’t truly apparent until after six, 12 or even 18 months. Looking at a short period like this may not give us an accurate view of long-term trends,” Moore said.
The B.C. government is expected to release more data on the impact of the foreign buyer tax on Metro Vancouver real estate next week.