The Only Hope for Seattle's Worsening Housing Crisis Is Now China


Be like New Zealand, and ban all foreign home purchases
Charles, according to the sources you've cited, when Chinese buyers are purchasing residential real estate for investment purposes, they are entering those properties in the rental market ("Those who rent out the homes can see 5 to 6 percent profit a year, he said, as the local market continues to see rising prices. “The investment return is very nice to them,” Hu said.")

Anyone entering property in the rental market is faced with the same problem: you can't make more in rental income than renters are willing to pay. So, what difference does it make whether a landlord is Chinese or some other nationality?

Also, wasn't a major premise of your prior series on this issue that these investment properties were left vacant, therefore reducing the number of dwellings available in the marketplace? Has this new reporting caused to you reconsider that theory?
One chief way to have capital controls would be to demand state income tax, and spend that money on schools and housing.

Oh and "there's no income tax here and no corporate taxes" is a huge reason why your housing market looks great to foreign investors.
@2 just because they put a place up for rent doesn't mean it actually rents to residents. Air BnB is considered a rental.

Vancouver had this problem as Chinese investors were taking inventory effectively off the market by asking for insane rents - and it doesn't matter.

They are not for rent "income." They are to park cash.

These investment homes can sit boarded up for as long as the market continues to inflate and by doing so they increase said inflation.

The mighty market will not solve this problem.
Building more mixed income MFH would fix this.

And upzoning all of Seattle arterial blocks to 6+2 MFH. Rich people don’t have to sell if they don’t want to.
My best friend is a contractor for a Chinese investment group out of Mercer Island, they have been buying up everything on the east side for the past two years paying cash 100% of the time. This is indeed adding to the "boom".
The home we rent is owned by a Chinese investor. In fact, it changed hands between two friends and we didn't even know for months. We are home-shopping, and it's depressing. Housing prices for where we need to live (because of work, school, commute) are out of control. And we've lost out on one house already to an all-cash deal that was almost certainly a Chinese investor. We're just one of many stories. I don't have a solution, I'm just sharing my story. It's so demoralizing. Right now we're paying another person's mortgage for them.
Could we not make this about Chinese capital specifically? The thing about global capital is it has its own logic, so it tends toward the same action whoever holds it. The variable is quantity. China adds a quantity of capital pressure on assets, but its not like they are as big as US capital.
@4 You wrote "They are not for rent 'income.' They are to park cash."

I'm confused. If these foreign buyers aren't after rental income, why is a guy from a real estate brokerage in Beijing commenting to a Seattle Times reporter about how much his customers like the rental income they receive from investment properties in Seattle? Also, see @7.
@8 That's a good point on including consideration of U.S. capital. Seattle has led the nation in gains in median income for some time now--there is plenty of home-grown capital at play in our local housing market.
Jenny Durkan endorsed by mayor murray... I guess everyone was blind to this? She is continuing his plans lol.
Simple solution, don't allow the Chinese to buy. Why we allow it at all is a mystery.
It won’t be long before people will have to pay the Chinese just to park on the street. Better start learning Mandrin soon - and better make more money to pay that rent.……
@9 - Propaganda purposes perhaps? There's no way to determine that person is telling the truth.
And yeah, we don't have to dump on Chinese cash, there could very well be Russian cash being parked in Seattle properties. Or maybe Saudi cash. Who knows? "Foreign" money is probably more accurate. There are plenty of US investors purchasing "escape" properties in New Zealand, for example.
@13 - I, for one, welcome our new Mandar-- oof!.. mMMmff!.. MMmmmffff!!... mmMFFfffff!!!
The global economy is based on two things: the mobility of money and the immobility of labor.
This is the truth.
Plenty of corporate cash pouring in too. When I was bottom fishing for a fixer in rural Snohomish County five years ago I would see a property come on the market and drive out there that morning to look. Over and over I would go home, look at my computer, and the place had been sold by noon. Finally I got an HUD repo that they could only sell to an owner/occupier under the rules for 30 days. I still live here and I'm still fixing it.
A disproportionately huge share of the world's "surplus global capital" is owned by Americans.

It is not just (or even primarily) foreigners buying up property in Seattle (and other American cities) as investments. Quite a lot of American investment funds are spending their money this way, too, and they are spending far more money than foreign firms. Just look at the signs on the lawns of homes changing hands in Seattle. "Berkshire Hathaway" is not a Chinese investment bank.

Capital controls for the US will do nothing to mitigate the effects of that American surplus capital within this country. They could even exaggerate those effects here at home, if the largest share of the world's surplus global capital is suddenly trapped inside of the US, and can not go abroad anymore.

Charles Mudede probably knows and understands all of this. But Charles Mudede finds it politically expedient to gin up fear of Chinese surplus capital, and politically inconvenient to talk the real talk about the much larger force acting on our local home markets: American surplus capital.
@13 That's the line populism becomes racism. Right there.
CM--you help me become smarter. Thank you.
Thank you Charles. I am very glad someone is stimulating conversation in a real way about this.

It reminds me of all the paradise paper tax haven stuff coming out now. Is there ever going to be honest conversation about economies on a large scale? It makes me nervous.
Also about the "having to learn Chinese" thing being racist, I agree. Related: I've seen several new construction signs in Newcastle and Tacoma that are completely in Chinese. I don't think there's anything wrong with that, but it is interesting that the people building them really don't care if non-Chinese can read their advertisement. I guess the units must go like hotcakes, regardless?
The way it was explained to me by a Taiwanese real estate broker: the million and billionaires in mainland China suspected that any money they kept in the country could be seized by their government.

Which is why they were gobbling up US real estate.

Which also gave them a base to flee to, should worse cone to worse and they could buy citizenship from Jared and Ivanka.
Wow - thanks for this article - we need to hear more about this - it needs to be exposed in the media so we can slow this down and have more homes available for people who want to live here.
I see boarded up homes frequently in this area (central area) which could be of good use for low income housing. Many have been sitting there for many months.

What housing crisis in Seattle? Prices are going to the moon. For those of us who own homes, this is nirvana. And for those of you renting, the apartment supply has exploded in recent years, so you have thousands of new options to choose from. If you cannot afford to live in Seattle, that is not a societal "housing crisis." That is simply an economic reality to which you alone will need to adjust. You still have lots of options, none of which are going to kill you. Yes, you may not initially be happy about it, but other people who are better educated and harder working will likely be very happy to take your place! And they may even be happy conservatives, shrewd Republicans and/or successful Trump supporters! Finally a solution to rid Seattle of its awful communists!!!! Price 'em out!!!

There are definitely problems with the conclusions drawn in this article, and I agree that a “crisis” is purely subjective. Seattle has become rich; from a certain point of view that is a good thing.

However, I cannot endorse the rest of your comment. You are reduced to the naive black and white thinking of the very people you criticize. Pure idiocy.