SEATTLE — When you think the housing market couldn’t get any hotter, it does and continues to set records.
The median price of a home sold in the Seattle area went for more than $700,000 last month.
On the Eastside, the price was even higher at nearly $900,000.
The skyrocketing prices can be a good thing if you already own a home but for buyers the market is tough.
And foreign investors are making it even harder.
Chinese investors make up the majority of foreign buyers in our area. They have always been interested in the Puget Sound area but several local realtors are telling Q13 News they are buying up residential properties at a rate they never seen before.
Many Chinese investors are purchasing luxury homes, and even if you are not personally playing in that arena, experts say the frenzy is affecting the housing market as a whole.
Q13 News recently went home shopping with Heather Scherie Manzer.
When Manzer walks into a home she is looking for love.
“I am of the mindset you have to love a house,” Manzer said.
And it`s happened. She’s fallen in love five different times.
“I’ve had my heart broken yes,” Manzer said.
She`s lost every single property she`s bid on for the past three years.
Among the competition are Chinese investors who many times overbid and pay in cash.
Broker Gary Lu with John L. Scott specializes in the cash-bidding world.
“Seattle is the top city for Chinese investors,” Lu said.
Lu has an interesting perspective — he represents local buyers frustrated over the fierce market.
“I grew up here and I completely understand,” Lu said.
At the same time, wealthy foreign investors hungry for a good investment are keeping him busy.
“I am their personal shopper,” Lu said.
In fact, Lu says some Chinese investors have never even set foot in the Emerald City.
“Not just one client, many of my clients they have never even been to Seattle,” Lu said.
The attraction to the Puget Sound region is multifaceted — from panoramic views to higher education and the burgeoning tech industry — there is much to be coveted in our region.
“If you look at the whole West Coast by comparison we are very affordable,” Lu said.
Adding to the attraction — Vancouver, Canada, imposed a 15% tax on foreign buyers last year. Quickly, searches for Seattle properties surged.
For example, in November 2016 inquiries went up by 125%, according to Juwai.com, a Chinese version of Zillow.
“You can see that as a good sign or a bad sign,” Lu said.
The good is the economy is getting a boost but the bad is that it`s drying up inventory.
And in some cases, properties are even sitting vacant, purchased by Chinese investors who never moved in. And that kind of practice is one reason Vancouver voted to tax foreigners.
“Not sure we`ve become the next Vancouver,” researcher James Young said.
Young, with the UW’s Runstad Center for Real Estate Studies, isn`t concerned so much about investor vacancy rates as he is with pace of development locally.
“There is no way to build enough houses right to meet the demand, it`s almost impossible,” Young said.
And for people looking to buy an average home in our area, what`s going on in the luxury market matters.
“If there are fewer opportunities for people to move up, they are going to stay in that house longer, which means there are fewer opportunities for first-time home buyers,” Young said.
There`s a lot of current to move up from the middle, and that trickles down to first-time buyers who can`t get that entry-level house.
“When you can’t buy a house because they are getting bought up, it`s a hard pill to swallow,” Manzer said.
The emotional roller coaster means Manzer’s realtor Mitch Lomax is also playing therapist.
“Let’s count to 10, let’s sleep on it, I am sure the sun will come up tomorrow,” Lomax said.
He`s preaching patience and unbridled optimism.
“What is happening right now is unusual, it will become a more balanced market,” Lomax said.
When that will happen is anyone`s guess. In the meantime Manzer is not giving up.
“We are saving in cash so we can compete,” Manzer said.
One realtor on the Eastside told me that last year 70% of her listings were sold to foreign investors, mostly to Chinese investors.
But Chinese investors are not the sole reason why we are seeing skyrocketing home prices.
Lu says even if Chinese buyers were to leave the market tomorrow, he believes the trend would still continue because of the strong economy.
BY HANA KIM, UPDATED AT 06:01PM, MAY 10, 2017