In China, a new millionaire is created every 30 seconds. Because of demand for houses there, the price of real estate in China has soared.  As a result, Chinese investors have flooded major housing markets including Vancouver, British Columbia, New York City, Los Angeles and, more recently, Seattle.

Mainland Chinese have emerged as a major force in the global real estate market in recent years. Chinese investors overtook Canadians to become the biggest foreign buyers of U.S. homes in 2015, spending a total of $28.5 billion.  

Chinese money now funds about 55 percent of all foreign home purchases in Washington state, according to the National Association of Realtors. Seattle is now the No. 1 U.S. market for Chinese homebuyers, according to the Seattle Times.

By comparison, real estate in the Pacific Northwest region is a bargain for Chinese investors.  They can sell one condominium in their home country and afford two single-family homes here, according to a recent article by CNN Money. Most of those purchases are happening in wealthier suburbs on the Eastside, targeting homes priced more than $1.2 million.

Neighborhoods in Bellevue, Medina, and Mercer Island have seen home prices skyrocket 125 percent in the past five years — twice as fast as the rest of King County, according to the Northwest Multiple Listing Service.

Looking to Vancouver, British Columbia, as an example, home prices rose almost 18 percent in 2016. Home prices in the Fraser Valley, long considered an affordable alternative to pricey Vancouver, rose 27 percent in 2016.  Feeling the pressure, provincial leaders implemented a 15 percent foreign-buyer tax last August. As a result, December home sales in Vancouver were down 39.4 percent from a year earlier, according to the Real Estate Board of Greater Vancouver.  Economists predict Vancouver sales will continue to decline through 2017. Vancouver ranked number three on a recent list of the least affordable housing markets in the world in 2017.

Vancouver’s foreign-buyer tax has indirectly brought attention to Seattle, as Chinese investors look for alternatives to paying the 15 percent tax. As a result, Seattle received more inquiries from Chinese home buyers than any other American city, according to Juwai.com, China’s biggest real estate site for buyers looking in North America.

Will Seattle become the next Vancouver?  Maybe not.

China recently imposed new currency controls that could dampen sales here.  On Dec. 31, the People’s Bank of China and the State Administration of Foreign Exchange began an aggressive intervention to curb capital flowing out of China.  As part of the new restrictions, foreign currency purchases by individuals at banks “are not allowed for overseas property purchases”, the China Business Network reported. Overseas cash transfers are limited to $50,000 in an attempt to curb overseas investment.

“The new policy may hit some middle-class Chinese who have just started to consider overseas asset allocation,” said Thomas Lam, a Hong Kong-based senior director at property consultancy Knight Frank. “But for high net-worth individuals, I don’t see any impact, as most of them already have offshore bank accounts and investments.”

Market insiders say the volume of foreign home purchases may slow down amid the tightened currency policies, but Chinese demand for overseas properties is likely to continue. Already, there are efforts to circumvent the currency rules by some U.S. banks, offering zero-down loans for Chinese borrowers, with no income verification required. These mortgages don’t require tax returns or pay stubs. With 100,000 new Chinese millionaires created each year, experts believe the money will find a way around the rules.

Write RAY AKERS at ray@akerscargill.com or reach him at 206-722-4444.