Today I was afforded the opportunity once again to speak in the Small Or Solo Law Practice Class at the University of Washington School of Law. The best part of my presentation was the break out sessions, where I got to see law students analyze potential ethical issues. The student responses were on target, complex, and strikingly sophisticated. Knowing that the legal profession will be carried on by such great thinkers is really inspiring. Clients of the future will be in good hands.
By Jacob Passy
International buyers purchased the smallest number of existing-homes in the U.S. since 2011 this past year
Foreign buyers are purchasing fewer and fewer American homes. And the coronavirus pandemic could cause a serious pullback in new investment in U.S. residential real estate from international buyers.
During the 12-month period ending in March 2020, foreign buyers purchased 154,000 existing homes in the U.S., down 16% from the previous year, according to a new report from the National Association of Realtors. This was the smallest number of existing-homes that international buyers have purchased since 2011, and the third consecutive year that the number decreased.
Altogether, international buyers purchased $74 billion-worth of U.S. residential real-estate, down from $77.9 billion the year before and $121 billion two years ago. The report includes purchases by buyers who live abroad as well as foreign residents in the U.S.
China was the largest buyer of U.S. homes once again, accounting for the purchase of 18,400 homes worth roughly $11.5 billion. But among the top five international buyers — which also included Canada, Mexico, India and Colombia — China was the only country where the number and value of homes purchased between 2019 and 2020 decreased.
A number of factors have reduced Chinese interest in U.S. real estate in recent years — including government efforts to stem these purchases.
“The Chinese government has become much more restrictive about how much cash they can take out of the country,” said Lawrence Yun, chief economist at the National Association of Realtors.
“There’s always a way to go around it, but the fact that the Chinese government is placing capital controls means there could be more monitoring of their citizens,” Yun added. “Just the sense the government may be watching them has reduced the number of Chinese buyers here in the U.S.”
Continued trade tensions between the U.S. and China has also worked to hold back some activity, as have restrictions on visa issuance to Chinese visitors.
How the pandemic will affect international purchases of U.S. homes
The National Association of Realtors (NAR) report only covers the period between April 2019 and March 2020, so it doesn’t reflect the full impact of the coronavirus pandemic.
But even before the pandemic became a crisis here in the U.S. it was having an effect on home-buying activity. Back in February, when China was still the main epicenter for the pandemic, real-estate agents told MarketWatch that uncertainty and travel restrictions had led Chinese investors to pull out of planned deals.
Much has changed since then. The U.S. now has the largest number of cases worldwide, and many countries have imposed travel restrictions. This will seriously curtail foreign buying of U.S. real-estate, Yun said.
“For the most part, people need to see the property in person,” Yun said. Buyers from abroad aren’t just purchasing properties for investment purposes.
Over half (51%) of non-resident foreign home buyers plan to use the property as a primary residence or vacation home, while another 10% expect to have it double as a rental property and vacation home, according to NAR data.
Over half of non-resident home buyers use the property as a primary residence or vacation home.
Moreover, the most popular real-estate markets for foreign buyers are located in states with some of the highest coronavirus case counts. Florida was the top destination for foreign buyers, followed by California, Texas, New York and New Jersey.
Given the difficulty and risks posed by traveling, many foreign buyers may decide to hold off on buying an American home until they can enjoy it.
International buyers also don’t have the same incentives to buy a home in the U.S. right now as their American peers. “International buyers are much more likely to buy with cash or use more limited financing,” said Danielle Hale, chief economist at Realtor.com. “As a result, we don’t see a surge in international demand when interest rates drop.”
A number of factors could provide a boost to international demand, though. The upcoming presidential election could result in a dramatic shift in international relations depending on the outcome. “A Biden administration could potentially be more welcoming,” Yun said.
The U.S. real-estate market’s quick rebound from its coronavirus lows could be a draw in and of itself for foreign buyers, said Daren Blomquist, vice president of market economics at Auction.com, a listing site for foreclosed properties. Plus, some economists have suggested that the flight to the suburbs could lead to softer prices for properties in major cities, which could attract foreign buyers.
Ultimately, though, a decline in international buying isn’t likely to hurt the U.S. real-estate market, because foreign buyers only account for 4% of existing-home sales. In fact, it could be the opposite.
“The fact that foreigners have stepped back is actually providing a better chance for domestic buyers to get those properties,” Yun said.
I spoke in the Small And Solo Firm Practice Class at the University of Washington School of Law recently. The discussion was largely about my career path. I hope that more mentorship opportunities within the legal profession arise for younger attorneys.
July 30, 2019 at 6:00 am
By Gene Balk
Seattle Times Columnist
Seattle rents are on the rise again, after a brief respite. And that shouldn’t come as much of a surprise, because that’s what rents do around here — they go up, and they go up fast.
At the start of the decade, Seattle ranked just outside the Top 10 among big U.S. cities for the cost of rent and utilities. Now, we’re fourth. In fact, Seattle has become the nation’s most expensive big city for renters outside of California.
According to survey data from the U.S. Census Bureau, the median rent and utilities paid in the city of Seattle hit $1,555 in 2017, across all sizes and types of rental units. Among the 50 most populous U.S. cities, the only three where renters pay more are San Jose, San Francisco and San Diego.
The median rent is the midway point — half of all renters pay more, and half pay less.
The last time I wrote about this date, which was in 2014,, it was to report that Seattle had broken onto the list of Top 10 most expensive big cities for renters for the first time. That seemed like a big deal at the time, but it turns out, that was only the beginning of our ascent up the rankings.
Since then, we’ve knocked off a bunch of high-price cities, climbing past Los Angeles, Washington, D.C., and even New York. Then, last year, we leapfrogged Boston to hit fourth place behind those three absurdly expensive Golden State locales. Can you imagine how high rents would be here if it didn’t drizzle for nine straight months a year?
And Seattle actually ranks ahead of San Diego as the third most-expensive city for renters if you only look at the costs for one-bedroom units, with a median of $1,455.
There are a lot of ways to measure rental costs, and the census data is very different from those reports that just look at market-rate apartments. The census data is based on surveys, and it presents a current snapshot of renters across the spectrum — from tenants in luxury units to those in older-stock housing, who are paying significantly less than market rate. It includes people in affordable and subsidized housing, and even people who get a break in their rent in exchange for doing work around the building.
In some cities, it also includes people living in rent-controlled and rent-stabilized apartments — not in Seattle, of course, since we don’t have any of those. But New York, for example, has more than 1 million such units, and San Francisco also has a substantial number. That’s part of the reason the census data for those two city’s median rents is lower than you might think.
Bringing rent control to Seattle is one of the signature issues for City Councilmember Kshama Sawant.
The census data represents what’s called “gross rent.” That means that the cost of utilities, if they are not covered by the landlord, are included in the dollar amount. This allows for a better comparison of the rental costs between units where the tenants have to pay the utilities separately and those where the utilities are folded into the rent.
In Seattle, at the start of the decade, the median rent and utilities was just $990. The increase of $565 by 2017 ranks second among the 50 largest cities, only behind San Jose, where the costs went up by $738.
Seattle also ranks second if you look at the increase in rents as a percent change — our 57% jump in rental costs since 2010 ranks just behind Denver’s 59%.
Rent and utilities have gone up in every big city, which isn’t surprising. But there are places it’s been much gentler for renters than in Seattle. In both Detroit and New Orleans, the increases have been less than 10% since the start of the decade. Virginia Beach, Memphis and Milwaukee are only a bit above 10%.
Many Seattle tenants have certainly been slapped with severe rent hikes, which has contributed to the city’s fast-rising median. But there’s another factor that’s probably more significant: We’ve had an unprecedented apartment construction boom that’s added thousands of high-priced new luxury units to our housing stock. Seattle has a higher precentage of new-construction apartments than any other big U.S. city.
Of course, rents wouldn’t be going up so fast in Seattle if incomes weren’t leading the way. The new class of renters in Seattle are higher income, and they can afford to pay more.
The Census Bureau also produces data that compares median rents and utilities with income, and it illustrates how the two have kept pace with each other. In 2017, the median rent in Seattle ate up 29% of household income. That’s basically unchanged from where it was in 2010.
And while rents are a lot lower in Miami or Detroit, for example, so are incomes. The median rent in those cities is nearly 40% of household income.
But that’s small consolation if you’re among the folks who don’t work in tech or some other high-paying industry, and you’re trying to make ends meet in Seattle. Census data shows that in nearly one out of five rental units in the city, at least half of the household income goes just to paying the rent and utilities.
Speaking At YGB Conference U.W. Law School
I was a panelist at the YGB Conference at U.W. Law School on Saturday, February 23rd. I was afforded the opportunity to speak with a group of high school students regarding my educational journey and career path and to have lunch with them. Their curiosity and intelligence made me very hopeful about the future.
Once again I was afforded the opportunity to speak in the Small and Solo Practice Class at the University of Washington School of Law, my alma mater. Interactivity and questions are on the upswing and this is welcome, because it means that students are increasingly engaged. The dynamic nature of the legal profession and the need for adaptability are frequent topics of discussion.
I was once again afforded the opportunity to share my experience with law students in the Small And Solo Practice Class at University of Washington School of Law. The class itself is very pragmatic in terms of the nuts and bolts of creating, owning, and operating a small law firm. In speaking with students my goal is always to foster honesty about the legal world, and also to encourage them to create a more client-centered, more civil, kinder, and more compassionate legal profession.
I attended the King County Bar Association’s Volunteer Appreciation Reception this evening. Seeing so many legal volunteers working collaboratively to ameliorate societal problems is inspirational.
I attended a Continuing Legal Education workshop for the King County Bar Association Alternative Dispute Resolution Section this evening regarding using mindfulness and willfulness to cultivate civility in relation to “other”-that which is different from our own experience or frame of reference. The workshop focused on developing and using this skill in the mediation context.
I attended the swearing in ceremony for King County Superior Court Judges Jason Poydras and Matthew York today. This was a great opportunity to see the lighter side of the judiciary branch.