Schools are attracting affluent Chinese to the Eastside, and the real estate market is being altered in the process
“Tai xiao le,” Xiao Man Xue says, slightly shaking her head. Too small.
The four-bedroom Bellevue house she is touring in February is centrally located, but it’s only 2,450 square feet. Xue wants at least 3,500 square feet for herself, her husband, and their two sons to live in.
Though the area’s housing inventory is scarce, Xue is in no hurry. She has been searching since September while living in a rented Bellevue apartment so her sons, ages 14 and 6, can get a head start on their schooling in the United States. Xue plans to buy a house by June in either Bellevue or Mercer Island, and is considering purchasing another one as an investment.
Xue typifies mainland Chinese homebuyers who have been flooding the Eastside the past couple years. Those buyers have provided a steady stream of customers for agents such as Lili Shang, a broker with the Kirkland office of Realogics Sotheby’s International Realty.
Shang’s workday begins before dawn, when the Beijing native starts receiving calls from China. Last year, Shang sold roughly $27 million worth of houses to Chinese buyers. Most of them paid cash, she says.
“It has just been crazy. This is a very exciting market, and a very exciting place to be today in the U.S.,” Shang says. “I’ve been lucky. There is a lot of investment coming from Asia and China, and it’s going to change the area tremendously.” Immigrants, competing with thriving companies’ other new hires in the midst of a severe housing shortage, have helped push area home prices to record highs.
International buyers accounted for about 40 percent of all Eastside residential home sales of $3 million or more in 2014, up from 30 percent in 2013, according to research compiled by Windermere Real Estate. Matt Deasy, general manager of Windermere’s Bellevue office, says those buyers were “predominantly from Asian countries.”
The Eastside has seen other waves of immigrants, but this wave is distinct. This latest group of Chinese immigrants is not coming primarily for jobs at brand-name international companies; rather, they are independently wealthy, young, and ambitious. They shop discerningly, invest shrewdly, and think entrepreneurially. For many, the main objective is securing a top-notch education for their children and they’re willing to pay handsomely to do so.
“I had one Chinese family whose budget was $1 million. After they found out Mercer Island High School is so good, they bumped it up to $1.5 million so they could be sure to buy in the school district,” says Becco Zou, a Chinese native currently working as a broker with Berkshire Hathaway HomeServices.
Zou’s story isn’t unusual. Chinese clients purchased $1.98 billion worth of residential real estate in Washington in 2014, according to the National Association of Realtors. A recent Barclays survey found that 78 percent of Chinese immigrants cited better education and employment opportunities for their children as a reason for moving to the U.S.
Once they arrive, many Chinese are spending big. The median value of U.S. homes purchased by Chinese buyers in 2014 was more than $523,000, and 76 percent of purchases were made in cash, according to a 2014 report by the National Association of Realtors. Furthermore, local agents say Chinese homebuyers are often willing to waive home inspections. This gives them an edge in the fiercely competitive Eastside market, where a single open house can generate 300 shoppers and 20 bids.
Twelve of Zou’s 14 home sales to Chinese customers last year were cash transactions, and most of those clients who bought on the Eastside said they did so primarily for their kids’ education.
Education is far and away the biggest reason Chinese homebuyers are coming to the Eastside, but they also are drawn to the Pacific Northwest for other reasons: proximity to China, clean air and water, natural beauty, relative spaciousness, and a soaring economy. California was the only state that saw more homes purchased by Chinese immigrants in 2014 than Washington.
The Seattle area also is becoming a popular relocation choice for Chinese who originally settled in other West Coast cities, says Mary Swanson, manager of Berkshire Hathaway’s Bellevue office.
“We’re seeing movement out of Southern California,” Swanson says. “Those Chinese who moved to the U.S. (earlier), their children are now realizing they can buy as big a house as their parents for less money in Seattle.”
Among Washington cities, Bellevue has the largest ratio of Asian residents at 31 percent, according to the 2013 American Community Survey. Newcastle (29 percent) and Redmond (26 percent) are other Eastside cities that are close behind. Seattle’s population, by comparison, is 13 percent Asian.
In Bellevue, city demographers estimate that in 2013 Chinese residents (13,806) and Asian Indian residents (13,372) were the city’s largest immigrant groups, with Koreans (4,956) a distant third.
Though many Asians do come to work for companies like Microsoft — 29 percent of the company’s employees are Asian — an increasing number of Asian newcomers are taking a nontraditional route: the EB-5, or immigrant investor, visa.
To qualify for EB-5 status, an investor must pledge $1 million, or $500,000 toward what the government calls Targeted Employment Areas, and create or preserve 10 jobs in the process. The visa includes temporary U.S. green cards for the investor’s immediate family. EB-5 holders can apply for permanent residency after two years, but they do not have to wait for permanent status to move to the U.S. and begin a new life. Of the 10,000 EB-5 visas issued in the United States last year, 8,308 were awarded to citizens from mainland China. One recipient was Xue’s husband, a real-estate developer who invested in a California Marriott.
After centuries of notorious difficulty getting a U.S. school or work visa, American emigrants can obtain an EB-5 that offers them a quicker, more direct path to the U.S. Essentially, they can buy their way in.
After clearing the immigration hurdle, the fresh arrivals face a new challenge: What next? “A lot of immigrants have to find what to do once they settle down and feel comfortable with the area,” says Tim Lee, president of the Bellevue Chinese Chamber of Commerce. “They’re businessmen. By nature, they can’t sit around too long.”
Chinese immigrants are increasingly seeking entrepreneurial opportunities. A 2007 survey of business owners by the U.S. Census Bureau, the latest related data available, revealed that Asian-owned enterprises comprised 16 percent of the total businesses in Bellevue and 13 percent in Redmond, well above the levels for Seattle (10 percent), and the country as a whole (6 percent).
Lee, a former Seattle restaurant owner who started a real estate company last year, founded the Bellevue Chinese Chamber of Commerce three years ago. About half of the chamber’s 70 members are business owners. Half of those, Lee says, own restaurants and half invest in real estate.
Jianping Pang does both. The son of poor farmers, Pang quit school after seventh grade yet eventually worked his way up to owning a leather factory near Shanghai. He received an EB-5 for investing in a hotel in Wisconsin. When he first came to the United States two years ago, Pang planned to first visit the Seattle area, then San Francisco and Los Angeles. But when he hit the Northwest, he fell in love with the Eastside and canceled the California trips. He bought a house in Lakemont and enrolled his daughters, then ages 4 and 14, in the Issaquah School District.
“I can have a better life in America for the same amount of money,” Pang says. “Before I came, I sat my family down and we watched Forrest Gump three times. I told them if Forrest Gump can be successful in America, why not me?”
The 43-year-old started a chat group for Chinese entrepreneurs that has grown to more than 100 members. Pang estimates that 90 percent of them are in the U.S. on EB-5s. He has since invested in property in downtown Bellevue, where construction of a 6,000-square-foot house is underway, as well as parcels in Sammamish, Newcastle, and Newport Hills. Pang plans to open a seafood-noodle restaurant in Lake Hills Shopping Center the first week of April, which he will manage.
“There is no good Chinese food here,” Pang says, echoing a common lament among fellow immigrants. Part of his 2,300-square-foot space is a Seahawks-themed sports bar. Pang says he has become “almost crazy” about the team since moving to the U.S. He also is in the process of leasing a site for a second restaurant in Seattle’s Northgate Mall.
“I’m fully confident in myself,” Pang says. “In 20 years in business, the only time I’ve lost money was when I invested in the (Chinese) stock market.”
Chinese capital is spreading into the area’s commercial real estate sector as well. Investor Jia Lin Niu, head of Niu Enterprises, paid nearly $47 million last year for 2 acres in downtown Bellevue, where she is expected to build a high-rise development. Another Chinese company, Supernova Aeronautic Technology LLC, plans to add 50 units of affordable housing to an office complex it bought for $5.25 million at 1000 124th Ave. NE, near Bellevue’s upcoming Spring District.
New immigrants who aren’t purchasing land or buildings are boosting the economy in other ways, particularly via high-end shopping. Many Chinese consumers are more than willing to shell out for authentic merchandise — as opposed to homeland knock-offs — and brand names largely unavailable in China.
Tourists also frequent the area. Chinese nationals, for example, overtook Japanese visitors last year to become the top overseas international tourists in the region, according to Visit Seattle. More than 100,000 Chinese were projected to visit the Puget Sound area in 2014. Chinese tourists spend $3,000 on average, significantly more than other nationalities.
Lee says some of his friends visiting from the mainland spent $10,000 on a recent spree in downtown Bellevue. “There were discounts on Chanel,” he says. “They would never see that at home.”
Chinese newcomers enrich the community in other ways as well, says Tere Foster, a longtime Eastside real estate agent. Foster runs her own company within Windermere Real Estate, called Team Foster, which specializes in West Bellevue homes.
Previous waves of immigrants — Eastern Europeans in the late ’90s, Koreans in the mid-2000s — and the steady, tech-driven stream of Asian Indians are “amazing things for the young people here,” says Foster, who serves on the board of directors for the Bellevue Boys & Girls Club. Seattle friends used to tease Foster’s daughter about living in “Blahvue,” which they say was rich, white, staid, and boring. “Honestly, no one can say that today,” Foster says.
She’s at least right about the white part. Forty-five percent of Bellevue residents are people of color, and the share is larger in its schools — 61 percent of the school district’s public elementary students are nonwhite. The numbers are similar in middle school (57 percent) and high school (54 percent).
“Kids are getting a very international education just by living in the area,” Foster says. “That’s a rich experience, and they don’t have to go to an international school to get it.”
The wave of immigrants isn’t likely to become a trickle in the foreseeable future. Forty-seven percent of China’s millionaires are considering leaving their country in the next five years, according to the Barclays survey, and Washington’s popularity with Chinese buyers is only growing. And when and if they arrive here, many will stay quite a while.
“As long as both my children are here, I’ll be here,” says Xue, the Bellevue renter shopping for a house. “It feels safer to keep my money in America. There’s no other way but staying here.”