Just a few days after Vancouver announced a tax on foreign property investors, Seattle real estate broker Lili Shang received a WeChat message from a wealthy Chinese businessman who wanted to sell a home in Canada and buy in her area.

After a week of showings, he purchased a $1-million (U.S.) property in Bellevue, across Lake Washington from Seattle. He soon returned to buy two more, including a $2.2-million house in Clyde Hill paid for with a single cashier's check.

Ms. Shang says she's been inundated with similar requests from China and Hong Kong after Vancouver's provincial government enacted a 15-per-cent tax on foreign home buyers in August to help cool soaring real estate values. With Chinese investors – the largest pool of foreign capital – looking for a place to put their cash, the unintended consequence of the fee has been to push demand to cities such as Seattle and Toronto.

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"The tax was the trigger of this new wave of investment now coming to Seattle," Ms. Shang said. "Why pay more for the same thing?" Vancouver, which has seen detached-home prices double in a decade, joined areas including Australia and Hong Kong in taking steps to slow housing demand after an unprecedented surge of foreign investment. Chinese buyers, in particular, are accelerating purchases overseas, spurred by a weakening yuan, rising prices at home and the perceived safety of real estate. They're also venturing farther afield as costs soar in some of their favoured markets.

Home-purchase inquiries from China have jumped in Seattle and Toronto since the Vancouver tax was announced, according to Juwai.com, the country's largest overseas property website.

For Vancouver investors, Seattle is a lure because it's a waterfront city just a few hours away by car. It's also more affordable than other West Coast destinations. Toronto, as one of the world's financial capitals, already has an established base of foreign investment in condominiums and a large Asian population.

"Chinese money isn't going to sit and wait," said David Ley, a Vancouver-based professor at the University of British Columbia's Department of Geography, who focuses on housing. "Investors are going to find another city," and Toronto and Seattle are the top two contenders, he said.

Rising sales

While there are no figures specifically showing purchases made by offshore buyers, brokers say demand in Seattle and Toronto has been robust, particularly for the high-end properties Chinese investors tend to favour. In Seattle, about 12 per cent of all homes this year sold for at least $1-million, double the share over the past decade, according to brokerage Windermere Real Estate. Single-family home prices in King County, where the city is located, jumped almost 15 per cent in October from a year earlier, data from the local Realtors association show.

The average price of a Greater Toronto home rose 23 per cent in November from a year earlier to $776,684 (Canadian) while sales soared almost 17 per cent, the local real estate board reported Dec. 2. In Vancouver, meanwhile, sales have plunged since July and were down 37 per cent last month compared with the prior year.

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Dean Jones, chief executive officer of Realogics Sotheby's International Realty, which specializes in high-end properties and has a unit that caters to Asian buyers, estimates that about half of the homes his firm sells in Seattle's suburbs are going to Chinese purchasers, with many of the transactions requiring the use of interpreters, international banks and multiple escrow deposits. That's up from about 30 per cent last year, he said.

"This is Vancouver 2.0," said Mr. Jones, who lived in the Canadian city about two decades ago, when the capital flow from Asia started to accelerate. "A lot of the same motivations and goals are being replicated in Seattle."

Relative Value

The Seattle metropolitan area has already seen a 50-per-cent jump in house prices in the past five years, thanks in part to a booming technology industry and growth in companies such as Amazon.com Inc. and Microsoft Corp. Still, the median home value is $409,900 (U.S.), less than in San Francisco and Los Angeles, according to Zillow Group Inc. In Vancouver, the benchmark home price is $919,300 (Canadian) or $1.06-million with the tax.

Carrie Brown, a broker at Ewing & Clark Inc. in Seattle, says she has received roughly six calls a night from Taiwan, Hong Kong and even local Chinese residents looking for more real estate to store their wealth.

"Most of my Chinese investors, 60 [per cent] to 70 per cent, compare Vancouver and Seattle," Ms. Brown said. She currently has two clients living in Vancouver who are actively looking for Seattle real estate and many others in China, with an average budget of about $2-million (U.S.) for a home.

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There are other dynamics at play boosting home prices in the area, such as limited supply, according to Svenja Gudell, chief economist at Seattle-based Zillow. She said it's not necessarily the Vancouver tax bringing in buyers.

"I can easily buy the story that we're seeing a ton of foreign buyers here, I just don't think they're all from Vancouver," Ms. Gudell said.

Toronto Dinner

In Toronto, about 3,379 kilometers east of Seattle, the Vancouver tax has also rippled through the market, said Hunter Milborne, chief executive officer of Milborne Real Estate Inc. His team is responsible for about 15 per cent of sales of new condo units in Toronto each year, advertising through many Mandarin and Cantonese-speaking brokers to reach Chinese buyers across the globe.

The week that the government announced Vancouver's foreign tax, Mr. Milborne was dining in Toronto's tony Yorkville neighborhood with about a dozen Chinese bankers. Conversation over the lobster and dim sum dinner was consumed by the tax, he said. The diners mentioned that a handful of clients were closing their Vancouver accounts and planned to sell homes to move investments to Toronto.

One of the brokers Mr. Milborne works with is Ding Li, who runs JDL Realty, a closely held Toronto company offering services for Chinese investors, including advising on real estate investments, giving seminars on the education system and helping to manage finances. Mr. Li sells about 500 preconstruction condo units a year to Chinese investors looking to rent them out for a monthly income, or as a home for their children attending nearby universities.

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"The Toronto market is stronger, healthier, than Vancouver," Mr. Li said. But demand from Chinese investors, including some of his clients, likely will return to Vancouver once prices soften, he said.

Regardless of where the unprecedented flow of money out of China and Hong Kong goes, it'll find a home as Asian investors look for a safe place to invest their growing wealth.

"The key point for Chinese investors is still, 'Let's move that money out of China, you never know what will happen to it,'" said Gordon Houlden, director of the China Institute at the University of Alberta. "So they'll go to Seattle or Toronto."