Is the Tacoma Housing Market Flattening Out?

 

 

Despite Redfin’s recent announcement that Tacoma’s housing market is the “hottest” in the nation, the market in Tacoma’s North End looks a lot like it did a year ago. Our median home price is essentially unchanged, the number of homes selling remains steady and inventory levels are still incredibly tight.

 

 

 

 

 

 

 

 

 

 

The average time on market hasn’t changed much since last year, but it does FEEL like homes are selling more quickly, particularly those priced below $500K. Eager buyers are touring new listings within hours of MLS activation and writing offers immediately – and many listing brokers are letting their sellers accept the first good offer that comes in.

We generally take a different approach when we list properties for sale, encouraging our sellers to delay review of offers for a few days to allow for full exposure to the market. It increases the odds of getting the best offer possible, which is good for our sellers, and it decreases the sense of frenzy, which is good for buyers.

 

Current Market Conditions

 

  • Geopolitical uncertainty has been applying downward pressure on mortgage interest rates, with 30-year fixed rates dropping below 4% in June. Windermere Chief Economist Matthew Gardner doesn’t expect to see rates over 4.5% before the end of the year.
  • Depending on the outcome of trade and tariff discussions with China, the cost of some building materials could rise as much as 25% this year – a cost that would almost certainly be passed on to home buyers already struggling with housing affordability.
  • Concerns about a potential economic slowdown persist. A Wall Street Journal survey of economists and a Duke University survey of CFOs both predict a recession in 2020.
  • Wages have been trailing rising housing costs for years, but wages for Washington workers did increase an average of 5.5% across all industries in 2018 – a step in the right direction.

 

The housing market in North Tacoma may feel hot, but it does also seem to be flattening out. Is it a seasonal slowdown or a broader market shift? Hard to say for sure at this point, which is why it remains critical for buyers and sellers to seek expert real estate advice. If you’re thinking about buying or selling a home in the area, please contact us to discuss how we can put our knowledge and experience to work for you.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark Pinto is a top-producing Realtor with Windermere Professional Partners, specializing in residential real estate in Tacoma, Gig Harbor, University Place and Lakewood.

Mark Pinto: (253) 318-0923

MarkPinto@windermere.com

Posted on July 23, 2019 at 9:46 am
South Sound Property Group | Category: Market Statistics, North Tacoma, Tacoma Real Estate

Investing in Real Estate in Tacoma’s North End

Jeff and I recently bought a duplex in North Tacoma that we’re pretty excited about.  We weighed the pros and cons of purchasing in the current market and ultimately decided that the property met our needs, both for the short term and the long.  In light of our recent purchase, I thought it might be a good time to share some thoughts and observations about investing in real estate in Tacoma’s North End.

 

According to a recent report from Redfin, Tacoma has the hottest housing market in the nation.  That doesn’t come as a complete surprise to brokers in the know. Tacoma has a lot to offer potential residents in terms of amenities and culture, but a big part of the city’s appeal has to do with affordability.  You just get more for your housing dollar in Tacoma than you do in neighboring Seattle.

 

 

Not surprisingly, rents are on the rise in Tacoma.  Between April of last year and April of this year, rents in Tacoma rose about 10%.  Developers have been building new apartment buildings, but not enough to outpace demand.  That means rents are likely to continue rising for the foreseeable future, making a strong argument for investing in rental properties in Tacoma.

Investing in real estate is a great long term strategy for accruing wealth but, like any type of investment, it does involve risk.  That’s why it’s important to educate yourself before becoming a landlord.

 

5 Things to Consider BEFORE Becoming a Landlord

  1. Will you manage the property yourself or will you hire a property management company?  If you decide to manage the property yourself, you may still benefit from assistance with screening potential tenants and/or evicting tenants if things don’t work out.  Landlord Solutions is a great local resource for those types of services.
  2. Will you allow pets?  Cats? Dogs? Large? Small?  Allowing pets will obviously increase your potential applicant pool, but pets can take a toll on a house, which might cost you more than it’s worth in the long run.
  3. If your property is located near the University of Puget Sound, Tacoma Community College or UW Tacoma, will you rent by the room to attract students?  You may be able to earn more income if you rent by the room, but you can also expect more wear and tear on your property.
  4. Have you talked to your insurance company to find out if there will be an increase in your premium if you convert a homeowner’s policy to a landlord’s policy?  Our preferred insurance agent Jerry Hallman at Farmers is a great resource for exploring your insurance options.
  5. Have you spoken with your accountant about the potential tax implications associated with owning a rental property, converting your primary residence into a rental or selling a rental property?  What expenses can be counted as deductions on your tax returns? How can you avoid capital gains taxes when selling a rental property?

 

 

 

Short Term Rentals?

With the emergence of marketing platforms like VRBO and Airbnb, short term rentals have become a very popular way for homeowners to generate income. Short term rentals may offer a greater return on your investment than a traditional rental property, but it feels like the short term rental market in Tacoma is becoming saturated.  Jeff and I were initially thinking about using our new duplex units as short term rentals but are now leaning towards a more traditional long term rental approach.

 

If you have questions about investing in Tacoma real estate, please don’t hesitate to contact me.  I’m here to help.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mark Pinto is a top-producing Realtor with Windermere Professional Partners, specializing in residential real estate in Tacoma, Gig Harbor, University Place and Lakewood.

Mark Pinto: (253) 318-0923

MarkPinto@windermere.com

 

Posted on June 20, 2019 at 9:31 am
South Sound Property Group | Category: Investing In Real Estate, Market Statistics, North Tacoma | Tagged , , ,

Gig Harbor has Modest Price Increases in the 2nd Quarter

Posted on July 28, 2018 at 4:20 pm
South Sound Property Group | Category: Gig Harbor Real Estate, Market Statistics

Are There Clues that the Real Estate Market is Starting to Cool?

I’d like to begin this post with a disclaimer.  The information I’m sharing here is anecdotal in nature, and my opinions are based largely on my own personal experience investing in and selling residential real estate since 1993.  I know that quite a few Realtors may disagree with me, but I’m having a distinct feeling of “déjà vu” with respect to the local housing market, a feeling that reminds me of the months just before the market peaked in August of 2007.  Median home prices in Pierce County are currently well above that 2007 peak (see the chart below) and well above the levels we would expect to see with normal appreciation (the red line).  While the numbers differ by county in the Western Washington area, the overall trends remain the same.

FIRST SIGNS OF A CHANGE?  Watching what new home builders and developers are doing is never a bad idea.  I was recently showing homes to relocation clients interested in new construction in Puyallup, and what I saw gave me pause.  Builders were working their crews around the clock to finish houses that were already under construction, but there seemed to be little to no new ground being broken for additional homes.  Builders’ agents were also offering heavy, unadvertised incentives (in some cases 10-15% of a home’s total value) to buyers willing to purchase in June.  The MLS data below shows a recent decline in pending new construction home sales in Pierce County (the red line), consistent with a decrease in new housing starts.  Of note, Time Magazine has pointed to this decrease in new housing starts as an early warning sign of a broader recession (SEE THE FULL ARTICLE HERE).

IS A RECESSION AROUND THE CORNER?  For seven leading economists interviewed by Forbes Magazine in May of this year, the answer is yes.  Predictions for the start of that recession range from late 2018 to 2022.  SEE THE FULL ARTICLE HERE.  A lot will depend on the fiscal policies of the current administration, but rising interest rates in combination with a recession will almost certainly have a negative impact on our local housing market.

 

SHOULD YOU PANIC?  The answer here is no.  I’m not expecting a market drop like we experienced in 2007 because the fundamentals of home mortgage lending are significantly different than they were back then, but I do anticipate a decline in real estate values within the next year.  Is now a good time to buy?  It depends on how long you’re planning to own the house and how much equity you’ll have in the house at the time of purchase.  We’re advising clients who expect to have their house for at least five years and who have the capacity to hold on to the property through a market downturn to buy at a price they feel is reasonable.  If buyer clients tell us they might have to resell a house within the next two to three years and/or if they don’t have a lot of equity to put into a house, purchasing now may be riskier.  Is it a good time to sell?  Absolutely.  For seller clients thinking of selling “in the next few years”, we’re recommending that they do it sooner rather than later.  While today’s sellers could be missing out on additional appreciation, timing the housing market for maximum gain can be difficult.  If selling now fits with your larger life plans, sell now and avoid the risk of a loss in value if and when the market shifts.

 

 

Jeff Williams is a top-producing Realtor with Windermere in Tacoma specializing in the purchase and sale of historic and luxury homes.   Click here to email Jeff or give him a call at 253-303-1135.

 

Posted on July 3, 2018 at 10:49 am
South Sound Property Group | Category: Market Statistics

1st Quarter 2018 Sales Results for Tacoma’s North End

Posted on April 23, 2018 at 10:28 am
South Sound Property Group | Category: Market Statistics, North Tacoma | Tagged , , , , , , , , , , , , , , , , , , , , ,

4th Quarter Sales Results for Tacoma’s North End

Posted on January 26, 2018 at 12:50 pm
South Sound Property Group | Category: Market Statistics, North Tacoma, Tacoma Real Estate | Tagged , , , , , , , , , , , , , , , , ,

Third Quarter Home Prices Increase a Whopping 17% From Last Year

Posted on October 25, 2017 at 4:16 pm
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Pierce County’s Over Million Dollar House Market is Heating Up

Jeff Williams and Mark Pinto were recently interviewed by Kate Martin of the Tacoma News Tribune to explore the current trends for the over million dollar housing market in Pierce County.  As the listing agents for three of the over million dollar listings that are currently pending sale in Pierce County, they shared insight about buyers for these luxury properties and their experience in the luxury market.

In recent months, dozens of million-dollar abodes have sold or are in the process of closing. If the pace keeps up, sales of homes worth a million dollars or more could eclipse the record of 86 sales set in 2007.

Where are these buyers coming from? Many fly in from other parts of the country, said Jeff Williams, a real estate broker for South Sound Property Group, part of Windermere Professional Partners. He works with fellow broker Mark Pinto.

“They could be coming for a job or lifestyle change,” Williams said. “It could be a second home for people who live in California.”

One historic home in Tacoma’s North End is listed by Williams and Pinto at nearly $1.3 million. Its sweeping views of Commencement Bay, and the Olympic and Cascade mountains drew 25 showings in three weeks — a pace unheard of just a few years ago, Williams said. The final sale price was not available.

Williams and Pinto work together to sell luxury and historic properties in Tacoma, Lakewood and Gig Harbor. They said the luxury or “trophy home” market has heated up in the county in the past six months to a year.

“I think it speaks to the confidence that people have in the market and the broader economy,” Pinto said. “They probably have been sitting on the sidelines in a house that they like, but they want to buy up to that aspirational house.”

Posted on April 28, 2017 at 10:31 am
South Sound Property Group | Category: Luxury Real Estate, Market Statistics | Tagged , , , , , , , , , , , ,

North End Home Prices Continue to Rise in the 3rd Quarter

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Posted on October 22, 2016 at 10:05 am
South Sound Property Group | Category: Market Statistics, North Tacoma, Tacoma Real Estate | Tagged , , , , , , , , , , , , , , , , , ,

North End Home Prices in the 2nd Quarter Continue to Rise

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Posted on July 20, 2016 at 4:28 pm
South Sound Property Group | Category: Market Statistics, North Tacoma, Tacoma Real Estate | Tagged , , , , , , , , , , , , , , , , , , ,