With market values in Tacoma’s North End on the rise, we’re often asked by our clients to “keep our eyes open” for a house exactly like theirs but with a water view. The implication being that if they found a view home that was as nice as their current residence, they would want to buy it. The follow-up question from them is inevitably, “how much more would that cost?” Well, that isn’t always an easy question to answer. When showing homes to buyers that are specifically interested in purchasing a view property, it becomes readily apparent that not all views are created equal. I did some digging and found an article published in 2011 by the Texas Association of Appraisal Districts that mirrors my experience with the Tacoma housing market. It states the following:
Market studies support the premise [that a view adds value], with one study concluding that . . . “in addition to square footage and lot size, view is the most significant determinant of home value.” A panoramic view (breadth and/or depth in aspect) tends to command the ultimate premium, . . . a near view of a prized view object is preferred over a far view, while the ability to see a far distance is prized over a vista that is foreshortened. Other things being equal, an obstructed (or keyhole) view will draw a lesser premium. A view only visible from the upper floor of a single family residence likely draws a lesser premium. A damaged view (a mountain view marred by overhead power lines or a junkyard in the foreground) will likely invoke a lesser premium. View orientation can influence value. It is said that the view from the “back” of a residence (where family rooms and patios are often located) is significant, while the view from the front door is less significant.
A study of 1984 – 1993 data from Bellingham, Washington found that a view added a 25.9% premium to home value. When the views were differentiated, however, the study findings were more informative: poor partial ocean view (8% premium), good partial ocean view (29% premium), unobstructed ocean view (59% premium), and water frontage (127% premium). (See the full study here)
I was curious to see if view homes in North Tacoma garnered this same price premium so I pulled recent sales data specific to the North End, comparing similar houses in the same neighborhood with and without views to determine pricing differentials. The exercise is a challenging one, but I was able to find three pairs of properties of the same size and condition but differing in view (see below for side-by-side comparisons). The view homes sold for 51%, 40% and 55% more than their non-view comparables for an average premium of 49%. My sample size is obviously too small to draw definitive conclusions, but I think the results do support the findings of the study discussed above. The results also echo what I always tell our real estate clients when they ask me “how much more for a view property?”… expect to pay at least 50% more for a great view property and be prepared to wait. Patience is everything.
|7213 N. 25th Street
5 bedroom, 2.5 bath, 3,032SF
Built in 1970, sold for $425,000 on 9/20/2013
|1818 Skyline Drive
5 bedroom, 2.75 bath, 3,000 SF
Built in 1965, sold for $282,000 on 12/13/2013
|3009 N. 31st Street
3 bedroom, 1.5 bath, 2,006 SF
Built in 1906, sold for $462,000 on 8/28/2013
View: unobstructed water view from rear
|2210 N. 29th Street
3 bedroom, 2 bath, 1,820 SF
Built in 1904, sold for $330,000 on 10/23/2013
|3712 N. 39th Street
2 bedroom, 1.75 bath, 1,606 SF
Built in 1916, sold for $460,000 on 07/31/2013
|3905 N. 35th Street
3 bedroom, 1 bath, 1,358 SF
Built in 1922, sold for $297,000 on 8/1/2013
The median sales price in north end zip codes 98403, 98406 and 98407 jumped from $212,000 in January of 2013 to $285,000 in July (a 34% increase). However, after the 4th of July, the market began to cool off. primarily due to buyer hesitancy given multiple offers on properties for sale in the spring and an increase in interest rates for home mortgages. After the slow down the median sale price had dropped to $222,000 by November.
Some neighborhoods held their gains better than others, most notably zip code 98406, but the current market as a whole looks much as it did at this time last year with respect to home values and sales activity. That’s not altogether a bad thing. A steady, measured recovery is more likely to be a sustained recovery.
Lawrence Yun, chief economist for the National Association of Realtors, predicts that strong job growth in 2014 will continue to drive the housing recovery (see the interview here). The foreclosure crisis is expected to draw to a close, and home values will continue to rise, albeit at a slower pace than they did in early 2013. Most pundits agree that mortgage interest rates, currently hovering around 4.5%, will top 5% by the end of 2014. With housing values and mortgage interest rates on the rise, housing affordability is admittedly beginning to decline. That means it could become more difficult for first time home buyers to enter the market, which could temper the recovery in some areas. The good news is that according to Zillow, an online real estate housing database, the Seattle metro area is predicted to be one of the hottest housing markets in the country in 2014,
Mark Pinto is a top producing Realtor with Windermere specializing in historic and luxury homes located in Tacoma, Lakewood and Gig Harbor. For further information contact Mark at firstname.lastname@example.org.
Homeowners in Tacoma’s coveted North End really like their garages, whether they’re attached or detached, one car or two. Some people use their garages as workshops. Others use them for overflow storage. Some people actually use them the old fashioned way – for parking cars. Regardless of how it’s used, the presence of a garage in Tacoma’s North End definitely adds value to a property. People love the North End of Tacoma for its character Victorian and Craftsman homes and its quaint tree-lined streets, but many of the older homes weren't built with a useable garage. Some of the garages that were built are narrow, single car structures. Others offer tandem parking in the basement, while some of the grander homes built at the turn of century have garages that were originally carriage houses.
If a home has no off-street parking whatsoever, it can be a deal-breaker for a lot of buyers, regardless of their price range. A carport may be acceptable, but that really depends on the design and security that the structure offers. The bottom line is that off-street parking seems to be the bare minimum that many buyers will accept, whether it's a garage, a carport, a driveway or just a parking pad. If it's a garage, the bigger and better it is, the greater the added value. Several of our listings have sold quickly in large part because they’ve had a good sturdy two-car garage. Other listings have languished if they’ve lacked a garage.
If you're buying or selling a home in the North End of Tacoma, you should evaluate the garage (or lack thereof) and make sure that the parking accomodations are factored into the purchase price. If you plan to make home improvements that have a good rate of return and you don’t already have a garage, consider adding one. We’ve seen appraisers add as much $30,000 for a garage if a comparable sale doesn't have one, depending on the size and useability of the structure. There are obviously guidelines and requirements that you’ll need to follow, but much of the investment that you make in a new garage will come back to you at the time of sale. For additional information about adding a garage in Tacoma’s North End, visit the city’s Planning and Development Services Department website.