Year over year home sales activity in Tacoma’s North End was down in the first quarter of 2020, but there was a surprising surge in the days leading up to the Governor’s “Stay Home” order in late March, which will likely yield a year over year increase in closed sales in the second quarter.

First Quarter Market Update for North Tacoma

Sales activity was down in North Tacoma in the first quarter of 2020, but home prices continued to rise. The median home price for zip codes 98403, 98406 and 98407 is 10% higher now than it was a year ago.

The pace of the market continues to quicken.  On average, homes have been selling in 3-4 weeks.  Inventory levels remain extremely low.  Unless available inventory increases dramatically during the COVID-19 pandemic, pent up demand should help to stimulate the market when things return to normal.

What’s happening with the broader economy?

  • Most experts agree that the U.S. economy has entered a recession. The severity of that recession will depend in large part on the course of the COVID-19 pandemic.
  • The Federal Reserve Board’s recent efforts to stabilize the economy with interest rate cuts have been unsuccessful, but rates are likely to remain low for the foreseeable future. That’s good news for the real estate market.
  • Goldman Sachs predicts a difficult first half of the year (not a surprise) with recovery beginning in the second half.

What impact will the pandemic and associated recession have on home values? That remains to be seen, but we’re guardedly optimistic.

  • Recessions aren’t typically associated with a significant drop in home values. The Great Recession of 2008 is the exception to that rule because it was CAUSED by questionable lending practices and a resulting wave of foreclosures.
Home Values During Recession

    • The current recession’s impact on the housing market is predicted to be similar to the impact of the recession that followed the crash and 9/11 in the early 2000s. Though the S&P 500 lost 45% of its value between September of 2000 and October of 2002, home prices increased 6.6% to 8.6% per year during that same period of time.
    • Recognizing that an uptick in foreclosures could trigger an unwanted housing crisis, the federal government has put mortgage relief measures in place for government-backed loans, including a 60-day moratorium on foreclosures and the option to defer payments (and extend the life of a loan) for up to 12 months. Many large banks are following suit, offering up to three months of payment deferrals and/or mortgage forbearance.

Because the housing market was strong when the COVID-19 pandemic began and because the federal government has implemented measures to keep the housing market strong as we head into a recession, we’re guardedly optimistic that home values will remain stable.  If we do see a drop in home prices, that drop should be modest.

Given the uncertainty associated with the current health crisis, it’s critical for buyers and sellers to seek expert 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 Chambers Bay, specializing in residential real estate in Tacoma, Gig Harbor, University Place and Lakewood.

Mark Pinto: (253) 318-0923

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