Tom Hume

Things are picking up in the Tacoma real estate market. It’s been a long ride since September of 2007 when the market really started slowing down. Tacoma isn’t a market known for volatility of real estate values. Rapid spikes in either direction are a phenomenon we generally associate with California. First we had several years of steep appreciation fueled by relaxed mortgage standards and low adjustable rate loans. Those same factors that lead us up the hill eventually led us back down. People’s rates reset, causing them to get behind in their payments. Foreclosures spiked here, like elsewhere, flooding the market with low priced homes. This along with buyer anxiety caused our sales numbers and values to slide for nearly two years. Hopefully the worst is behind us. The stimulus package included a first-time home buyer tax credit of $8,000 which is set to expire December 1st. It has helped sales, particularly with lower priced homes.

The Northwest Multiple Listing Service reported more home sales closed in Pierce County in July than in any month since August 2007. Nearly 21 percent more sales – of single-family homes and condominiums – were pending than were pending a year ago. David Gala and The Hume Group is cautiously optimistic at this point that the worst is behind us. Although mortgage standards have toughened, rates are still at historic lows. We are hopeful that Tacoma buyers will take advantage of these low rates, attractive prices and a plentiful supply of homes on the market from which to choose! If you would like to see what is available in your price range, give us a call!

It does seem the $8,000 first-time-home-buyer tax credit, part of the President’s stimulus package, has helped to stimulate the lowest price points of the Tacoma market, but the Developer of the 27th Street Station says they have not seen increased volume as a result. “We are selling homes,” says Dave Gintz, “but we were hoping for a real boost from this and that has yet to materialize.” To help it along, The Gintz Group is announcing a plan to match the Obama stimulus dollar-for-dollar. For contracts originating in April, the developer has agreed to an $8,000 concession package. Inventory starts at $127,990, With the $16,000 in combined savings, that brings the effective price to $111,990 for a completely remodeled unit with quality finishes. I heard today that the Ways and Means Committee pushed through legislation that would allow first time buyers to use their $8,000 credit toward their down payment. This could really improve the results we have seen to date.

It has been amazing to watch the transformation of downtown Tacoma and neighboring Hilltop, so named because it is perched on a bluff overlooking downtown, Commencement Bay and Mt. Rainier. I remember seeing Hilltop on the show Cops in Tacoma at a time when there was a proliferation of gang activity and crime.

A lot has changed. Wikipedia has this to say: "Since the mid-1990s, neighborhood watch efforts, increased police presence, commercial real estate development efforts along Martin Luther King Way, and rising real estate values in all areas adjoining downtown Tacoma have served to lower the amount of crime in Hilltop". What has happened is a renaissance of that area. There are new restaurants and businesses, a light rail line with expansion plans and museums. The University of Washington Tacoma campus has been expanding since its inception.

One of my clients, The Gintz Group, a real estate developer, is headquartered in downtown Tacoma in the Mecca, a building that was once an adult movie house, but which they have since renovated beautifully into a mix of office and residential use. They are currently developing a site at the corner of 23rd and Martin Luther King Way. Here they partnered with Ivory and Eric Crittendon in a planned mixed-use redevelopment of a former brownfield site. The site was a gas station in the 1940s and 50s before housing Ivory's Auto Rebuild. The first phase of the redevelopment plan is well under way with the excavation of storage tanks and soil remediation to be completed this week. This will clear the way for a 6 story mid-rise building that will house high-end apartments and commercial / retail space.

And just down the street is a project I am representing for sale: 27th Street Station Condominiums. Despite the economic downturn, 27th Street Station has sold 17 units since opening in April and is the fastest selling condo in Tacoma. Dave Gintz says the success is attributable to deluxe finishes, low prices starting at $124,990, with monthly payments of about $1,000. You can get a condo at the Station with a view of Mount Rainier for less than rent, particularly now with historically low interest rates. Forgive me touting my listing here, but I'm just very excited about the project and the area generally.

More Nums

Pending Active Sales Ratio
Overall 143 622 23.0%
Sub $200K 51 95 53.7%
$200-$300K 43 249 29.1%
$300-$400K 20 150 11.7%
$400-$500K 7 72 18.5%
$500-$600K 2 52 4.5%
$600-$700K 7 26 8.3%
$700-$800K 0 21 11.8%
$800-$1m 0 24 5.9%
Over $1m 0 22 4.2%

It's official. The under $200,000 market in Tacoma, Fircrest and University Place is not a Buyer's Market any longer!! It is balanced and trending "Seller's". Even the $200,000 to $300,000 range is showing much improvement.

I was really hoping for the $15,000 tax credit for first time home buyers to survive negotiation between the house and senate regarding the stimulus package, but it would appear we are getting something less... probably $7,500. Depending on how this looks in the final bill signed by President Obama, it could have an impact on these numbers. I promise to write about something other than sales ratios soon. I'm just focussed on the ailing market's recovery. I'm encouraged by the entry level price range and hopeful it will trickle up!

New num's....

Category.......Pending.....Active.....Ratio
Overall............110.........628........17.5%
Sub $200K.......38.........104........36.5%
$200-$300K......46.........212........21.7%
$300-$400K......17.........138........12.3%
$400-$500K........4..........65.........6.2%
$500-$600K........5..........33........15.2%
$600-$700K........3..........27........11.1%
$700-800K..........0..........18.........0.0%
$800-$1M............0..........18.........0.0%
Over $1M............0..........21.........0.0%
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There is improvement overall since December of more than three percentage points, but check out the sub $200K range. The improvement here is tremendous. Ordinarily I would say this will trickle up into the higher price categories as those lucky sellers, freed up at last to buy, move to more expensive homes. However, many of the sellers in this case are banks, and individuals with injured credit scores who may not be able to buy something else right away. But as that inventory is absorbed more and more sellers will turn into buyers. Stay tuned.