Monday, March 31, 2008

Another Way to Look at Tacoma Condos

I have stumbled across Condo Compare a couple of times and feel that it has some merit in terms of a tool to compare Tacoma Condos across neighborhoods. What I really like about the site is that it gives you an idea of the total number of units for sale, not only for that particular Tacoma Condo Project, but for the condo inventory citywide. Although, to be honest, I am not sure how up to date their information is, I will do some research and report back to you on that.

Check out their website:

There are a lot of condos out there. I don't recommend buying a Tacoma condo as an investment, there is too much inventory and the prices are too high. However, if you were in the market for a condo, this will give you some ammunition when it comes to the negotiating table (although the market is definitely in your favor, especially when it comes to Tacoma Condos).

Saturday, March 29, 2008

Tacoma Condo Map

A couple of years ago, I started reading Exit 133, a local Tacoma blog that is about Tacoma. It's about Real Estate, Politics, the Arts, Urban Development, and the interests of Tacoma readers. Of course, I was interested in the Tacoma Real Estate Market.

One of the more interesting posts, I remeber, was a Google map superimposed with new Tacoma condo developments. You can see the original overlay here. They had a scant pickup of interest and some revision in late 2006 as seen here.

I think it would be fascinating to take this idea and create a heat chart (ala Tulia) and utilize some of the functionality seen on the Tacoma Condo Map, not only detailing locations and websites, but also days on the market, and sales prices.

Who knows maybe we could inject a little life in the Tacoma condo market and get some of these stale units moving and reduce the Tacoma condo inventory. Even if it means a loss for the developers.

Who's with me? Anyone? Anyone?

Tuesday, March 25, 2008

Home Prices Plunge a Record Breaking 8.2%

The National Association of Realtors recently reported the median price of homes sold during the month fell 8.2% to $195,900 from $213,500 a year earlier - the largest year-over-year price drop on record. Before the start of the current housing slump, it had been 11 years since prices declined, when compared with the same period a year earlier. Read the full artice at

Although home sales rose modestly nationwide, home sales still declined in the Western region of the United States. The NAR and housing experts still try to paint a hopeful picture, but as lending practices tighten and foreclosures increase along with rising gas and food prices combined with a weak dollar, I think we haven't seen the worst of it yet. Hold on to your hats, we are in for a bumpy ride.

Sunday, March 23, 2008

Thinking about Buying a Condo in Tacoma?

I wrote a post in 2006 talking about Tacoma Condos. I said it then and I will say it now, don' buy a condo in Tacoma as an investement. There are over 300 two and three bed condos on the market right now in Tacoma. The average listing price is hovering at $305k. There were just over 160 condos in this category sold in Tacoma in the past twelve months. That is close to a two year supply, and guess what developers are still building them. Prium has gotten smart and are turning both Chelsea and Hanna Heights into apartments. Not sure how much the rents will be but they will have a hard time breaking even. Prium had not sold one single unit in Hanna Heights despite upgrading the countertops and other amenities. The Jay Heights project has been put on an indefinate hold and there is plenty of developable land on the market.

You also need be to aware of the high risk of construction defect litigation, home owner dues, and poorly managed home owner associations. All of these factors, an individual condo owner does not have much control over, and it usually amounts to higher HOA dues, which creates a huge monthly cost penalty for owning a condo.

The mediam sales price for homes in North Tacoma are $289,000 and have decreased over 7% for the year. If you are looking to buy, don't buy a condo in Tacoma, they aren't good investments. If you love the lifestyle, I would recommend renting one of these recent downtown Tacoma condo projects turned apartments and wait for things to settle out. Zero lot line Townhomes are always an option, at least you won't have to deal with HOAs and HODs.

Saturday, March 22, 2008

Tacoma Real Estate Market Listings Soar, Prices Drop

The number of listings in the has ballooned to over 2600 in the MLS. There were 250 SFH Listings on the Tacom Real Estate Market in May of 2006, that is over a 1000% increase since I started tracking inventory on my own.

Prices have dropped close to 10% from last year. Sales are down 25% from a number that already saw the inventory outstripping the demand. Mortgages are harder to get. Washington
was deemed a "soft" market making mortgage insurance companies shut off 100% financing.

Have you tried getting a non-owner occupied loan with a LTV for more than 80%? They basically don't exist, taking another segment of the buyer population out of the picture. Even if prices keep dropping, many Americans don't have the savings to put 20% down.

One disconcerting factor that has gotten some media attention but has not been internalized by many in the Real Estate market today is demographics, good old demographics.

There are 78 million baby boomers approaching retirement fast, with the upper limits already making the transition. Their typical real estate life cycle involved trading upwards for bigger and bigger home ala the McMansion in the suburbs. The problem is that many Gen X'ers even in places like Tacoma, myself include, do not want a sprawling house in the suburbs with the awful commute. What will be done with these homes in the current Real Estate Market crisis?

Time will only tell....

Friday, March 21, 2008

The Subprime Crisis and Widespread Corporate Fraud

There are many causes for the current subprime (and prime) mortgage crisis. One such cause that is coming more to the forefront is the widespread corporate fraud that exists (possibly existed, they have tightened up quite a bit) in the mortgage industry. The FBI is investigated 17 mortgage firms accused of Fraud.

If you have any doubt that things will be supressed for the forseeble future, check out this article in the New York Times. One factor in the real estate boom was the type of loans that were being written, standards are being tightened dramatically so this factor will likely not contribute to a rebound in the future.

Thursday, March 20, 2008

Subprime Crisis Nightmares and Mortgage Problems

I have seen it all myself and this article attests to the trapping and lies that have befallen many in the current real estate crisis.

There are a couple of things that you should always keep in mind when shopping around for a mortgage whether it is a refinance (refi) or purchasing a new home.

One of the most important things to ask for when shopping for a refi or when purchasing is a GFE - or good faith estimate. There is a Truth-in-Lending Act ("TILA") statement required for closed-end, fixed-rate residential mortgages under the Truth in Lending Act, and the Good Faith Estimate of Settlement Costs ("GFE") required under the Real Estate Settlement Procedures Act ("RESPA"). A GFE must be provided to you three business days after submission of an application.

The GFE will break down all associated costs, fees, prepayments, and the estimate monthly costs. Important items to look for are discount points and broker fees (shouldn't pay more than 1% origination fee) and any pre-mortgage insurance (PMI).

Be sure to ask if there are any pre-payment penalties.

How do brokers get around the TILA and the 3 day rule? Most lenders don't have you fill out a formal application until closing only then do they conveniently add the GFE in the closing docs.

Always ask for a GFE and do your research to ensure all items have been covered. You can hold them accountable for extreme discrepancies.

Wednesday, March 19, 2008

Confessions of a Tacoma Real Estate Entrepreneur

Every investor will have their collection of tales in real estate investing. They will have the tale of the "one" that got away. They will have their defining moments in defeat and in victory. I would like to share such a tale with you.

In Late Summer of 2006, I was heavily invested in the Sixth Avenue district in Tacoma. I had researched every parcel up and down that business district, primarily because of the zoning (which is mostly Residential Commercial Mix-Use and Neighborhood Commercial Mix-Use). I felt strongly that Sixth Avenue would become the next Capital Hill in Tacoma. The district is still mostly made up of single family homes but with great zoning and is within walking distance of a lot of great restaurants and bars.

As I dug deeper into the zoning (height limit for most parcels between Pine and State Streets and N. 8th and S. 8th is 45') and the parcels in the area, I realized that sooner or later land prices would become a premium. Why?

SFH prices were high and far outpriced the value of the land they sat on. Homes in the area typically go for 250k plus and usually sit on a smaller than 5k square foot parcel. Actually, there are very few SFHs that sit on anything larger than a 5k lot. I used the mapguide viewer on the City of Tacoma's GovMe site extensively for this. This research led me to make two decisions first I bought a four plex sitting on a 7800 square foot lot that had a nice rental income stream and was well priced at the time. And secondly, I targeted several parcels for acquisition.

One such parcel was located across the Jack in the Box on State Street, it was a small three bedroom rental on a 10k lot. The owner was in the local area and bought it for less than $150k. She had owned it for about three years. I cross referenced her name with White Pages, got a number, and made the call.

I told her I was a local real estate investor and was interested in her house on State street. I asked her if she had any intention of selling and she said she didn't. Not wanting to lose the opportunity, I made a verbal offer of $300k on the spot. She took a deep breathe and asked if I was serious, I said absolutely and said there would be an written offer to her in an hour.

I wrote the offer up with and/or assigns (I like having flexibility), and it was accepted. I knew the land value of the property was worth significantly more than $30/sq ft, so I reached out to several area investors and ended up assigning the contract to a Seattle developer for $17k. Not a bad little deal for the amount of time invested. By the way there are no other SFH on 10k lots in the Sixth Avenue Area that would be at this price point (I have looked).

Look for opportunities, aggressively pursue them, make a strong offer and move the deal.

Monday, March 17, 2008

I use Redfin ...

I use Redfin to look at Real Estate lisitings in Seattle and Tacoma. I used to use Windermere (they uploaded new listings the quickest) and John L Scott is nice for some commercial listings (why can't the CBA website have rendered graphic listings over a map???).

I use Redfin due to two facts.

1. I love to see what I might save if I don't use a traditional buyer's agent (I usually end up telling them which listings I want to view anyways, they just have the MLS Key).

2. They have unique features that shows the number of days on Redfin (on the market) and the price chanes to the listings. Not to mention the tax and parcel information that normally I would have to go to Pierce County's Assessor-Treasure site or Tacoma's Government Made Easy site (easily the best tool for an investor in Tacoma).