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: http://www.condocompare.com/WA/Pierce/Tacoma/condo_search.aspx

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).

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?

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.

Tacoma Real Estate Market Listings Soar, Prices Drop

The number of listings in the Tacoma Real Estate Market 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....

Real Estate Market Data

where and who people are getting their data. I just look at the MLS and interpret the data how I feel comfortable with. A realtor can provide you with just about any information you desire, of course it helps if you are a buyer or seller working with them, laugh.

Above are a couple of scans of an Area Market Survery hot from the press (generated from the MLS, you can even see the links at the bottom). I am mainly posting this entry for the prolific debaters from both sides of the argument on the housing forum of Craigslist. For better resolution click on the image then expand it. The first pic is all homes sold in seattle from May 18, 2006 to June 18, 2006. The second is from August 18, 2005 to September 18, 2005. The third is August 18, 2006, to September 18, 2006. Don't ask me why the aren't in order, Blogger put them that way.

Tacoma Housing Market sizzle now a simmer..

All the local papers published articles about the cooling Seattle and Tacoma Real Estate Market:

Tacoma News Tribune:
Housing sizzle now a simmer - 09/13/2006

Seattle Times:
Area's home prices idling as buyers take more time - 09/13/2006

Seattle PI
Home buying 'frenzy' may be leveling off - 09/13/2006

Overall I agree with the information published in these articles, they are based on hard numbers that I have confirmed myself through the MLS. We are in a buyer's market, good deals will still move, over priced or undesirable properties will sit - for a very long time.

Properties are Still Selling in Seattle

You can walk up to any water cooler or any group of people and immediately start a debate on the housing market. I've found, however, this is mostly an emotional debate based loosely on impressions or advice from this guy or that gal. Hardly are hard numbers involved. Now, numbers can be manipulated to show any number of things rarely show the whole picture. However, I like to look at the raw numbers and determine for myself what I think they mean. And I will post these raw numbers on this blog. If you have any market analysis requests in the Tacoma or Seattle area email me and I will see what I can do.

So without further adieu:

Seattle is one of those highly discussed area, partially because it appears the market is not slowing down much. I attribute this to a growing downtown commercial and residential core, a lack of easy expansion due to geography, and the commute.

The following numbers are based on Single Family Homes and Condos.

The number of buyers is constant, which is an indication of a strong market. The inventories, or number of active listings, are rising, doubling actually each month. The next couple of months should be interesting. The rule of thumb is if the inventory is less than 3 months the number of properties sold per month then it is a seller's market. If it is more than 6 months then it is a buyer's market.

Interestingly enough the average days on the market and the price has stayed the same. Homes and Condos are selling in about 30 days and the average price is 475k.

Stay tuned.

Inventories are Jumping through the Roof in Tacoma

I am a big believer in numbers, that is why I went into real estate in the first place.

In the Tacoma Housing Market, inventories have jumped from less than 250 Single Family Homes on the Market in May to over 1300 to date.

Not only that the number of Single Family Homes sold in August in Tacoma was a little over 260, compared to over 520 for the month of August in 2005.

Definitely swinging to a buyer's market. Don't let anyone pressure you into buying. There are plenty of properties available. And yes, while there are some still properties coming under contract in less than a week, that is the anomaly not the norm now.

I am firmly convinced that you should view every property as an investment unless you know for 100% certainty that you are going to live there until you die. Taking the emotional connection out of the picture, take a step back and get the best deal you can in the area you want. If your agent is not providing this kind of service and advice, find another.

Is the Condo Market in Tacoma in Trouble?

Yes, I believe it is and here is why.

Inventories have tripled in the last six months. There were half as many condos sold in July then there were in both May and June. Why?

Developers are setting high prices (Seattle pricing) and are still building more units. Prium is working on three projects in a half mile radius. The median price for a 2 or 3 bed condo sold in the last six months Tacoma is $239k. The median price for a home is $234k. By the way, the median priced condo on the market right now in is $355k.

The reason why condos are attractive is because in most urban markets, Seattle for example, they are much more reasonably priced than single family homes. In Capital Hill in Seattle, the median priced house sold in the last six months is $669k compared to a 2 or 3 bed condo at $369k. That is a difference of over $300k. This is why the Seattle condo market is still hot. Since most people have a hard time entering a market at $670k, condos are much more viable an option.

This absolutely does not exist in Tacoma. Take my advice, do not buy a condo in Tacoma unless you desire that type of living and are willing to pay a premium for it. Condos in Tacoma are not a good investment.

The Tacoma Real Estate Market is Slowing Down this is True...

Don't let Real Estate Agents try to fool you, the market is slowing down. The market is swinging back towards a buyer's market. However, there are some key issues I would like to address. Properties of all kinds, are selling quickly if priced and marketed correctly.

For example a 3 bed / 1 bath, 2000 sq ft house right off 6th Avenue went for 5k more than asking price and was under contract in less than a week.

Now is a very good time to buy or exchange investment property. Why?

The investment property market is slowing but still healthy. The market is shifting from a strong seller’s market over the last four years to a buyer’s market. Increasing interest rates and home prices in the single family housing market, condo conversions, and a stable economy are contributing to lower rental unit supply and increasing rents. For the first time in years, renting is a much more viable and affordable option than buying, with owners getting greater cash flow as a result.

Why is it the perfect time to buy or exchange rental property?

• The multi-family property market is still strong with correct pricing and intelligent marketing. Over a quarter of the properties sold in the last two months were on the market for less than three weeks.
  
• Multiplex inventories have doubled in Pierce County over the past year.
  A 4% rent increase in the last 12 months with a projected rent increase of 14% of the next two years.
  
• A projected net operating income increase of 21% over the next two years.
  In Pierce County, the market vacancy rate is 4.8%. That’s the lowest rate since early 2001 and down from its peak of 8.2% less than two years ago.
  
• In 2006, 5,000 rental units in the tri-county region will be converted to condos significantly decreasing the supply of available units, and putting additional upward pressure on rents.
  
• "Mortgage rates are down for the fourth straight week and are the lowest they've been since mid-April." Frank Nothaft, Freddie Mac chief economist, Aug. 17th.
  
• There is now a difference of $550 between the mortgage payment of an averaged price home in Pierce County and the average rental of an updated 2 bed / 2 bath apartment, making renting an attractive cost-saving option for many people.