Home Sales Drop and Current Real Estate Market Trends

In Pierce County and Tacoma, sales are showing a modest upward trend so far this year when compared to the winter months (which is cyclical and quite a normal trend). Pierce County reported a 30 percent drop compared to the year before. Not only are sales continuing to drop, Pierce county registered a 5.5 percent Home Price dip as compared to March a year ago.

Real Estate Market Trends made both Seattle Newspapers today:

See the Seattle Times article here: Home prices declining, inventory building around Puget Sound

Seattle PI: Seattle single-family homes prices stay steady in March

Check out the vastly differing titles and article content.

Real Estate experts still are claiming the end is near: The local market "has reached bottom -- or pretty darn close" and although inventory continues to grow, so does optimism among buyers, Northwest MLS director Dick Beeson said in a statement.

I think that this is hopeful at best. Add in the difficulty of getting a mortgage plus the recent economic development, you get a bleak outlook for a quick turnaround.

"It's no longer a question of recession or not. Now it's how deep and how long. Workers' pink slips stacked ever higher in March as jittery employers slashed 80,000 jobs, the most in five years, and the national unemployment rate climbed to 5.1 percent. Job losses are nearing the staggering level of a quarter-million this year in just three months. "

Check out the rest of the news in this recent AP Economics article: Huge job losses set off recession alarms.

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 CNNMoney.com.

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.

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....

An good article outlining the current state of the Tacoma Real Estate Market...

Forbes.com article 9/22/06

Check out their 10 year prediction for Seattle, though! I think Seattle / Tacoma is a great place to live and not in the same shape as other metro areas but 60% gains over the next 10 years is a little optimistic, I believe.

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.

Seattle Home Prices - A Local Market Debate

Pretty good article in the Seattle Times regarding the local Real Estate market. There is a heated debate whether Seattle is a different market. There are good points on each side.

Home prices' long rise: Is the end near? - 09/03/06

But take this advice because it will serve you well in a buyer's or seller's market. It is a proven principle in real estate and you won't go wrong.

If you are looking to buy. Buy a house you love (if is it your home), but most important buy one that you can afford on a fixed rate mortgage. Your payments will stay the same and you will own your home in thirty years.

The housing market has gotten out of hand because of speculation, investing, and new mortgage programs. Variable rate mortgages make up a very large part of the industry, see the chart below:

http://www.businessweek.com/common_ssi/map_of_misery.htm

Eek, watch out Cali.

I am believer of real estate and do believe in investing in the market. Why? Because of leverage.

You can put 20% down on a property and leverage the rest. You can't do that in the stock market, each dollar invested in your own.

The rental market looks good right now because it hasn't corrected itself yet. Dupre and Scott Apartment Advisors interview thousands of property owners and managers in the Puget Sound region. There are predicting a 15% increase in gross rent over the next two years.

Unfortunately, both buying and renting is becoming more expensive.

Dan
danielh@gibraltarusa.com

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.

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.