Tom Hume's Blog

Tacoma Market Trending Up

Tom Hume (Windermere Professional Partners) — Sun, 09 Aug 2009 18:45:58 -0700

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!

Is the Stimulus Helping The Tacoma Market?

Tom Hume (Windermere Professional Partners) — Thu, 16 Apr 2009 18:32:26 -0700

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.

Tacoma's Hilltop Neighborhood - A Renaissance

Tom Hume (Windermere Professional Partners) — Wed, 11 Feb 2009 17:45:37 -0800

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.

Surprising Development in Tacoma's Entry Price Point!

Tom Hume (Windermere Professional Partners) — Wed, 11 Feb 2009 17:03:48 -0800

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!

Early Signs of Thaw?

Tom Hume (Windermere Professional Partners) — Sat, 10 Jan 2009 14:15:20 -0800

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.

Break it Down

Tom Hume (Windermere Professional Partners) — Wed, 10 Dec 2008 16:42:15 -0800

I had a few comments on my recent first post about Sales Ratios (absorption) for Tacoma and surrounding areas. I cross posted on my own website. Kym, who wrote me there, hit the nail on the head. The lower price points are moving better than the higher priced homes in Tacoma, University Place and Fircrest, probably for the very reasons she cites. First time buyers are out hunting for good deals. Importantly, they do not have homes to sell, which means they are in a position to act when they find something. Lending standards have tightened, so some of those deals don't sail through to closing the way they once did, but the fact is, those are the houses that are moving. So your gut, Kym, is right on the money! You win the Golden Gut award. Maybe I'll come up with a more appealing name, or maybe Kim, as debut recipient, might be inclined to suggest one.

The best price category in terms of Sales Ratio is sub $200,000. Absorption there, while not great, is at least in an acceptible range. What is very striking about this study from today is the number of pending sales over $700,000. I don't recall a time when there were ZERO pending sales in such a sweeping range.

Pending          Active      Sales   Ratio
Overall           104          733     14.2%
Sub $200K      29            127     22.8%
$200-$300K    43            249     17.3%
$300-$400K    20            150     13.3%
$400-$500K    7              72        9.7%
$500-$600K    2              52        3.8%
$600-$700K    7              26       26.9%
$700-$800K    0              21        0.0%
$800-$1m      0              24        0.0%
Over $1m       0              22        0.0%

Is this bad news? NOT if you are a buyer! This is what they call a buyer's market. Interest rates are at an historically low point. Money is affordable, inventory is plentiful, and prices are depressed. I don't have to brainstorm my next posts. This study leads me in the direction I want to go. Stay tuned for more on why buyers should not be sidelined by dire news stories about the economy. In my opinion, there are great times to buy and great times to sell. We won't know for sure until the dust settles and December 2008 is in the rear view mirror, but I am increasingly of the opinion that now might just be the time to buy that Tacoma real estate.

Hey, Tom... How's the Market?

Tom Hume (Windermere Professional Partners) — Fri, 05 Dec 2008 19:31:10 -0800

I get asked this question a lot. Rather than rely for my answer on gut feel alone, I like to continually understand what is really going. Out team has a nifty tool for that; the sales ratio.

That sounds mathy, but the math couldn't be easier. Sales Ratio is Pending Sales divided by Active Listings. No matter what market you are talking about, no matter the market segment within that market, the sales ratio sheds light on how well the market is absorbing inventory. It is a snapshot of the moment you happen to pull the numbers. (It can change the second after you gather the data.) For example: Let's say there are ten actively listed homes meeting whatever criteria you query, and there are five pending sales. The sales ratio is 50%. Incidentally, a result of 50% signifies to us a market in balance, favoring neither buyers nor sellers.

Below 50% = Buyer's Market (large supply of homes, low demand)

50% = Balanced

Over 50% = Seller's Market (shortage of inventory, high demand)

The other day (12/1/08) I pulled the numbers for the North End of Tacoma, Central Tacoma / Hilltop, University Place and Fircrest. There were 746 active listings and 111 pending sales, for a 15% Sales Ratio.

To put that in perspective, two years ago there were 633 active listings and 187 pending sales, or 30%. Three years ago there were 424 active and 233 pendings, or 55%. I should note that within some price categories, that sales ratio exceeded 100%. At any given time there are hot price points, and slower ones.

Buyers, this is your chance. They call it a buyer's market... not a waiter's market. (I didn't author that; I heard it somewhere.)

I'll break down sales ratio by price category in a later post.