As long as people opt to stay put or remodel, rather than move, it’s going to remain hard to find that bargain home in Tacoma.
Low inventory prospects may not change next year. A new report this week from ATTOM Data Solutions points to some reasons behind that.
Nationwide, along with record high down payments, home equity lines of credit also are at a more than nine-year high, with Bremerton among the top metros in the nation for year-over-year increase.
“Most interesting to me is the big jump in new lines of credit, which is likely a result of frustrated buyers deciding to stay in their existing homes and remodel rather than deal with the highly competitive Seattle housing market,” noted Matthew Gardner, chief economist at Windermere Real Estate, in the news release detailing the report.
Given all that, what’s Tacoma’s outlook?
Dick Beeson, principal managing broker of RE/MAX Professionals, recently answered our questions via email about the current state of the Tacoma/Pierce County housing market. Answers have been edited for length.
Q: What was the biggest surprise this year for Pierce County home sales?
A: Tacoma has finally come into its own.
For years Tacoma/Pierce County were little thought of and dismissed by our neighbors to the north when it came to acceptable livability in Puget Sound. Now, as a result of the high cost of housing in Seattle/King County ... Tacoma isn’t considered the ugly duckling any longer. The days of being known as the “location without a destination” have been mostly eliminated as the quality of life here has caught the attention of even the staunchest Seattleite.
Q: We hear a lot about California buyers in our region’s market. Are California transplants causing the biggest upward pressure when it comes to pricing? If not, then what/who is?
A: The migration isn’t crossing state borders, it’s crossing county borders.
Californians are still coming to Puget Sound because of the changes to the tax laws and the continued ongoing nightmare of traffic and congestion, high cost of living. But the movement to Pierce County and Tacoma by Seattleites has been a recent phenomenon. And the transplants bring lots of buying power as they sell their home in King County/Seattle for XX dollars and buy in Tacoma/Pierce county for X dollars, often half price.
Q: What have been some key differences (besides price) for Pierce vs. King or Snohomish?
A: All three counties have suffered from a serious lack of inventory. However, in all three counties, the number of new listings coming onto the market each month has equaled or exceeded the previous year’s number.
The answer to the inventory shortage is not a lack of homes coming onto the market, it is the velocity at which they are going under contract and going off the market as soon as they come on the market.
More buyers than sellers are in the marketplace in all three counties. There are only so many sellers moving out-of-state or out-of-area; there are only so many sellers that are changing lifestyle and looking to downsize; there are only so many sellers who can afford to move farther away from their work. There are only so many new homes being built in the three-county area each year. That number has increased but has fallen behind the demand by at least a year’s worth of need.
King County is an incredibly difficult place to secure a home if you are an entry-level buyer. It is easier in Snohomish or Pierce, but not by much. All have seen the price entry point increase significantly in the past three years.
All three counties experience similar stories with regard to multi-offers, above list-price offers, waiver of inspections by buyers and escalation clauses in contracts.
In Pierce County, these practices are happening at a different pace than in Snohomish and King County.
Slightly more laid back and easy going, the buyers and sellers in Tacoma/Pierce County aren’t as frantic, yet, as their counterparts in King and Snohomish.
Keep in mind, the Thurston and Kitsap markets are also feeling the spill-over of Seattle metro-area buyers. Buyers are looking at housing prices as pretty much the final determinative of where to live.
Q: Is inventory improving? Will millennials be able to have more choices of what's available next year in the entry-level? How about mid-level and high-end inventories for next year?
A: Inventory is not improving, nor will it improve throughout 2018. The velocity of the market will continue to make it extremely difficult for buyers.
New construction is far behind the level it needs to be. And that won’t change because of many factors including lack of available correctly zoned land; lending practices still remain stringent and money is difficult for small and mid-sized builders to obtain; and government regulation causing delays and expenses to increase.
The Tacoma/Pierce County market will experience a continued rise in prices, albeit at a slower pace than in 2017 (maybe 3-6 percent), and inventory levels will remain low throughout the year.