The median price of closed single-family homes (excluding condos) in King County in May was $700,000, Northwest Multiple Listing Service reports. Pierce County, by contrast was at $370,000, slightly higher than half the price of its neighbor to the north.
The disparity in prices, not to mention the size of the respective markets (the number of transactions was also at roughly a two-to-one ratio), would suggest these are stories of two separate and distinct markets, reflective of different economies and economic drivers. The heavy tech influence in Seattle and the Eastside and its modest (at best) presence in Tacoma and Pierce County distorts the economic comparisons to the point of being unreliable.
But they aren’t two distinct markets, even with the physical distances and economic differences between them. The willingness of workers to commute long distances, via car or public transit, if that’s what it takes to have both a job and a house that is affordable and comfortable, makes it one big market.
This isn’t exactly new news. Tacoma has had its real estate booms — or more properly boomlets — and busts before, driven by what was going on in Seattle and more specifically with Boeing. Housing prices in the region are as old a conversation topic — if not as consistent — as the weather.
Even when Seattle got into one of its periodic frenzied moments, leaving people to mutter about the cost of homes, rarely was there a feeling that affordability had been permanently lost. You might not get a prime property in a perfect neighborhood, but even first-time buyers and newcomers to the market had some hope of getting on the homeownership ladder.
This time feels different. Home prices have galloped so far ahead of income growth that much of Seattle and some Eastside communities are in danger of tipping over into the permanently unaffordable zone.
When that happens, what happens to Tacoma?
Since the markets are so intertwined, we should be seeing some effect. We are. The multiple-listing service shows a year-to-year gain in the closed-sale median-price number for Tacoma even as King County had a bit of a decline. As reported by The News Tribune’s Debbie Cockrell last week, some Pierce County neighborhoods are seeing an increase of high-income households, with that trend widely attributed to the relative attractiveness of housing prices locally.
That’s great news only if you’re a seller looking to move out of the market or downsizing. For everyone else, it’s at best mixed news. Those moving in get the house they want, but a longer commute, too. Those already here find the next rung on the home-ownership ladder just got more expensive. And the community pays a price from being someone else’s bedroom suburb.
It’s not clear that, even by packing ‘em higher and deeper, Seattle can ever reclaim the mantle of affordability. While there are examples of markets getting overheated and then cooling off — southern California, a source of transplants looking to escape high home prices in the early 1990s comes to mind — history does not list many instances of regions slipping from the ranks of expensive places to live.
Tacoma and Pierce County have the luxury, if that’s the right word, of having an inventory of developable land on which to build more housing, which in theory should at least dampen price increases. They also have an inventory of commercial property just waiting for business owners and entrepreneurs looking to reduce their operating costs and their commutes.
But here’s the maddening thing. Will those attractive features be Tacoma’s affordability undoing? Getting businesses to relocate here is a good thing because it builds the employment and tax-revenue base. It’s not so great in that increased demand for residential and business real estate will drive up their cost.
Somewhere out there is a fine balancing point between affordability and economic vibrancy, and good luck trying to find it, much less stick to it. Some economies stay permanently mired on the low-vibrancy/high-affordability side of the scale — think of the Rust Belt communities for whom the last recession never really ended. Short of a giant tsunami wiping out the tech sector, the Bay Area looks to be permanently ensconced on the high-vibrancy/low-affordability side.
That should make predicting the future of affordability and demand in Tacoma and Pierce County a simple matter of figuring out what’s going on with aerospace and high tech in King County. Even that theory has its limitations and drawbacks in predicting the future of affordability in this market.
To judge by some of the data, the twin hits of the dot-com bust and 9/11 (resulting in Boeing layoffs) caused a plateauing, not a slump, in the Seattle housing market. It took the Great Recession to really carve a chunk out of local real estate prices — and yet aerospace and high tech, the regional economy’s two leading drivers, did comparatively well during the downturn.
The economy could get rocked again by tech and aerospace simultaneously swooning (Amazon could pack up and move. Meanwhile, a recent headline from trade publication Aviation Week warns, “There’s An Aircraft Order Bubble — And It Is About To Burst”). That might solve the affordability problem, at a huge cost to the economy and those whose livelihoods depend on those jobs.
If it doesn’t? Then you’re stuck with a low-vibrancy/low-affordability economy. Is such an animal even possible? Better to attempt to cope with the beast we’ve got, no matter how ornery it seems, than to find out that alternative is not only possible but a far more harmful creature, and far more difficult to tame.