Real Estate News

Pierce County housing market recovers from years of lost equity

As of last month, Tacoma had a little more than a month’s worth of inventory of homes for sale.
As of last month, Tacoma had a little more than a month’s worth of inventory of homes for sale. Staff file, 2013

Home sales data from December show that Pierce County abodes are selling for about as much as they did before the housing bubble burst and plunged the nation into a years-long recession.

Pierce County’s December median sale price — where half as many homes sell for more and half sell for less — is just $4,500 shy the August 2007 peak of $285,500, according to data compiled by Tacoma real estate firm Windermere Professional Partners.

Meanwhile, Thurston County home values are still playing catch-up to the prerecession peak, the data show. Median sales peaked there in January 2007 at $294,950 and bottomed out at $200,000 in December 2012. In December 2016, the median home sold for $275,450 — $19,500 short of the pre-recession high.

The same data show King County surpassed the prerecession high of $430,000 months ago, with a median home price in December of $505,000.

Separately, Northwest Multiple Listing Service last week listed its figures for its 2016 recap, with Pierce County sales up nearly 13 percent and Thurston County sales up nearly 20 percent. Median price for Pierce climbed 10 percent to $275,000 for the year. Thurston County median price climbed 8.14 percent to $264,950.

The next decade will not be as tumultuous, said Peter Orser, chairman of the board of advisers for the Runstad Center for Real Estate Studies at University of Washington. He expects values in Puget Sound, and especially Seattle, to continue to climb.

“People always ask me if we are headed to the next San Francisco. My answer is yes, absolutely,” Orser said of Seattle.

Real estate data firm Zillow says homes values in King County jumped by nearly 10 percent compared with last year. In Seattle the year-over-year increase climbed nearly 15 percent.

Kevin Mullin, owner-partner and designated broker of Windermere Professional Partners in Tacoma, said he expects this year to be the best for real estate agents since he started working in the business 14 years ago.

People fleeing Seattle’s sky-high home prices might be part of the reason, but Mullin said the main cause can be explained in Economics 101: supply and demand.

As of last month, Tacoma had a little more than a month’s worth of inventory of homes for sale, Mullin said.

“It’s pretty clear that’s a seller’s market,” he said. “There’s just not that much inventory.”

Mullin said a balanced market, where buyers and sellers are on equal footing, would have five or six months of inventory. In December, Pierce County had 1.5 months of inventory, the data show. Thurston County is not much better, with 1.9 months of inventory.

Even in the dead of winter, when Realtors say homes have less curb appeal than in the summer months, the housing market here remains hot. North Tacoma, which includes the North and West ends north of Sixth Avenue, has only 0.9 months worth of inventory. Homes that sold in December there were on the market for an average of 26 days.

By contrast, data compiled by Windermere Professional Partners show that in February 2012, North Tacoma had 4.7 months of homes on the market, and those homes sold in an average of 85 days. Data show the median-priced North Tacoma home sold then for $215,000. Last month, a median-priced home sold for $329,250 — $114,250 more than in February 2012.

Statewide the picture remains bleak for buyers. In the Northwest Multiple Listing Service area, which includes five north-central Washington counties and all counties west of the Cascade Crest, supply averaged at nearly 1.9 months of inventory throughout 2016, down from the previous year’s 2.4 months, according to a news release from NWMLS.

Orser predicts annual home price increases numbering between 5 percent and 10 percent for several years.

“Sometime in the next five or 10 years, barring some huge event like Mount Rainier exploding, the market will double,” Orser said.

But Tacoma’s market will remain cool compared with Seattle’s if only because a round-trip to the Emerald City during rush hour can take hours.

“That is a devastating impact and has a lot of hidden costs,” Orser said. “It comes from self or family, or community or faith.”

Commutes are just one factor in a family’s decision on a community, he said.

“Maybe you are willing to drive 90 minutes (one way) if you can get a reasonable home price and a good school district,” Orser said. “Now you’ve solved two cost issues.”

While housing prices continue to climb, fewer homes nationwide are entering foreclosure.

Nationwide, foreclosure activity is also at a 10-year low, according to ATTOM Data Solutions, a firm that tracks the real estate market. Last year in Washington state, banks foreclosed on 16,554 properties, a drop of more than 62 percent since the peak of foreclosure activity in 2010.

Last year, many homeowners heaved a sigh of relief as home values climbed high enough to lift many out of underwater mortgages — where the owner owes more on the loan than the property is worth.

In 2012, half of homeowners in Pierce County had underwater mortgages, but by the end of 2015, only 13 percent owed more than the property was worth, according to information from real estate data firm Zillow.

Staff writer Rolf Boone contributed to this report.

Kate Martin: 253-597-8542, @KateReports