Portions of Pierce and South King County are getting wealthier.
From 2012 to 2017, the Tacoma metro and surrounding area, which includes some of South King County, have seen the number of high-earning households, those that make $200,000 a year or more, grow from 14,594 to 24,137.
That’s according to census data and numbers compiled by data and analytics consulting firm Webster Pacific, based in San Francisco.
Not all of the high-earning households are new, the researchers said. Some of them could have been in the area before 2012 and experienced wealth growth.
Yet, as Seattle’s housing market has continued to push more home buyers southward, some neighborhoods on the outskirts of Tacoma’s metro area have been among those to see the most growth since the market rebounded after the Great Recession.
The accumulation of wealth leads to affordability concerns and raises questions about what is happening to the local economy.
A look at changing income levels in the Tacoma metro area offers a patchwork of comparisons, based on Webster Pacific’s review of census data from 2012-2017, which were compiled for The News Tribune by Steve Bazant, a consultant with Webster Pacific.
The area reviewed extends slightly beyond Pierce County’s borders to the north, to get a sense of some of South King County’s effects on the local economy, and excludes the less-populated areas closer to Mount Rainier.
A link to the report is here: https://tabsoft.co/2KB0J9R
According to the results, the number of wealthy households has taken off in some areas, increasing by hundreds of households earning at least $200,000 annually.
New development has helped attract a growing percentage of high-earning households to Gig Harbor, the Fox Island/Wollochet/Forest Beach area, neighborhoods in and around Spanaway, the Puyallup/Bonney Lake/Buckley area and Lakewood, among others.
A census tract near the Purdy Spit Bridge saw its number of high-earning households go from 43 to 188.
Another tract in University Place, from Sunset Drive West on its easternmost boundary to the waterfront, has increased from 85 to 307 wealthy households.
The Spanaway Loop area and Spanaway Lake went from zero high-earning households to 82 from 2012 to 2017.
An area including Lake Louise and Waughop Lake in Lakewood increased the number of high-earning households by 88 in the five-year time frame.
One consequence of increasing high-income households is the effect on home prices.
Anecdotes of bidding wars and King County buyers making cash offers on Pierce County real estate culminated in Tacoma’s recent ranking by Redfin as the nation’s hottest housing market.
Not long after came news that the county, based on May sales figures, was in the throes of a housing stock deficiency.
“There is an extreme shortage of unsold listings for homes up to $350,000,” according to an analysis by John L. Scott Real Estate released June 6.
“The sales activity intensity between $350,000 to 500,000 is at a frenzy, with a severe shortage of inventory. From $500,000 to 1 million, sales activity intensity is strong.”
Puget Sound Regional Council recognized the affordability squeeze in its trends report released this spring.
“First-time buyers in King, Pierce and Snohomish counties face a severe lack of affordable options to allow them to establish a foothold in the homeownership market,” according to the report.
In April, it was noted that even the “starter” price for a luxury home in the county was shifting upward.
Northwest Multiple Listing Service reported June 6 that an analysis of its entire inventory of 23 counties at the end of May “shows only 13.8 percent of the listings of single family homes have asking prices under $600,000.”
“That compares to 25.6 percent in Snohomish County, 31.2 percent in Pierce County and 35.3 percent in Kitsap County.”
Pierce County’s median closed home sale price for May was $370,000 up 4.23 percent from the same period in 2018. For King County, May’s median was $700,000, down 3.62 percent from last year.
Affordability needs to be top of mind for the area’s leaders, says Ali Modarres, University of Washington-Tacoma’s director of Urban Studies and assistant chancellor for community partnerships.
“If we create a displaced population that is outbid or cannot afford the property tax, then you’ll have people moving out,” Modarres said.
Also, with rising home prices come higher rents.
According to Apartment List’s June market report, Lakewood still has the least expensive rents in the area. At the same time, “the city has also experienced the fastest rent growth in the (Seattle) metro, with a year-over-year increase of 4.0 percent.”
Newly developed apartments in Lakewood, at market rate, start at $1,305 and go up to $1,830.
It’s the first Pierce County property managed by California-based Legacy Partners. Wellstone Bridgeport’s business manager Rumel Ramos for now is commuting from Mercer Island to work at the Lakewood site.
The complex leased three of its units in the first three days of accepting applications, with multiple hard-hat tours available for interested renters. As of June 5, the complex had leased 10 units, with the first of its four buildings to open by July 1.
There’s another ripple effect as the economy shifts to cater to higher-income households, notably if they are not earning those dollars here.
“We create a large service economy,” Modarres said.
Too many service-based jobs and independent contractors working in the gig economy can throw off the balance of a region’s economy as a rising cost of living makes survival that much harder.
A prime local example gained national attention with the rapid rise of grocery delivery in the area. A Tacoma-based delivery person was among those who pushed Instacart to make changes in how payments were administered after a system change affected deliverers’ earnings per job based on the tip.
Ashley Knudson told The News Tribune earlier this year she’d had to start working six to seven days a week to pick up hours to help make up for the loss before the matter was corrected.
The challenge remains for the county to attract better-paying jobs.
Pierce County still has a large commuter community, although slightly more people work and live here than commute, according to research from South Sound Alliance. The alliance is a regional data-collecting leadership council supported by UWT’s Urban Studies Program.
Modarres has warned in public presentations of the dangers of Pierce County existing as a bedroom community serving the labor needs of King County, with the effects of that felt not just now, but five to 10 years down the road.
“If our economic base doesn’t grow, we could be looking at adding 30,000 commuters,” he said. “The majority of growth in the county could result in higher levels of commuting out.
“We need something that produces goods or products, generating an economy beyond services.”
In April, the county launched investpiercecounty.com, a one-stop collection of data for potential investors and businesses that are considering relocating or launching a new business. It shows available sites, demographics and an array of analytics.
“Quality of life starts with a good job, and investors who create jobs need good data,” said Bruce Kendall, president and CEO of the Economic Development Board for Tacoma-Pierce County in a release announcing the launch. “We’re excited to partner with the county to provide the business community with a tool its members can use to explore and create those great job opportunities right here in Pierce County.”
One angle that economic developers have started to explore are opportunity zones — “census tracts that offer an investment opportunity in real estate property as incentivized by deferred or reduced tax exposure for capital gains,” Webster Pacific’s Bazant explained.
Webster Pacific recently compiled the nation’s top 50 opportunity zones by growth in high-income households.
The EDB noted last year that “multiple Pierce County communities could benefit from a tax incentive plan aimed at attracting business investment in the region.”
Bazant, who compiled the wealthy household data, noted the multiple opportunity zones in the Tacoma area and South King County, “focused in downtown Tacoma, Lakewood/Spanaway and Federal Way.”
All of the zones are low-income communities, he noted, but “four of them have seen an increase in the percentage of high-earning households in recent years.”
One census tract in Spanaway, according to Bazant, “has seen the most growth, about 2.7 percent, in the percentage of high-earning households from 2012 to 2017 of any opportunity zone in the Tacoma area.“
What to do about these areas and redevelopment continues to be an ongoing conversation.
Pierce County’s Planning Commission is now considering proposed updates to the Frederickson, Mid-County, Parkland-Spanaway-Midland and South Hill community plans in public meetings the next few months.
“We realize that there are many ways to evaluate a prospective commercial real estate investment,” Bazant told The News Tribune. From the perspective of historical income growth, zones that show positive income growth have “wind at their backs.”
Meanwhile, as low interest rates continue in the housing market, there’s no slowdown of new arrivals to the area.
Noting the sales activity in South King County, Pierce County and Tacoma, Dean Rebhuhn of Village Homes and Properties said in NWMLS’ May release: “We look for a very active summer market.”
BY THE NUMBERS
Other local neighborhoods with a noticeable increase of households earning $200,000-plus from the years 2012 to 2017:
▪ An area around Lake Tapps that stretches along the Buckley-Tapps Highway (275 to 447).
▪ Waterfront locations in the Artondale area (219 to 354).
▪ The Lake Meridian area to Southeast 240th Street (117 to 381).
▪ The Federal Way waterfront area (223 to 478).
▪ A section of Puyallup bounded by 96th Street East, Stewart Avenue East, Canyon Road East and South Fruitland (58 to 184).
FOR MORE INFORMATION
▪ Pierce County Community Plan updates: https://www.piercecountywa.gov/4693/Community-Plan-Updates
▪ EDB opportunity zones information: https://www.edbtacomapierce.org/pierce-county-opportunity-zones/