It’ll take more than a pandemic to crush Tacoma’s hot housing market, brokers say
If you’re thinking or even hoping that the coronavirus is going to completely tank Tacoma and Pierce County’s hot real estate market, you’re probably not alone — but you might want to think again.
So far, that isn’t happening, according to Michael Robinson, a Pierce County-based owner and managing broker with Windermere.
Things have slowed, Robinson acknowledged this week, but the pandemic hasn’t come close to extinguishing a housing market that earlier this year was deemed one of the hottest in the nation.
“I don’t blame them for thinking that, because this is a significant event. But so far that is not showing up in any statistics that I look at, and I’m looking for a trend,” Robinson said. “The market is alive and well.”
The declaration came as something of a surprise, since days earlier the Northwest Multiple Listing Service had released its latest batch of market figures, capturing the first full month of the COVID-19 pandemic’s impact on the state’s real estate market.
As The News Tribune’s Debbie Cockrell reported, April brought with it significant drops across the Puget Sound region in many of the metrics used to measure the local housing market.
Year over year, Pierce County experienced a drop off in active listings, pending sales and closed sales. While the median closed sales price in Pierce County of $405,000 was still up more than 13 percent from a year ago, it was down slightly from $410,000 in March.
Typically, spring is flush with homes hitting the market, but this year — amid the coronavirus outbreak — that hasn’t been the case.
So sound the alarm and break the glass?
Not quite, Robinson and others told The News Tribune.
When it comes to Tacoma and Pierce County, the picture painted by the numbers requires context, they said.
Yes, the pandemic took its toll, but “you can’t take one month’s worth of data and say this is a new market,” Robinson said.
Compared to last April, it’s true that new listings are down. That was to be expected, Robinson said, considering when the COVID-19 pandemic and Washington Gov. Jay Inslee’s stay-home order hit.
Predictably, there was what Robinson described as a “supply shock” — as many potential sellers hit the pause button to gauge what the pandemic would mean for the local housing market.
There was also a “system shock,” Robinson added, as potential buyers and real estate agents had to regroup and adjust to a new and slower way of buying and selling homes.
In recent weeks, listings and pending sales have trended up, he noted.
“There was a slowing on both sides, with buyers and sellers. It was definitely a pregnant pause,” according to Jasmyn Jefferson, the principal managing broker at Windermere Professional Partners’ Tacoma office. “It slowed us down, but there’s still stuff going on for people who need to be operating.”.
“I think when it got weird, people got really nervous and scared,” added real estate agent Matt Hume. “What I’m seeing now is that agents, sellers and buyers are becoming more comfortable with our new normal.”
More than anything, what gives Robinson and others faith that the bottom isn’t about to fall out of the area’s housing market is simple:
The demand compared to the number of homes available.
For perspective, in 2007 there were more than 7,000 homes for sale throughout the county, Robinson said.
Today there are a little over 1,000 — while the county’s population has increased by more than 100,000 people.
“It’s just simple supply and demand. We don’t have enough houses,” Robinson said, noting that — in actuality — the fewer new listings shown in April’s Northwest Multiple Listing Services numbers only exacerbates the problem.
While he expects the pandemic to normalize the fevered pitch of Tacoma and Pierce County’s housing market to some extent, he anticipates sellers will continue to experience the benefits of a market tilted in their favor, while buyers will continue to feel the crunch.
Meanwhile, if you’re one of potentially many hoping all of this will slow the influx of newcomers, Robinson wouldn’t bet on it.
Why?
When real estate agents counsel potential sellers, they often look at two metrics in particular, Robinson explained: the number of pending sales to active listings.
If pending sales are greater than active listings, it signals a strong market. In layman’s terms, it signifies more buyers than sellers.
Dividing the number of pending sales by active listings can give sellers a picture of their chance of selling, Robinson explained. In a “normal market,” he said, sellers would expect roughly a 55 percent chance of selling.
Today, in many areas of the county — including South Tacoma and Puyallup’s South Hill — the equation still shows a chance of selling near 200 percent, Robinson said.
It’s what’s known as an inverted market, and while he cautioned that “I just don’t think we can draw any conclusions yet,” Robinson remained fairly adamant that “the strong demand and short supply” should continue to prop up Tacoma and Pierce County’s housing market for months to come.
Then, of course, there’s the continuing Seattle and King County effect — which could become more pronounced.
The pandemic has made working from home the new normal for many people, including high-wage earners in the tech industry, which has so far remained largely unscathed by the pandemic’s economic fallout.
Many, including Redfin CEO Glenn Kelman, expect the work-from-home trend to continue even after the coronavirus crisis fades.
As Geekwire recently reported, Kelman and Redfin are now “preparing for a seismic demographic shift toward smaller cities.”
“More people will leave San Francisco, New York and even Seattle, some for nearby towns like Sacramento and Tacoma that are close enough to support a weekly office visit,” Kelmen said during a recent earnings call.
If the prediction proves accurate, it’s not difficult to imagine Tacoma’s appeal, Robinson said.
While the median home price in King County is in the ballpark of $700,000, in Pierce County it’s roughly $300,000 less.
“Our homes in Pierce County are 42 percent less expensive on average than King. That just creates an upward draft that we get caught up in, and it’s why people come down here to buy,” Robinson said.
“Now, if they don’t have to commute and they can work more days remotely, why not?”
Asked for the advice she’d give potential buyers and sellers, Jefferson was realistic. She said it was important for everyone to take stock of their situation and evaluate whether right now is the right time — for them — to enter the market.
There’s no need to force it, she cautioned.
“The market has evened out in terms of pace, but there still aren’t enough homes for the amount of bodies in the county, and there are still a lot of buyers,” she said.
In many cases, sellers are still receiving multiple offers, Jefferson added, even if the process takes a bit longer.
According to Hume, that’s exactly what he’s experienced as the initial shock of the coronavirus pandemic has faded.
Recently, he listed a home in Tacoma priced at $400,000, he said.
There were 12 showings in three days, and “on day four we got an offer that was full price,” he said.
Previously, Hume would have classified the Tacoma market as “smoking hot.”
Now?
“I would say we’re in a healthy, strong market,” he said.
This story was originally published May 15, 2020 at 5:05 AM.
