Tacoma's Real Estate To Bounce Back!?!

32 comments

• T Thorax O'Tool October 2, 2009

  Nope, housing prices will continue on a kinda bumpy road down for at least 2-5 more years. With structurally high unemployment plus the ticking time bomb that is pay-option mortgages, we’ll see an “L” shaped path for housing.

  And that is a good thing. The last decade we saw prices skyrocket out of control. Lower prices, etc are the antidote.

  It sucks, but everything going on in this recession is the cure for the debt orgy of the last decade or so.

• N Nick October 2, 2009

  I’m inclined to agree w/ Thorax, though perhaps we will see a relatively strong improvement when compared to other cities given the fundamental contributors to our local economy.

• M Mofo from the Hood October 2, 2009

  One would think that with all the current information available from all the different forms of popular media, print or electronic, that we would be the most informed population in world history.

  This article from USnews.com is a perfect illustration of what popular media really is: Entertainment.

• A Altered Chords October 2, 2009

  A recent Altered Chords study indicates that Exit 133 commenters are the least optimistic of Tacoma residents.

• 6 6ther October 2, 2009

  Keep in mind, regardless of the state of our economy, more people move into the northwest than people moving away. And it will continue to be that way for very long time.

  I think that bodes well for Tacoma’s residential market.

• J jamie from thriceallamerican October 2, 2009

  (6ther@5): more people move into the northwest than people moving away

  Damn Californians…oh, sorry Derek…

• S Squid October 2, 2009

  Zillow just sent me a check for $15,000, so I know for sure my house just went up in value.

• E Erik S October 2, 2009

  I can’t begin to imagine what sort of local economic developments would support property price appreciation to the tune of over 8% per year over a 5 year period.

  Perhaps they’re expecting general price inflation to be 5-10%, in which case that might make sense.

  Or is everyone in Tacoma just going to get a lot more money somehow? If so, anyone know how I can sign up for my 41% wage hike?

• N Nick October 2, 2009

  How about population growth for an economic development? Not suggesting we will even remotely see 8% growth anytime soon, but property values are not tied to incomes, they’re tied to demand.

  Yes demand can be affected by income, but it’s not the only component.
  Assuming population growth continues, Tacoma will continue to get more people competing to live in the same amount of geographic space.

• A Altered Chords October 2, 2009

  Erik S.

  1) Inherit money.
  2) Sell the house you bought 15 years ago and use the equity to put a huge down payment on your new house.

  That’s how they do it in California. Now that California has no water and is burning down, they are moving up here.

• E Erik S October 2, 2009

  Can I demand $1,000,000 worth of house even though I can’t make half of the necessary interest payments on that amount?

  No.

  Nick, you’re quite right that demand is not the same as ability to pay, but desire cannot express itself in the market (becoming demand in the economic sense) without the ability to pay.

  I can see growth, yes. But back up to near the recent peak prices by 2014? That seems fanciful.

  Of course, if it does happen, we can go back to grumbling about Californian invaders like when I was a little whippersnapper in the ’80s. And that would be fun.

• T Thorax ''BOm-Tek'' O'Tool October 2, 2009

  Do a little research, and you’ll find that historically (if you exclude the Great Depression) housing costs in Tacoma have been about 3.3x the median income in an given area (Depression included, about 2.6x). We’re currently at 5.1x, which though below our peak of 6.8x, is still far out of whack.

  It doesn’t matter how many people live in the city or how many are moving in if house prices are so unreachable that few can buy. That is how you get either a city of renters (as a renter, that doesn’t offend me) or banks offering funny money. And we know how THAT turned out.

  We’re special up here in the greater Pugetopolis region. Just not <i>that</i> special.

• K Kooper October 3, 2009

  Thorax, what was the median income multiplier to ‘build’ a house in year’s past?

  Builders didn’t have to deal with all the gov’t nonsense they have to deal with today. Home prices will continue to drop a little bit more, but they won’t get back to 3.3x median income because the cost of paperwork/studies/permits/L&I/Insurance is so much more than it used to be.

• J Jesse October 3, 2009

  Thorax is both wrong and right at the same time. 3.3 times median income for a house — yes — but that is when interest rates are high — 8-10% — where they have typically been over most of the last 40 plus years. A better statistic to go by is percentage of median HOUSEHOLD income of 26% to 31% of gross. When interset rates are low, that equals higher prices. When interest rates are higher, that equals lower prices. All in all, the percentage of income designated to a house payment for the median HOUSEHOLD (remember, women work now where they didn’t pre-1970’s) is 26% to 31%.
  I’d bet the housing slump is over.

• S Squid October 3, 2009

  Sound and fury, signifying nothing.

• M MLS4owners October 3, 2009

  I don’t know where prices are going, but our newer customers have seen sales activity picking up lately at current price levels. A good sign?

• M Mofo from the Hood October 3, 2009

  I think if we are going to address this issue with any pretense to sophistication then we need to consider the relationship of population control to demand for housing.

  Allow me to restate this mathematically:

  D = N x I

  In this equation, D stands for demand for Tacoma housing, N stands for the number of people, and I stands for the impact of people on Tacoma’s environment.

  What this equation shows is that we cannot increase demand for Tacoma housing without also increasing the number of people who in turn increasingly impact the environment—- There is a direct correlation between demand for Tacoma housing and immediate impact on local pollution and ultimate impact on global warming.

  Quite simply, population control is the solution to Tacoma’s problems.
  Or is it?

• M Mofo from the Hood October 4, 2009

  Okay, USNews.com quotes Moody’s economy.com people who “expect…home prices [In Tacoma?] increasing…41 percent by the first quarter of 2014.”

  My immediate thought was “Great; what’s behind the boom of that prediction? Will home buyer’s have an increasing supply of lenders with whom they can again borrow up to 100% of a home’s equity?” Not likely that we could force that.

  However, USNews.com does seem to address my concern with the following quote after their prediction:

  “David Graybill, president and chief executive of the Tacoma-Pierce County Chamber of Commerce, says the area’s large military…will…support rising home prices going forward.”

  Man, I haven’t heard tough talk like that since Lyndon Johnson declared War on Poverty.

  Alright people, this economy thing, this is like a war; ya know? So we gotta treat it like a war; follow me? We gotta support our area’s large military, ‘cause like, they’re gonna support rising home prices going forward.

  Our area’s G.I’s have been pretty mellow so far. But let me tell ya straight up, they’re trained killers.

  When USNews.com reports that home prices are predicted to rise 41 percent by the first quarter of 2014 with the implication of local military force—-Maybe my inference is mistaken. Or is the form of expression by USNews.com controlling the meaning?

• C crenshaw sepulveda October 4, 2009

  Is this really a prediction or just wishful thinking? I don’t recall any of these financial geniuses predicting the financial mess that we are in, quite in fact it seems that the financial geniuses were pretty much the cause of it. This sounds more like a desperate pitch than any information of substance. “Buy now or you’ll miss out on the big profits of the near future”.

• A Altered Chords October 4, 2009

  All this bearish talk is the absolute best predictor of an impending bull market.

• M Mofo from the Hood October 4, 2009

  USNews.com: “The city’s abundance of government jobs…helped drive home prices higher during the first half of the decade.”

  Therefore, if true, more government is better?

• C Cromletch MacArthur October 4, 2009

  “All this bearish talk is the absolute best predictor of an impending bull market.”

  @ 21:
  All the bullish talk is also a clear sign of a further crash.

  Most people, includng the talking heads in the other washington, the media and the so-called “financial experts” are all remarkably bullish.

  Watch out below.

• W West Ender October 5, 2009

  It’s nice to be first at something, but rising housing prices are bad for the long term health of the local economy.

  Housing prices may bottom out by the first quarter of 2012, all the rest is fantasy.

  I follow the local market on Redfin.com and there are lots of sellers taking multiple reductions in their selling prices by $20k-$60k at a pop and still no sale.

• T Tacoma Real Estate Watcher October 5, 2009

  Tacoma real estate is on the rebound along with most of the rest of the nation. While it may not be an immediate bounce back, come Springtime, this won’t even be a debate. Zillow and other valuation websites are already reporting that Tacoma bottomed in June and the market is up 4% since then, on average.

• M Mofo from the Hood October 5, 2009

  I expect the market to bounce back strongly, with home prices increasing 23% by the first quarter of 2012 and 42% by the first quarter of 2014.

• E Erik S October 5, 2009

  If you’ll allow me a moment of self-indulgent introspection, I wonder if my somewhat pessimistic outlook on the Tacoma real estate market (which isn’t actually limited to the Tacoma market) is actually a form of guarded optimism or at least wishful thinking. Why? Because I think that the city would be better off if its real estate remains (or becomes) very affordable, especially compared to neighboring communities, especially those with rosier employment outlooks. What’s going to draw new blood (residents or businesses) to Tacoma? High real estate prices, high taxes, and few employers? Or would

  The only benefits to a rapid increase in real estate prices in Tacoma would be:

  (1) It would allow homeowners to return to the smug satisfaction over paper wealth that they enjoyed the last time prices were rising 8% or more per year. This might also have some spillover benefits for local retailers as residents cash out equity to buy jet skis and plasma TVs (setting themselves back further in the long march to actually owning their homes free and clear).

  (2) It would allow homeowners who are currently underwater on their mortgages to sell without owing money to the bank. This would allow some current residents to sell and move to other communities. Which might help with the population problem identified by Mofo.

• M Mofo from the Hood October 5, 2009

  Look, there’s a sector of people in Tacoma that are clearly unhappy with the status of this city’s real estate.

  They use code words like “Density.”

  As if increasing the local population is THE solution.

  Let’s come to an understanding of what is really going on in Tacoma. Removing buildings from the landscape is removing environmental hazards. When you fill a commercial or private residence with people, the effect is detrimental to the environment. As I noted before, there are consequences to density—-Pollution AND Global Warming.

  And I would extend the logic of clear-cutting local buildings to the recent Luzon action. This was simply a decision and action by the City to restore Tacoma to its natural state.

  Now, I can still expect home prices to increase as I noted above. In fact I just changed my mind a minute ago. I expect home prices increasing by 27% by the first quarter of 2012, with a margin of error of 3%.

• E Erik S October 5, 2009

  Tollefson Square is people!!!

• A Altered Chords October 5, 2009

  Mofo – you are forgetting this important factor:

  As population in Tacoma becomes more dense, the earth heats up and the ice in the north pole melts. This creates a higher water level which means less total available real estate in Tacoma.

  In addition, polar bears have been snapping up properties in the north end (they think it’s colder there than the south end)

  This creates a tipping point that will actually lead to an increase of 34.825% by the 3rd day of the 2nd week of the 2nd quarter of 2012.

• the green nazi October 6, 2009

  Real estate only goes up, remember?
  Peculiar how the banks are not foreclosing on people that have been in default for years without payments. Look it up if you don’t believe me.
  (http://business.theatlantic.com/2009/09/the_shadow_foreclosure_inventory.php)
  Free rent for over 2 years? Sign me up!
  What is up with that? And how is “shadow inventory” keeping the market here in T-town propped up? If a bank forecloses on somebody then they usually sell it in this market at a loss. If they do nothing they can keep it as an asset on their books and continue being a zombie bank rather than a bankrupt bank. HMMMMMM. Not liking what this foreshadows on a lot of levels.
  But remember real estate always goes up, Viva the Esplanade!

• A Altered Chords October 7, 2009

  Green nazi: what you say does not make sense. If the bank does not forclose on the property then they do not own the property. They own the loan. The loan is their asset. It is a non-performing asset. Too many non-performing assets and then things like paying interest and paying Tacoma power are no longer feasible and the FDIC takes over. I think what you mean is that they do forclose and hold the asset real estate asset called “Real estate owned” (REO) and hope the market comes back. In that case they are acting as real estate speculators. I don’t know if they are able to rent out property that they own or if they just use those properties for corporate parties like Bank of America did.

• T the green nazi October 8, 2009

  Altered Chords:
  No, you’re having trouble understanding my point. DId you read the link I posted in my original comment? The bank can own the note whether they foreclose or not. They don’t have to mark the loan down to market with a potential loss if they don’t foreclose. It’s an asset at full value until they sell it as an REO. Now is not such a great time to be selling an overpriced piece of a junk which is mostly what I see in the REO category these days.
  BUT:
  Not foreclosing serves several functions:
  1) Wait until a more favorable time to sell. They are speculating they can pump the market with govt incentives and NAR propaganda to refluff the market (good luck with that, bubbles rarely re-inflate) and sell at a higher price if they wait to foreclose.
  2) Control the number of foreclosures on the market at any one time to avoid flooding of the market with the enormous inventory of homes that are already in default.
  3) Occupied property generally holds its value better. Vacant structures without heat and without oversight from vandals and scavengers don’t hold up so well or the property values surrounding it. Detroit or Cleveland are the best examples of this sort of vacant housing decay and property value vicious cycle they want to avoid in other markets.
  The whole point of my post that was missed was the banksters are holding back a HUGE inventory of potential (pending) foreclosures nobody ever hears about. Two or three years of non payment without some stage of foreclosure proceeding is NOT normal.
  It’s just plain fishy. Market manipulation perhaps? I don’t know, but if it looks like a duck and quacks like a duck maybe it’s a ……… !
  But don’t worry about that old news.
  NOW’S THE TIME TO BUY, REAL ESTATE ALWAYS GOES UP!
  BUY NOW OR BE PRICED OUT FOREVER !
  TACOMA IS SPECIAL. EVERYONE WANTS TO LIVE HERE!
  IT’S A BUYER’S MARKET OUT THERE. yadda yadda yadda