In December, 2020, KOMO News reported Tacoma as ‘the nation’s hottest housing market.’ The following February, the Seattle Times reported about the number of Seattleites that were taking their money and their businesses moving south to Tacoma. Forbes Magazine, in December, listed the top markets to watch in 2021. Listed in the top seven markets were Tacoma (#2), Spokane (#4), and Seattle (#7).
For those of us who live, work, and are remotely involved in the real estate market in the Pacific Northwest, these rankings come as no surprise. Early in the 21st Century, Tacoma and the surrounding area began to change. By 2017, Tacoma was listed by Sunset Magazine as the best place to live in the Pacific Northwest. And as more people move into the area in and around Tacoma, the demand on housing has pushed up prices and rents, and has reduced the housing supply for the past few years.
Believe it or not, this is not a COVID driven market, though the pandemic has had some impact on the sales of homes in the area. We have not been in a buyers market for over six years and the days a home is on the market before selling has been decreasing during that time as well. With interest rates at record lows, buyers are out in droves, competing for a limited supply of homes. This is what is driving the market.
So what does the market look like and where is it heading?
Average Sales Price
If we look at the average (not median) price of single family homes (not condos) since March, 2020, home prices in Pierce County have increased by17.1% and homes in Tacoma increased by 19.3%. While I do not have figures for April yet, it is trending rapidly upwards in most areas of King, Pierce, and Thurston Counties. Condos are also increasing comparably with the exception of Thurston where condos have jumped up 30% in average sales price.
Due to the way calculations are made, I tend to focus on the average vs the median price of homes. However, the stats for median prices are not much different with Pierce County showing a 18% increase, Tacoma at 22.4% increase, Thurston County at 23.9%, and King County trailing at 19.5%.
Several factors could impact what we will see over the summer. Buyers have not been slowed down by the weather, however what has moderated the increase in buyers has been the frustration with few homes on the market and the competition for the homes that are on the market. If we start to see more homes listed over the summer, which has been the trend in the past, we might start to see additional buyers willing to weather the market.
Housing Supply
Housing supply is measured in months. It is the number of months that it would take, at the current rate, to sell all the homes currently listed if no more homes came on the market. A buyers market is when the supply will last six months or more. A sellers market has generally been considered when the housing supply will last between three to six months. I am measuring today’s housing supply in days. That is the intensity of the demand for homes and the low supply of homes available to purchase.
Currently the housing supply for Pierce and Thurston Counties is at around 18 days, the city of Tacoma around 15 days, and King County fairing a bit better at 24 days.
Even though the trend is downward, with the number of new listings increasing as we approach summer, I believe we will see the supply improve.
Number of Listings (Homes for Sale)
From a low number of new listings in December, 2020, new listings coming on the market have doubled. This is an encouraging sign, however it has not slowed down the price increases. That is because much of it has been the seasonal trend we see every year. The increase since March, 2020 is still positive but in the mid single digits. However, we are trending towards having more homes enter the market than we did at the same time last year.
I am expecting to see a little moderation in the market over the summer as the increase in listings should outpace the increase in homebuyers. However, it has a long way to go before we see a ‘buyers market’ again.
Days on the Market (DOM/CDOM)
This stat has been a key indicator of the competitiveness of the current market. The average days on the market has plummeted 50% since March, 2020, however the median days has dropped to only five days on the market for both Tacoma and Pierce County. This makes the homebuying process not only competitive, but incredibly hectic and stressful for homebuyers.
What Does it All Mean?
Without a doubt, this is a challenging market. For buyers, the competition is fierce, and is driving prices beyond what I feel is reasonable. Some homes are selling at such an elevated price that I honestly do not believe the buyers will see equity in their homes for a long time. If they are planning on staying in their new homes for a long time, that probably is not an issue. However, if they are planning on moving in the next five to ten years, they may be disappointed in the return.
For sellers it is not all as rosy as it seems. Sellers are seeing huge profits on their homes and are able to sell quickly. However, if they are looking to purchase after they sell, they run into the same situation as I mentioned above. This has tempered the sellers who would like to sell, but worry about where they will live after they sell. If they are able to rent or move in with family until the market changes, they may do just fine. Either way, they tend to have better options than buyers do these days.
There are strategies available to the savvy buyer or seller to help weather the current market. There are ways to search and find homes, to create a competitive offer, and to position yourself to take advantage of transaction situations caused by financing or over zealous buyers. There are also ways to manage the negotiations and selection process as a seller to reduce the chances of a failed sale. We are more than happy to discuss these things with our clients and navigate the difficult waters.
On a Personal Note
It has been several months since I issued a newsletter and a market update. This issue will now get us back on track and will provide for you information that will help you make decisions regarding your home and investment properties you might have or be interested in purchasing. There are also other resources available to you with regards to the housing market and your particular situation.
I have two resources that you can utilize online. One is The Marks Home Team Facebook page (https://www.facebook.com/TheMarksHomeTeam/). This page I update regularly with real estate related articles on different aspects of the market. There are also infographics that I post that have helpful information about how to better understand the market and the trends happening.
Also, the NEW Marks Home Team website is now up and running with an incredible home search that is updated throughout the day. We have buyers checklists and sellers checklists if you wish to know about the process or if you are entering into a transaction. For information related to real estate, your home, the market, and everything related, I have a blog post that is updated every day. If you want to know more about the various areas of the south Puget Sound and its outlying communities and areas, check out our neighborhood page.
Home Valuation
One thing that is very important to both sellers and buyers is the market value of the home you wish to sell or, for buyers, the home you are interested in purchasing. Many people will utilize a site like Zillow or RedFin for the valuation. Our home valuation system is based upon Corefacts data and will give a quick estimate of your home based upon the information you are able to supply.
HOWEVER, if you wish to have a personal, comparative market analysis on your home that is tailored to more detailed specifics of your home, please do not hesitate to contact us. Set an appointment and we will come out to your home and provide you with a comprehensive report and market analysis.
If you have questions or need additional information, my contact information is attached. You can call, text, or email me. If I am away from my office or in a meeting, showing homes, or other activities, please leave a message. I will call you back as soon as possible.
Dave Marks
The Marks Home Team
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