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The REAL Reasons Americans Buy a Home
Intresting results from a study from the Joint Center for Housing Studies at Harvard Univerisity can be found here.
December 2014 Pierce County Housing Report
For the final Pierce County Housing Report of 2014 I thought it would be interesting to list 3 top trends that surprised in 2014. But first, let's look at the current headline numbers as measured on November 30:
Inventory – UP – 0.6%
Closings – DOWN – 4.2%
Median Price – UP – 14%
New Pending Contracts – UP 19.3%
A nice bump up for prices, flat growth in inventory, and surprisingly, closings down just over 4%. I say surprising because Octobers report was down over 30% in Pendings. The increase in year over year pricing contrasts with a 0.4% increase over last month and a 0.4% decrease from 6 months ago. This deceleration of price increases matches what we are seeing with National trends, and indicates a settling of the market.
Three Top Trends for 2014.
1. Interest Rates. Most all real estates pundits, including yours truly, predicted we would have interest rates back up to around 5.5% by this time. Luckily for home buyers and sellers not only did rates not tick up in 2014, they actually trended down! As of this writing the 30 year fixed rate is at 4.125%.
These low rates make it easier for buyers to qualify for the house they want and provide a great hedge against the likelihood of future inflation. Locking in a housing expense at these rates will prove over time to be a great move for a anyone interested in a long term real estate hold.
Just like one year ago, all the experts are calling for a rise in rates to take place over the coming 12 months. Here is a chart indicating where the major mortgage providers and experts predict rates will go.
2. Transaction Velocity. In several of my past reports I've stated, "the pace of transaction velocity must come back before a market can fully recover". In 2014 Pierce County will record something right around 12,000 units. The 12 year pre and post bubble average is 12,749 units Sold annually in Pierce County. It is exciting to see our market returning to these historical average levels.
3. Decrease in Distressed Property Sales Distressed property sales are those sales that are either Bank Owned (REO) or Short Sales where the owner owes more than the market will bear. Compared to our King County neighbors we have had more distressed property sales as a percentage of our total volume throughout the recession and recovery. By looking at the chart below we can see a trend of clearing these properties, another important step to normalizing our appreciation forecasts.
As measured by comparing November 2013 to November 2014 we see distressed property sales accounted for 31% of all closings in 2013. In 2014 the distressed property sales accounted for 22%. The percentage of total inventory also declined from 25% to 19%. As this inventory continues to clear we will get back to normal levels of 5% to 10% and it will cease to provide a drag on price increases in the future.
Thanks for your interest in this report and I hope your home is filled with good friends and family this Holiday Season!
Median Home Prices Expected to rise 3%-4% in Washington
According to this article from the National Association of Realtors the median home price is expected to rise greater than 3%-4% in Washington in the next 12 months. You can find the full article here.
Coffee & Cars: A Favorite Pastime
Enjoying the Coffee & Cars scene is one of the ways I like to let off a little steam in my spare time. A tradition that repeats itself all over the country on Saturday mornings, sometimes it’s sponsored by a car club or a car-related business. Not only do I love coffee and cars, but it’s also a great way for me to see my friends, past clients and meet new people, too!
What exactly is “Coffee & Cars”?
Basically, a “coffee and cars” get-together is a gathering of car collectors and enthusiasts who meet up to see each other’s unique vehicles and hear about how any given car was found, purchased, restored, modified, etc., and also to learn about any interesting history behind it. “I always wanted one since I was in High School when my neighbor had one” is a common sentiment at these events, as you can imagine! We love learning about why a collector has his or her car.
Sometimes, these gatherings will be a more focused group of collectors, but more often it’s an eclectic, random collection of interesting cars with a great variety of American, European, Japanese, and other brand models. There is even the occasional truck or SUV. I’ve even taken our 1971 Bronco in the past!
Check out “Caffeine & Gasoline” at Griot’s Garage in Tacoma
Currently in Tacoma, the most consistently scheduled event is Caffeine & Gasoline at Griot's Garage on the first Saturday of each month, rain or shine. Located on the corner of 38th and Union, this amazing facility is part retail store, part museum, part car detail and restoration workshop with a diner-like coffee house in the back. For decades, the Griot's facility served as a bottling plant for Coca-Cola.
Founder Richard Griot has lived in the Tacoma/Lakewood area for years, and local car enthusiasts are fortunate to have this flagship facility right in our backyard. The event starts at 8 am, but I recommend getting there early for a good parking spot; if the weather is half decent, it really fills up fast!
Each month I see many regulars like my friend Jack with one of his German beauties, who always told me, "Find me a condo with a six-car garage and I'll buy it!" I found just that in his Steilacoom condo some years ago. There’s also my friend Rob who gets up early with his youngest son Willie before the rest of the family is up and cruises over from Gig Harbor in their immaculate 1977 911S. It’s great to meet other like-minded passionate car folk from all over the Puget Sound region.
Come out for the cars, stay for the people!
To the people who come to these events, cars are much more than shiny boxes for transportation. They can be touchstones in our lives that fondly remind us of another time or event. To car guys (and gals!), cars are an expression of personality and often even touch artistic chords. Form follows function creating beautifully engineered statements in what can be built with discipline and dedication. From all that comes an enthusiasm that mostly only other "car-people" get. Gatherings like Coffee & Cars make a fun way to share that passion and meet others who feel the same!
7515 110th St NW, Gig Harbor ~ Stunning Low Bank Waterfront Home!
Read the lastest blog post on LivingGigHarbor.com and see more photos of this stunning contemporary low bank waterfront home on Henderson Bay in Gig Harbor! Click here to find out more.
October 2014 Pierce County Housing Report
It's that time again to check in on the Pierce County Housing Market. This month we have another neutral month based on the year over year stats I always lead off with, but I also found a few goblins we may want to keep an eye on. Here are the headline numbers as measured on September 30:
Inventory – UP 6.5%
Closings – UP 9.1%
Median Price – UP 1.4%
New Pending Contracts – 31.7%
These are Year Over Year Numbers and they look pretty good. Inventory is UP, we like that, the market needs more houses to sell as we still have less than 4 months supply based on closed sales. Median Price is UP only slightly but that's not a surprise, we talked last month about price increases slowing. Pending contracts are UP so much that it is a great indication we are in store for a strong sales flow during the 4th quarter as we wrap up 2014! While I prefer the pumpkin is "half full" viewpoint, I have to say the market hasn't "felt" like these numbers. When talking with other brokers recently, I've noticed some chatter about a slower market; so I dug a little deeper.
Month Over Month transaction volumes are much different with Pierce County DOWN 13.4%. Turns out this August vs September drop in closed sales is normal, at least compared to 2013 when the same thing happened. However in arriving at this conclusion I viewed the volumes by price range and saw a couple of items you may find interesting. In the chart above you can see the very important $250,000 – $500,000 price range things really took a break with volume dropping 20%. These are the homes that buyers are "moving up to" and it is just this year we have been able to say the recovery took hold in this sector. This segment of the market represents over 35% of our Pierce County transaction volume. I don't know if it is widely understood that 95.7% of the Pierce County Market happens in this price sector….and below!
This shows that only 4.4% of all Pierce County transactions were over $500,000. In case you were wondering, listing inventory over $500,000 disproportionately makes up 13.3% of the total number of homes for sale. Pierce County Housing Market participants need to know, the "Work-Horse" price sector is under $250,000 with 41% of the inventory creating over 60% of the sales!
We have a healthy volume of Pending Sales so if history repeats itself the coming months should provide a nice increase as we wrap up 2014.
September's numbers are a fitting reminder that there's a limit to how robust our recovery can be characterized.
Month by month we are achieving normalization and as I've always said; "markets don't recover in a straight line" so there may be a bump in the road from time to time. Those that approach this market with realistic expectations based on detailed market analysis will find success.
Give me a call or shoot me an email, it is always good to hear from you!
Tacoma’s Stadium District
Tacoma's Stadium District is a unique highly walkable community nesteled between Old Town and Downtown Tacoma. You can read more about it here. My current listing 611 North G St, is located in the heart of Stadium District, is fulled remodeled, and offers 4,705 Sq. Ft. of living space.
Post Summer 2014 Pierce County Housing Report
Evidence of Slowing Appreciation and Reversion to Normalcy.
Also, how King County's trending may soon affect our local market.
Markets Continually Seek Balance The Pierce County Housing market as measured by August 2014 numbers gives us a clear indication it is efficiently balancing and allowing home buyers and sellers to participate with predictable results.
Inventory – UP +11%
Closings – Down -02%
Pending Sales – UP +21%
Months of Inventory – UP last year +3.2 this year + 3.6
Median Price – UP +5%
With inventory at 4,282 units it is the highest it has been all year. In fact it was December 2011 since we had that many homes for sale in Pierce County. At that time we were steadily coming off the crazy high level of inventory that was the result of the housing crisis which peaked in August of 2007 at 9,022 units for sale. So how much inventory should we have? To have a balanced market, we need 3-5 months worth of inventory. In the last 14 years, which includes pre and post bubble markets, Pierce County has sold an average of 11,766 homes per year. Using that average we have 4.4 months inventory. Pendings are up 21% as we close out the summer so we may exceed 12,000 units with a strong finish in 2014.
The peak of the Pierce County price index was 7 years ago! It has taken a long time to work through the huge impact of the housing market spinning out of control. Prices fell consistently for 5 years until reaching bottom in February 2012 and as of this month we are 39% up from that low! We've seen peak inventory levels as mentioned above when we had as much as 12 months worth on inventory and we've seen shortages like in March of 2013 with only 2,800 units for sale. It is refreshing to be at or near a normal inventory level!
Our recovery experience is comparable to other parts of the country. This CoreLogic map shows the State of Washington still 10.8% below it's peak market levels compared to other parts of the country that are either fully recovered or, like hard hit Nevada, still down over 37%. Ouch! It's always a good idea to break the numbers down to more localized evaluation and in this case I can tell you Pierce County is still 18% below the peak. What's interesting is Pierce County is at the same price level as June of 2005 while King County is at June 2006. With King County that much closer to the all time high, doesn't it seem logical that more of those buyers will be exploring Pierce County?
The road ahead. The Home Price Expectation Survey is a nationwide panel of over 100 economists, real estate experts, and investment or market strategists. I like this report because it is not the opinion of just one market expert, but a cumulative average of over 100 experts. Their 3rd quarter report is out and the graph is posted here. If Pierce County continues to generally follow the pattern of the rest of the country we will see cumulative appreciation of over 18% by the end of year 2018. This would put the Pierce County median price at about $280,000.
If you're a buyer in this market you can make your purchase decision with confidence that you're making a good long term investment. If you're a seller it is nice to know there is a balanced market with predictable fundamentals and a pool of buyers you can strike a deal with!
Tacoma’s University of Puget Sound
Read my blog about Tacoma's University of Puget Sound and what the UPS neighborhood has to offer here!
Whitley Hills / Madrona: Two Neighborhoods in One!
Read my blog about the Whitley Hills / Madrona neighborhoods in Gig Harbor here.
