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Sunday, April 23, 2006

Tacoma Condo Explosion Coming

Is Tacoma being set up for a big fall when the housing party finally ends? Quite possibly—especially when it comes to condos downtown.

A tally of downtown projects by real estate consulting firm McCament and Rogers for the City of Tacoma shows 774 residential units are currently being built in 13 different projects around downtown. In planning and design phases are 1,014 additional units. Hundreds more housing units are in less formal planning stages. Those under-construction and planned units will join 997 condominiums and apartments built downtown since 2000.

That's 2,785 units — something akin to adding a city the size of Steilacoom in downtown Tacoma.

According to sales people and developers, many of those projects are selling or being rented at a brisk pace.
...
Even with the tax benefits and the gentrifying downtown, some real estate sales people wonder whether the market can absorb the hundreds of units that will go on the market beginning next fall through the summer of 2007.

Privately they say they're concerned that the biggest projects — such as the 183-unit Esplanade just under construction on the Foss Waterway — are too big to enter the market all at once when so many other projects will hit the market at the same time.
And even more privately (as in—they wouldn't admit it to a newspaper) they're concerned that I think that by the time these units are ready, the whole market will have tanked and none of them will be selling... Or at least that's what they should be concerned about, methinks.

(John Gillie, Tacoma News Tribune, 04.23.2006)

15 comments:

Anonymous said...

Bellingham has also begun it's great condo dump.

And didn't it seem there were a ton of new condo adverts in the Seattle Times today? (Sunday)

This is a main reason why it's hard to believe that rents could go up.

Anonymous said...

The only reason why these Tacoma condos are selling well right now is because they are being bought up by Seatte residents. Very few people who work in the Tacoma area are interested in a downtown condo AND can actually afford it. Sure the Sounder train and the Light Link rail in Tacoma is a great way to commute, but not every day! When will these Seattle refugees figure out that they could do a lot more with those two hours a day they waste commuting.

meshugy said...

Hi Price drop,

I agree with your assessment that prices will hold longer in the "core" N. Seattle neighborhoods longer then other areas.

I was looking at the
March home sales for King County
and noticed that area 700 (Queen Anne, Fremont, S.Ballard, Wallingford) had one of the highest median prices last March ($439,900). This March it's actually down slightly ($439,000). However, areas further out had huge appreciation:

705 (N.Ballard, Greenlake) went from 355K to 407K
390 (U.District, Laurelhurst) went from 352K to 427K
710 (Sandpoint, Wedgewood) went from 375K to 432K

Seems like the bubble topped out in the core N. Seattle areas. but then people started looking further out and pushed up prices elsewhere.

Just a theory....

It'd be nice if we had this sort of neighborhood data for month over month. Then we'd have a better idea of what's going on...does anyone know if it's available?

meshugy said...

Sorry...that link was messed up.

Here's a good one:

March
home sales for King County

The Tim said...

meshugy,

Yes, they are available on the NWMLS website. Here's the link to March: Mar06KCbreakouts.pdf (PDF)

If you want older months, just change the URL to reflect the year and month you want. For instance, while March '06 is .../recaps/Recap2006/Mar06KCbreakouts.pdf June '04 is .../recaps/Recap2004/Jun04KCbreakouts.pdf

That seems to work back through January 2003. Beyond that they either aren't online or they use a different filename format.

meshugy said...

Wow...that's cool! Thanks Tim...

The Tim said...

meshugy,

My pleasure. In fact, since they're not too good at following their own naming convention, and some of the file names are off one month from the actual data contained within them, I made this page of links. It's got links to the breakouts from Feb. 2002 to present. From what I can tell, they didn't provide King County breakouts before Feb. '02.

Eric D. said...

Hey tim

Know of any breakout pages for Pierce County? I tried changing the KC to PC but no luck..

The Tim said...

Eric,

The NWMLS announces the monthly stats on this page, and all that they link to there is King and Snohomish "breakouts." If they have such data for Pierce County, it's not readily available on their website. Sorry.

matt said...

Condo craze... the last dying gasp of an overheated market. Needless to say this is in full affect in places like Miami, Vegas, and San Diego. When developers start humpin' the condo market, its the swan song for the RE bubble. The crazier this mania gets the bigger the fall.

I can see the cardboard signs now...

"Will build 500K 2 bdr condos for food."

Enjoy the halcyon days, they're not going to last

Anonymous said...

Actually, the next trend is condo reversion:
http://southflorida.bizjournals.com/southflorida/stories/2006/04/17/story3.html

seattle price drop said...

Meshugy:

Your theory on how markets move up (ie. close in rises, pushes people out, farther out rises) is not a theory. It is in fact the way it works in a heating-up and then cooling down market.

Reverse that trend (farther out depreciates then extends to closer in) and you've got what is happening now.

You can see it on a micro and macro level.

The last places in the US appreciate and then the whole thing inverts.

It was clear this was a massive RE bubble when areas of the rust belt (parts of NE and upper midwest) started appreciating a couple years ago. That was the beginning of the end for the spectacular run of the US housing market.

Now we are seeing the end starting in all areas of the country. Least desirable go down first, most desirable go down last.

Just the opposite of what happened in the run up.

That's why, in theory, now is a bad time to buy ANYWHERE, no matter how desirable. Unles you are trully in the finacial position to weather the storm.

meshugy said...

After comparing some of the Seattle neighborhood data the Tim so graciously pointed me to, it's really clear that area 700 (Queen Anne, Wallingford, Fremont, S.Ballard) topped out a year ago. The median price has stayed the same (439K), while other neighborhoods are playing catch up. Area 700 (Queen Anne, Wallingford, Fremont, S.Ballard) has the highest median, but other areas are quickly catching up. Leshi (Area 390) totally kicked ass going from 352K to 427K in one year! Just about every other area, W. Seattle, Sandpoint/Laurelhurst, Capital Hill, N. Ballard/Loyal Heights, etc are quickly closing in on the Queen Anne Wallingford median price. But the Queen/Wallingford doesn't seem to be moving any higher.

Interesting....

I guess Queen/Wallingford just topped out...there's just not enough buyers with enough $ (or exotic loans) to get it any higher, so the bubble spreads out. As Price Drop said, it will probably start to turning back the other way at some point.

Anonymous said...

Any guess what areas are going to become the next "renters ghetto" after the appreciation cools?

Just about any area with a high concentration of unremarkable townhomes and condos is up for grabs.

People will outgrow these places, they won't be new/stylish anymore. Since the land is built to capacity, there isn't any incentive to tear them down.

The neighborhood north of 85th by Greenlake seems like a good candidate.

Anonymous said...

Greenwood does seem like a good candidate.

As does the U Dist., areas of Queen Anne between downtown and Fremont.

It'll be interesting to see the changes. Have we ever seen a mania like this?