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Monday, March 26, 2007

Condomania in Tacoma!

Tacoma: Your mission, should you choose to accept it, is to sell 1,500 high-end condos in 14 months:

Hundreds of new, pricey condominiums exclude young singles needed for a thriving city core, according to the author of a study analyzing the downtown housing market.

Builders and developers say land costs and water views push prices beyond the mid-$200,000 range generally considered doable for the first-time buyer. And even though the number of unsold units remains high in some neighborhoods, they say demand is strong for high-end condos. Tacoma’s average new condominium price, according to the study, was $348,893 at the end of last year.

The 149-page report, finished last week, identified three kinds of future condo buyers: female baby boomers, young professionals, and married folks with no children at home. It recommended adding edgy lofts and more small spaces that Generation Y buyers can afford.
...
As of December, all six neighborhoods surveyed averaged 14 months of condominium inventory, which measures how long it would take to sell everything built and approved.

A healthy market for new construction tends to be in the six- to 12-month range, said Deanna Sihon, the study’s author.
...
Since 2004, nearly 400 condos have been sold downtown with another 525 for sale and about 1,500 proposed, according to the study.
...
A year ago, a hot market meant condo shoppers had to make rapid buying decisions, said RE/MAX real estate agent George Pilant.

Not so now.

“Buyers have so many choices they don’t feel a sense of urgency,” he said.
...
As in any type of residential real estate, demand is driven by population and job growth, said Paul Turek, an economist with the state Employment Security Department.

But condos are a niche product that at higher inventory levels, he said, raise this question: Will good-paying jobs needed to sell such downtown housing continue to be created?

“I suppose that’s where the gamble is,” he said. “In the Tacoma area, we have some high-paying jobs. Whether there’s enough to support the building of the condos remains to be seen.”
Good luck with that. Seriously.

(Devona Wells, Tacoma News-Tribune, 03.25.2007)

31 comments:

Pegasus said...

I am sure the crime rate in Tacoma won't affect the sales and will really help their property values in the future. Maybe they should build on Hilltop where there is a great view. That way the occupants won't have to worry about watching TV every night. One, someone will steal their TV before they get completely moved in and two; they will have their own entertainment with almost not-stop drive-by shootings every evening.

refractedthought said...

"Tacoma’s average new condominium price, according to the study, was $348,893 at the end of last year."

I stopped right there and busted out laughing.

EconE said...

I guess Tacoma is even more special than Seattle.

heh.

pika said...

Um, you guys haven't been to Tacoma lately, have you? I moved here from Seattle six months ago, and lo and behold, it's a nice little city.

EconE said...

Um, you guys haven't been to Tacoma lately, have you? I moved here from Seattle six months ago, and lo and behold, it's a nice little city.

Funny...I hear that about every place discussed on this blog.

There are special little places I believe...not that won't necessarily go down in value but it won't matter if they do.

Hunt's Point. Westside W/ Olympic Views.

Evergreen Point ditto.

Medina waterfront.

Laurelhurst waterfront.

The uber rich don't really give a rats ass if RE tanks because that is a relatively small part of their portfolios...not to mention...they'll probably be the ones that make out like bandits on the downturn also.

refractedthought said...

it's a nice little city.

There's a huge disconnect between "nice little city" and $350,000 condos. In time, gravity will reassert itself, and you too will understand.

matthew said...

Tacoma was voted least livable city in the U.S. a year or two ago... Based on crime, weather, unemployment and cost of living...

pika said...

My comment wasn't intended to convey that condo prices in Tacoma might not go down - they probably will, and that would be great for their affordability and even for downtown Tacoma on the whole. My point was that Tacoma's a good, interesting (even safe, in most neighborhoods) place to live and combat some of the ill-informed slander that based on conjecture and believing everything you read (I thought the whole point of this site was skepticism about media hype, albeit of the housing boom).

matthew said...

Pika,

Crime was up over 3.08 percent last year in Tacoma. It leads all cities in Washington in Violent crime, and has more crime than just about every city it is compared to in the FBI uniform crime report (Sacramento being higher).

Pegasus said...

Pika....."My point was that Tacoma's a good, interesting (even safe, in most neighborhoods) place to live and combat some of the ill-informed slander that based on conjecture and believing everything you read (I thought the whole point of this site was skepticism about media hype, albeit of the housing boom)."

And my point was to point out that builders will build anywhere as long as they know another fool will come along and buy their wares at greatly inflated prices.

Tacoma is so safe according to you and I am just spouting "ill-informed slander" and not facts that perhaps you should ignore the crime rate and warnings and prove me wrong.

Why don't you take a little drive this evening and park yourself up on Hilltop tonight while you enjoy the gorgeous view of the city, bay and lights. If your car is still in one piece and you are undamaged and alive at sunrise I will retract my previous comment. How's that? Oh I know you don't want to listen to any warnings for your safety but make sure you're wearing the right color bandana while you enjoy that view.

Good luck and I really hope you prove me wrong because the alternative is not a pleasant thought.

Sven said...

Pika is correct in the assertion that there are very nice parts of Tacoma, but there are also very sketchy parts of that city that must be avoided (like Hilltop and the Portland Ave. areas). The area north of 6th to Point Defiance is a very nice older home community particularly around the Proctor and Old Town areas. NE Tacoma around Brown’s Point is also a very nice area.

However, Tacoma is also very over priced in some areas with an even larger disconnect from median income level to home price than in many parts of Seattle (the recent overpriced article lends some tangential evidence to this). There is also some truth to parts of North Tacoma being a bedroom community for commuters to Seattle. The price of those condos is laughable considering the typical clientele of Tacoma and adds proof to the builder’s disconnect to geographical supply and demand...

Scott said...

I posted a few thoughts on this topic over at Greater Seattle metro housing market-condos. I agree that an average condo price of $348k in Tacoma is absurd, which would at least partially explain why there is a 14 month supply of condos in the downtown core at current selling rates. The gist of my commentary is that Tacoma could develop a sound condo-oriented housing market, if builders plan their developments correctly. Geographically, Tacoma isn't all that different from Seattle itself in that it is on the Sound and mountains are nearby.

flotown said...

But its a downtown, urban location relative to 99% of seattle metro area, and therein lies the value. It has the bones - streetgrid, infrastructure, zoning -to be one of the few urban, walkable locations in the region. If there are 3 million people in the region and some small percentage want an urtban walkable lifestyle, there aren't many options.

that said the prices are high, but construction costs are what they are and aren't likely to fall. I think many people on this blog underestimate the support provided to prices by high replacement costs

wreckingbull said...

Hey Flo,

I just don't buy that today's prices are the result of higher construction costs.

Can you price out what it costs to build a new 2000 square foot home of average quality on a standard lot? (i.e. not clinging to a hillside) I have not built anything since 2002, so I can't comment on this.

Thanks.

Sven said...

...and some small percentage want an urtban walkable lifestyle, there aren't many options.

Exactly why I consider the North Tacoma area as my favorite next to West Seattle (Admiral, Junction, and Alki areas). Walkable with great amenities, good schools (which Seattle can't boast) and a great community feel.

Replacement cost is a good point, but often that cost is hard to measure while using location as a check/balance. Like the developer mentioned, the cost of land is what really put one project so far out of whack with the norm, not necessarily construction cost as that's mainly a given.

Sorry, I may have misled with the geographical location statement. I have a primarily social geography eduction so I consider physical, social, and environmental considerations as all part of the same over arching classification (basically how humans interact with a given environment).

rentalbliss said...

Sven; I would highly disagree with Tacoma having a good school district. Where are you getting this info.?

Sven said...

Most of the information I've seen about the school districts in Tacoma has been from online review sites, test score publications, and interviews with current and former employees and parents I've had seperately. A lot of it is very location dependent and having no children in school, I can't give a completely informed opinion.

I did notice that the reviews varied quite a bit for different schools and there seems to be a remodel hangover for Stadium. So, real experience would trump what I've researched since I've no real test for the information until I put a kid in the system...

flotown said...

"Can you price out what it costs to build a new 2000 square foot home of average quality on a standard lot?"

I can't speak to that but I can speak to multi-family construction. The most efficient layout, in terms of hard cost and land cost, is 5-over-1 construction. I just got bids on hard costs for the podiums (blended rate of plain vanilla shell retail and non-heated parking) at about $120/sf, below grade parking at $85/sf and woodframe above the podium at $150/sf. We assume 5% escalation over the construciton period. this is an all-in per SF unit cost. then we add financing costs, insurance (15k pr unit), marketing and sales (6-8% of net sales), permitting (3% of hard), contingency (7%), and project management costs (5%). So that's $250/sf all in plus the pro-rata share of the parking (lets say one stall) at $50k including soft costs. 900 sf condo at $225,000 replacement plus $50k parking equals $275k total replacement cost. Lets make it simple, ignore costs of funds and discounting and assume a 15% margin on cost at delivery - $316,900.

Not even talking about anything fancy in terms of amenitieslet alone concrete and steel construction

rentalbliss said...

I have compared many school districts on Washington state report card, and Tacoma has shown the lowest test scores and highest dropout rate in the PNW.

Heres a link

http://reportcard.ospi.k12.wa.us/

Eric D. said...

I agree that condos are way overpriced in Tacoma, but there are actually parts of HillTop that you can hang out all night and not worry (e.g. The Tempest)- the crime rate here is greatly exagerated and is very relative. Compared to most cities in California the crime rate in Tacoma is not bad. Compared to rich, white Seattle it is, big surpise.

Sven said...

When investigating that issue, I limited my research to the schools that were in particular neighborhoods of my residence interest. Schools, by nature of being in neighborhoods, are very location sensitive in performance and evaluation. The sites I used were about specific schools, (Washington/Hoyt, Mason, Sherman, Statium, Wilson, etc...) instead of the district wide stats. To base a decision on district wide stats is a bit of a stretch in my opinion, but definately good information to have on hand.

From the site you posted one can dive deeper in to the specific schools and see individual performances. That is the real value of that survey, not necessarily the overall rating.

EconE said...

The new Tacoma mantra should be...or maybe the future.

"I am not white trash...my counters are granite...I am not white trash"

Face it...Tacoma Sucks. Always has...always will.

same with Everett.

flotown said...

Econ, thats a stupid, ignnorant comment and adds nothing to the conversation.

EconE said...

mmm....must have hit a nerve with you Flotown.

I'll show you something that doesn't contribute to the conversation...

[i]but construction costs are what they are and aren't likely to fall[/i]

have you checked the price for copper & lumber lately? Probably not.

I believe that construction costs are going to fall.

I believe that the builders will continue to build even as they bury the existing homeowners in their houses as they start to offer the same thing for less.

I also believe that Tacoma still sucks.

call me elitist I don't care. Tacoma sucks and I'm glad I never had nor ever will have to live on "that side of the tracks"

pika said...

Thanks, Sven for starting a rational discussion. Pegasus, I actually hang out on Hilltop on occasion -- walking over there at night sometimes (!), and it's not that different than Seattle's 23rd and Madison was until recently -- you have to be a bit more alert than you do in most Seattle or north Tacoma neighborhoods, but it's just not that big a deal if you mind your own business. Like somebody said, there are some good places to eat/hang out there including but not limited to the Tempest. That may not have been the case 10 years ago, but it's the case now.

drizell said...

I lived in Tacoma from 2000 to 2002. During that time, I never once experienced crime, heard a gunshot, or was even harassed on the street. I visited Seattle every couple months, and EVERY SINGLE TIME I went there something bad happened to me, whether it was being mugged in broad daylight downtown, spit on by homeless person, yelled at by drivers at intersections, or ticketed by the infamously brutal SPD for frivilous offenses. Tacoma does have some crime problems, but I feel much safer there than Seattle. Much of the crime is the direct result of a Department of Corrections policy to locate a far higher share of prisoner work release facilities in Pierce County than in other counties.

tacomagirl said...

It seems many of you prefer to live in neighborhoods that are not racially, socio-economically, or culturally diverse such as Tacoma's downtown or Hilltop neighborhoods. As an owner of a less than $350,000 condo in downtown Tacoma and a lovely house in the Hilltop (where I've never experienced crime, just racist and classist stereotypes from folks like you), I am completely offended and thankful that most of you live up north where you can be open-minded but never have to encounter people different from yourself. Enjoy the ignorance -- many say it's bliss.

jen said...

Tacoma's school district has open enrollment, meaning as long as there is space available and parents can provide transport, kids can go to any school in the district.

There are some great programs available, such as Bryant's Montessori curriculum, and Grant's arts-based curriculum. On the High School end, there's Tacoma School of the Arts.

Tacoma does have a large percentage of children below the poverty line, which historically has been associated with higher drop out rates and lower test scores. I don't think these things necessarily equate to "bad schools" so much as schools faced with very difficult circumstances.

At any rate, parents who have the means to do so have a choice of where to send their kids to school.

Stadium High, the closest high school to the condo developments, was rated a 9 out of 10 in overall performance on Greatschools.net last year.

Pegasus said...

tacomagurl..If you check with your local police dept. you will find out Hilltop is still a high crime area which requires extra police patrols to subvert the criminal element that frequents there and thinks drive-by shootings are a form of artistic expression.

you said..."where I've never experienced crime, just racist and classist stereotypes from folks like you".

Perhaps you are the racist here as no one else has brought that up. Maybe you can only play the race card when all of the facts prove you to be wrong.

Jen said.."Stadium High, the closest high school to the condo developments, was rated a 9 out of 10 in overall performance on Greatschools.net last year."

And didn't Stadium just have an in-school gangland style execution? Sounds like a great place to send your kids.

drizell said...

pegasus,

"gangland style execution?" Man, you are one mentally ill individual if you glorify school violence to try to portray one place as somehow "better" than another. A tragedy is a tragedy, not a reason to claim that Seattle is better than Tacoma. None of us Tacomans started bad-mouthing Seattle just because some psycho killed 7 people in Capital Hill a year ago.

The negativity of all the Seattle people on this blog makes me even more determined never to join your ranks and move north. I'm perfectly content staying down south.

Pegasus said...

dribble..

Amazing that you and others have twisted my words to suit your agenda of deception. I merely exposed a heinous crime that occurred in a school that someone else here claimed was a great school. I do not glorify the crime nor do I condone it in silence. When crimes like this occur within the school and it DID OCCUR you stop covering it up and DEAL WITH THE PROBLEM. You can join the crowd of hiding and manipulating the truth to serve your own purpose which is to mislead(sucker) potential buyers into believing everything is wonderful in Tacoma. There is no crime and the schools are wonderful. NOT! Start telling the truth instead of lying and covering the facts up so that one day you can unload your property on a uninformed buyer. Try fixing your problems instead on lying and pointing fingers at people who tell the truth. I have not identified where I live nor what race I am but that seems to be the only way to discredit me here without dealing with the facts. Now get up and go out and clean up your neighborhoods and schools before you make up any more lies because crime does affect your property values and most importantly your quality of life.