Last May, Redfin elevated Tacoma on the nation’s real estate map with a report saying the city was the nation’s hottest market.
We have that distinction again.
On Thursday, the real estate company’s blog reported Tacoma was the fastest-selling metro market nationwide in January.
“Tacoma, Washington, was the fastest market, with half of all homes pending sale in just 23 days, down from 36 days a year earlier. Rochester, NY and Buffalo, NY were the next fastest markets with 28 and 29 median days on market, followed by Omaha, NE (31) and Sacramento, CA (33),” Redfin reported.
Tacoma also ranks high as a competitive market, with 34.2 percent of homes selling above list price.
The only other markets with a higher percentage of homes selling above list price were in California: Oakland, San Francisco and San Jose.
Redfin agent Brian Richards, who works in the Tacoma market, said that means conventional offers aren’t cutting it anymore, in scenes reminiscent of what Seattle was experiencing at the height of its rising home prices
Richards described a scenario where one of his clients offered $75,000 above asking price on a home, with an additional $25,000 in the event of a low appraisal, something growing more common as appraisal values are being rapidly outpaced by prices.
His client still lost out to another cash offer.
“And that was just an average nice home in University Place, not unique or with any special view,” he told The News Tribune.
Igor Mayster, an agent with John L. Scott’s University Place office, told The News Tribune on Thursday via email: “Tacoma is having bidding wars happen every day.”
Mayster said his office is seeing more cash sales in the Tacoma market.
“As more inventory comes up, I think we will see a strong amount of cash buyers coming through either investing or coming from other states,” Mayster said.
Buyers seeking lower-priced homes are often faced with turning to measures to make their offers more attractive, “like waiving inspections and other real estate contract contingencies,” Mayster said.
Increasing the earnest money offered by a potential buyer is another tactic, up from the typical 1 percent to up to 5 percent.
Additionally, Richards noted, some local sellers, particularly retirees, are taking advantage of the current market status and taking their proceeds from Tacoma sales to buy into lower-cost real estate in states such as Idaho and Texas.
Where is this headed?
“With the influx of demand from California and tech and overflow from King County because of their prices, it’s difficult to know,” said Richards.
Ali Modarres, director of Urban Studies and the assistant chancellor for community engagement at University of Washington Tacoma, told The News Tribune via email on Thursday:
“This shows that we need more supply, but at price ranges that match our wages and do not worsen our housing affordability condition. That way, we can become a lesson in positive growth with full attention to equity.
He added: “Bubbles come and go. We need to remain committed to people who have been with us through thick and thin.”
County council members Marty Campbell and Derek Young said adding more affordable housing requires adding more transportation infrastructure and more livable wage jobs.
“When I talk about affordable housing, it’s more than the cost of a home,” Campbell said. “People shouldn’t be spending their life on the road or working two jobs to pay for a home they can barely afford.”
He added government can only do so much when it comes to providing housing many can afford. Fixing the housing crisis requires collaboration between developers, construction firms, nonprofits and the government.
“We’re not going to be able to incentivize our way out of this,” Campbell said. “The one thing that’s going to work is us working from several different angles.”
Young said there are contributing factors to Tacoma/Pierce County’s lack of housing: a lack of construction in Pierce County, housing prices rising faster than wages and job-dense cities.
Cities such as Bellevue and Redmond need to either meet employer demands for housing or down zone for workplaces. Having the higher paying jobs concentrated in King County isn’t working anymore, Young said.
“They are taking 10 times the amount of jobs they have housing for,” the council member said. “They are relying on the rest of the region to supply housing while they have the jobs.”
The Puget Sound Regional Council is considering one measure to create more equity in jobs and housing. The policy looks to ensure cities in the region have enough housing to support their workforce.
It’s a good thing more people want to live in Tacoma, but the city has to be smart in preparing for that growth, according to some Tacoma City Council members.
“This just highlights our need for more housing,” said City Council member Kristina Walker.
Right now, Tacoma is a bit behind in terms of missing middle inventory like duplexes and townhouses, said City Council member Chris Beale.
“I think it’s going to prompt a discussion about housing choice and housing diversity,” Beale said. “We need to accelerate those efforts around missing middle housing.”
Another challenge is Tacoma residents looking to re-enter the housing market, said City Council member John Hines.
“I think the challenge is because historically we’ve always been very affordable, there’s not a lot of entry points into the market for people who live here,” Hines said.
The city is working to tackle the challenges presented by accelerating housing market conditions by developing an action strategy to address housing affordability, Mayor Victoria Woodards said in a statement. That includes the “creation of new housing, keeping existing housing affordable and in good repair, helping community members stay in their current housing and reducing barriers for those who often encounter them.”
“This new data showing Tacoma homes selling faster than anywhere else in the country reinforces that our focus on housing must remain a priority,” Woodards said.
The city currently is seeking consultant assistance “to develop an ambitious and highly targeted Housing Action Plan (Diverse Housing Types and Inclusionary Zoning Implementation Strategy),” according to the request for proposals.
Thursday’s Redfin news is only likely to make things harder for those now looking for someplace to move and comes after last week’s Northwest Multiple Listing Service report on January sales that said the area was “virtually sold out” of homes under $500,000.