When Russell left for Seattle, some worried about the impact on high-end home values. There was some impact, but it was hard to isolate with values already declining as a result of the economy. Some of the local Russell employees, whose families were well entrenched here, commuted rather than sold their homes, so there wasn’t the mass exodus that some feared. It is possible that any negative effect Russell might have had on high-end home values will be partially offset by the 2,000 or so jobs State Farm will bring (as many as 300 will be hired this summer!) However, average salaries of these positions have not been reported. This is going to be a claims center. I speculate that this will mean jobs with down-to-earth salaries. I see this having more of an effect on homes priced in the lower to mid price ranges, as well as the condo market downtown, where people could walk to work.

Conditions are ripe for a condo resurgence. Prior to the real estate downturn in 2007, we were seeing a condo boom in downtown Tacoma. There were new buildings going up and old apartment buildings were being converted to condos to keep up with demand. People wanted to live downtown. There was, and continues, a spirit of renewal, with UW Tacoma, new restaurants and fabulous museums. There were rumors that an urban grocery store would open, meaning urbanites would not have to get into a car and drive to Stadium Thriftway or Hilltop Safeway. Tacoma City Grocer IGA opened in the fall of 2011. So the infrastructure has moved in to meet the needs of downtown residents. Prices of condos are down significantly from their highs in 2007. In the first quarter of 2007 there were 53 condo sales downtown (MLS areas 19,20 and 29) averaging $281,446 and $295 per square foot. In the first quarter of 2013 there were 11 (ELEVEN!) condo sales averaging $179,886 and $181 per square
foot. If State Farm employees want to live the urban lifestyle in a downtown condo, they are going to find (for now) low prices, low interest rates and probably good upside potential for values. I see this as the segment of the market most likely to be affected significantly by the State Farm lease, although I believe it is great news across the board and for reasons unrelated to real estate.

Julia wrote back. Her family has decided to move anyway. They are working with a lender to qualify for a new mortgage with the plan to rent their current home. Julia was just one example among many of our clients who are fed up watching these low interest rates and attractively priced homes. Now that prices seem to be headed up again, they are betting on their current home appreciating. They are also locking in a low price and low interest rate on new homes. I think this phenomenon might help explain why there are so many buyers and so few sellers in our market today. The buyers we are seeing out there, after all, are not all first time buyers. We know this because even more expensive “move up” homes are selling these days. A lot of them already own a home, yet the offers they write are not contingent on selling it first. They are like Julia, Josh, Robin, Steven, Margaret, Tom, Bill and Jessica, and probably hundreds of others in Tacoma.

Each of these people adds to the pool of buyers but do not add a corresponding house to that pool. So this phenomenon is partially behind the inventory imbalance. But far from casting blame, I thank these people for igniting our market!

There are some things to consider if you are considering buying without selling first. Here are a few. Becky Thompson of Wells Fargo, says that if you don’t have a lot of equity in your current home you might not be able use rent as a debt ratio offset when applying for a mortgage, even if you have a signed lease. By and large you will have to qualify for both mortgages, but you might be surprised to find how much you can qualify for. Particularly if you do not have experience as a landlord, you might consider using a property management company in order to ensure you have qualified renters, that you don’t run afoul of landlord tenant laws, and that the call in the middle of the night regarding a plumbing leak does not go to your phone. You need to think about wear and tear on the home. A tenant will not care for things exactly as you would. If your home is in pristine condition you might consider what it will look like a year or two after becoming a rental. You will want to have cash reserves available for repairs or to cover the mortgage between renters.

Mark Melsness of Windermere Property Management says there is a strong market for rental housing between $1,400 and $1,800 per month, fueled by military families and people who had to short-sell their homes.

Before doing anything, it is worth gathering information. Call us to find out what your home is worth. As this market is hot, you might be pleasantly surprised.

We are helping many buyers sort through a thin assortment of listed homes in Tacoma. Reasonably priced new listings are drawing multiple offers. Here is a breakdown of what is now pending and active in each price category in the north end. To give a point of reference, a balanced market has about half as many pending sales as active listings (50%). Most categories are in north Tacoma are way out of balance. Check out a few in particular. Below $200,000… 232% pending! That is a lot more demand than supply. And another interesting price range is the $500,000 to $550,000 range, at 100%. I can’t tell you the last time I saw that. People, these are the conditions that drive prices up. I’m looking for an increase in values this year, perhaps significant.

We erroneously think of January 2 as being the day the new buyers come out and the market wakes from its holiday snooze. In reality there is a lag. Most years it is around the second week of the month when our phones start ringing and we begin the process David calls "getting busy getting busy", i.e. the time when we have a lot of those initial conversations with prospective buyers and sellers. This January, it was midweek last week that these calls and emails started coming in. I theorize that the loathsome flu virus going around delayed things. The virus took me down, but oddly enough, that couldn’t have happened at a better time; immediately after our holiday trip to Idaho and during that lag. It is always nice to hear from buyers, but at this juncture it is particularly nice to hear from sellers, since inventory is in short supply. We ended 2012 with about half as many north Tacoma homes as last year. This market needs good homes listed, the sooner the better. Buyers are ready, interest rates are favorable and the signs seem to point to improvement in values for 2013. If you have been considering selling Tacoma real estate, please call!

The other upside to being under the weather in early January was that I wasn't out showing homes or sitting open houses when the Seahawks were in the playoffs. I got to see the game against the Redskins in its entirety, as well as that breathtaking game against the Falcons in which the Hawks very nearly pulled off a historically improbable comeback in the second half. It is remarkable and stressful how fast fortunes can change with mere seconds on the clock. I am really looking forward to seeing Russell Wilson and this exciting team in the coming years. Speaking of sports, the interwebs are abuzz with talk that NBA basketball may return to Seattle. The family who owns the Sacramento Kings reached a deal to sell to a group intending to move the franchise to Seattle and dust off the Supersonics name. Like with a real estate purchase and sale, the purchase and sale in the case of the Kings has a contingency, which is basically a big “IF”. It's not contingent on inspection, or appraisal, like a real estate sale, but on approval from NBA Board of Governors. The mayor of Sacramento, Kevin Johnson, himself a former NBA star, plans to present his case to the NBA in April for keeping the team where it is. So it’s not a done deal. We can all relate to the people of Sacramento if they must bid farewell to the Kings, and yet one way or another it would be positive to see a franchise in Seattle again.

Last month I did a piece on aging in place—the concept of building homes designed to evolve with us as our needs change with age. I was nominated for a prestigious award for both the reporting and writing. Not really. But I did accomplish something. I elicited a critical response. I moved the needle enough to receive a letter to the editor, (me). I don’t take offense at such letters. I consider them to be a very encouraging sign that someone reads what I write. My critic this time was a friend and client, Mary Lloyd. The best part of receiving a critique from Mary on this particular topic is that Mary is highly credible on it. Mary is a speaker and consultant and author of Supercharged Retirement: Ditch the Rocking Chair, Trash the Remote, and Do What You Love. For more, see her website. Mary points out that when we let go of the stuff in our lives that gives us exercise without us noticing--stairs, yards, etc., we invite that decline, when we might be able to avoid it entirely. “Please,” she writes, “let’s have stairs to somewhere…” She believes in living as actively as you can right up until you can't do that stuff anymore. “Quitting early is just making us fat and unhappy…. this nonsense about ‘getting ready’ is just one more way to deny older people the dynamic lives they could be continuing to live. My dad died three days before his 85th birthday. He'd had heart disease since age 40. He lived in a two story house and walked everywhere in the small town where he lived. The only aging-related modification we made over the years was to put a handrail up the stairs to the second floor since he needed to go up there to take his shower every night. (His bedroom was on the main floor.) Activity was part of what gave him a vibrant life until he died.”

Thank you for writing Mary. More importantly, thank you for reading. I really hope that your good points inspire someone to write in with a strongly worded rebuttal, not because I want your words contradicted, but only because it would be an excellent sign of another reader. Also, I understand controversy is very engaging.

Perhaps you have heard of Tacoma Runners. It is a social running group that does a 3-mile run every Thursday night from a different location, usually bars and restaurants. That group grew from 7 people to over 2000 today. I have heard it described as a drinking club with a running problem. Derek Young, the mad genius behind this, (as well as the founder of Exit133, a great Tacoma blog) will soon be expanding on Tacoma Runners, with a free, timed 5K run every Saturday at Point Defiance. The run will offer a low pressure, consistent way for participants to be motivated to stay fit year-round and to track their progress with a timed event in between their regularly scheduled organized races. Given the rapid growth of the Tacoma Runners into the largest running club in the region based on Thursday runs alone, Derek expects the group to grow tremendously once word of the family-friendly free Saturday run spreads. It might be the only free weekly 5k in the country. Participation will be tracked via a custom built website, software application, and timers so that runners can view results over time. Derek is seeking a small group of sponsors at this time to help cover the costs. Write me if you would like more info.

Please be safe this holiday season!