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Tacoma housing market cheered on CNN Money — but is it true?

Post by Kathleen Cooper / The News Tribune on Feb. 8, 2011 at 11:34 am with 13 Comments »
February 9, 2011 12:01 pm

CNN Money’s Les Christie has a flashy report out today that Tacoma is one of “10 large metro areas” that will record the biggest housing price gains in 2012.

Specifically he predicts Tacoma home prices will gain 11.8 percent by September of 2012.

While all of us hope for good residential real estate news, it’s unclear how he arrived at that conclusion. The gallery says in very small type at the end that the source of data is “Fiserv, based on cities with a population of 500,000 or more.”

First thought: Tacoma has about 200,000 people; Pierce County has about 800,000. How is he, or Fiserv, defining metro area?

Second thought: Fiserv produces data for the Case-Shiller Index, which is published monthly by Standard & Poor’s. That monthly index for the Seattle area includes Pierce, King and Snohomish counties — that’s a lot of territory. Tacoma- and Pierce County-specific data is often different. We try to drill down on these local areas by using data from the Northwest Multiple Listings Service. Last month, it said the median sales price in Pierce County was $200,000. That’s $40,000 lower than Mr. Christie’s article lists for Tacoma.

Third thought: Mr. Christie also lists Seattle as one of his Top 10 markets. The median home price issue is the same; he lists it as $375,000, but the NWMLS says $333,500 for King County last month.

Final thought, for now: September 2012 is a long way away. Many real estate brokers I talk to aren’t comfortable making predictions for a few months from now, much less more than a year from now.

(Parenthetical personal thought: The CNN story also describes Tacoma as a “mini-Seattle.” Not really, right Gritizens?)

I’ve called Julie Nixon, a spokeswoman for Fiserv’s Case-Shiller indexes, to see if I can shed a little light on what we’re talking about here. Meanwhile, what questions do you have?

Update: As of 4:30 p.m., I haven’t heard from Ms. Nixon. I’ll post more if she calls back this week.

Update, noon Feb. 9: This morning, Brad Fennessy of Fiserv sent a spreadsheet that showed the “Tacoma” they refer to is the Census’s metropolitan area, which covers about 800,000 people. Generally, that’s Pierce County. The spreadsheet has data for about 380 areas across the country.

The spreadsheet has several categories, including two that indicate how the CNN reporter arrived at the 11.8 percent figure. Fiserv has predicted that home prices will decline 0.5 percent between third quarter 2010 and third quarter 2011, then rise 12.3 percent between third quarter 2011 and third quarter 2012.

What I still don’t know is the methodology behind those predictions, nor how Fiserv has arrived at a median home sales price that’s $40,000 less than the NWMLS data. Mr. Fennessy is arranging a phone call with Fiserv’s chief economist. I’ll post more after that.

Leave a comment Comments → 13
  1. Soundlife says:

    It’s always fun when they are reduced to making up numbers to try to prove some made up point.
    Maybe if they understood economics a little better, and had actually visited Tacoma, they might have a more realistic forecast.

  2. Crimson says:

    I’d love them to explain to me how our home, which has lost $75,000 in value over the last 5 years, is going to gain it’s value back. This is the most ridiculous report I’ve ever seen.

  3. snagglepuss says:

    As a person who grew up in the Seattle suburbs and now chooses to live in Tacoma, I’ve always felt Tacoma was a best kept secret. When I’m in Seattle and people sneer at Tacoma I agree with them and point out all the flaws, keeping the benefits quietly to myself. I’ve met people in my neighborhood in Tacoma who have primary residences in Seattle, and a second home in Tacoma where they spend the weekends. I’ve always felt that within twenty years the Seattle crowd will discover what a great place Tacoma is and will start moving down here, bringing all their traffic and congestion with them.

  4. the3rdpigshouse says:

    The previously over-valued homes in the Tacoma area should continue their slide in value until the home is representative of the value/price advertised! The property tax types in the auditors office just hate that senario!

  5. northsc says:

    Having just recently spoke to my bank about refinancing, the banks are a lot less enthusiastic about the near term. There will be record foreclosures in Pierce County this year.

  6. nwcolorist says:

    Something that might resonate more would be for the Trib to interview a handful of local real estate people. Ones whose livelihood depend on the housing market.

  7. Kathleen Cooper says:

    Good points all, folks. I just came back from an interview with a longtime Tacoma real estate broker who I was interviewing for another story. When I told him about this CNN report, he just laughed. Predicting what prices will do in 2012 is hilarious.

  8. aranciata says:

    I,m skeptical.

  9. Kathleen,

    Nice job picking up on the “flashy report”. If some of these people would step outside their office towers and venture into the real American landscape, then maybe we might see reports that actually have some relevance other than justifying a bloated paycheck for another overrated financial guru.

  10. salmonhead says:

    First, I see the report today that Tacoma was listed as North America’s Most Romantic City and then I see this. Hilarious

  11. Kathleen Cooper says:

    Salmonhead, I know! We are romantic AND have great housing potential. Well, I guess romance is in the eye of the beholder. Housing market issues, however, come with data.

  12. nvanputten says:

    Thanks for the excellent reporting here! Looking forward to feedback from Ms. Nixon- too much data gets fabricated. In this case, the’re no way to even predict mortgage rates 18 months from now, let alone home prices.

    the3rdpigshouse: The auditor’s office doesn’t handle property tax assessments. It’s the County Assessor’s duty, an elected office currently held by Dale Washam.

  13. tacomajoe says:

    Real estate brokers all had the same spiel through 2008 – home prices are going up up up and that having three or four extra homes was a great investment. Now we’re expected to believe them when they say they have no idea what is going to happen in the next year.

    And the explanation for the difference between NWMLS and Fiserv may be very simple – it is probably impossible for them to have the same home sales reflected in their median figures, because they count them at different times.

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