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Tacoma is currently a rather "hot" market for people. Thanks to its tourist appeal, affordability, and other reasons, there's no doubt that WA, Tacoma is a place you should have on your radar if you're looking to profit from your next real estate investment.
That said, we should note that the Tacoma housing market has undergone some changes this year. If you're interested in this city, you should first evaluate its market trends, home prices, and other essential factors.
The following article will cover the housing market in Tacoma as a whole, including what to expect from it over 2023 and whether it's a good investment option for you.
Recent Trends in the Tacoma Housing Market
There are a lot of conclusions we can draw by evaluating recent market trends. If we look at the February report from the Northwest Multiple Listing Service, for example, we can look that the market appears to be cooling off in comparison to last year.
According to the report, we can also conclude that:
- The market in Pierce County has about 2.13 months of housing stock, which isn't too much considering the current demand for homes.
- Pending sales declined by 5.75%.
- Closed sales declined by 34.18%.
Let's look at each factor closely to understand how this seller's market is behaving:
Median Home Sold Price - Median Home Price
According to Redfin's April 2023 report, the median sale price in Tacoma was $455K; a 10.4% decrease year-over-year.
On the other hand, data from Realtor.com shows that the median listing home price is $485K, and the median price per square foot is $308.
Number of Homes Sold
In April 2023, there were 229 home sales compared to 405 last year. This implies a surprising 43.5% decline in sales.
Median Days on the Market
The average home in Tacoma sells after seven days on the market compared to five days in 2022. Overall, the fact that homes in Tacoma sell so fast indicates that this remains a hot market that benefits sellers over buyers.
Sale-to-List Price
Tacoma's current sale-to-list price is 101.3%, which indicates that many homes sell for approximately the asking price, although the extra 1.3% suggests more negotiation power on the seller's side.
In April 2023, about 54.1% of homes sold above their listing price, and 26.1% sold below it. This indicates that sellers have the upper hand when negotiating home values.
What Can Affect the Tacoma Real Estate Market?
As you can see, Tacoma home prices have decreased slightly compared to last year, but why?
Many factors can affect home values in Tacoma and Washington State in general. Home buyers who are interested in this vibrant and exciting city should first look at the following factors and evaluate them with a real estate agent to determine whether its market is suitable for their goals and needs.
Supply and Demand
Supply and demand are two of the most important metrics to evaluate when it comes to any housing market.
While some people may argue that the housing market in Tacoma is "balanced," keep in mind the current supply isn't enough to meet the huge demand for homes there.
Another interesting thing to consider is that this market is known for being very competitive, and the average home gets multiple offers. According to Redfin, hot homes can go pending in as little as four days, which is a low number compared to other major cities in the country.
With all of that in mind, it's safe to conclude that Tacoma is currently a seller's market, as the supply isn't enough to meet the demand, and most sellers have the upper hand when negotiating better deals.
Does this mean that you should back off as a buyer? Not necessarily. However, if you're willing to invest in Tacoma, WA, then you should be prepared to enter a highly competitive market and participate in bidding wars with other people.
If you do proper research and know how to negotiate, you'll be able to find an excellent deal for your next property in Tacoma, WA.
Interest Rates
Mortgage interest rates have scared many buyers and sellers for a while now, as the Federal Reserve keeps raising them to fight inflation. In the case of buyers specifically, many of them have backed off from purchasing, as the rising rates can lower the affordability of many homes, especially in a city like Tacoma.
Since rates keep rising, some sellers try to offset these costs by raising their home prices, which makes them even less affordable for buyers. Others even back off from the market.
Depending on your case, you may decide to either negotiate a reasonable price or wait until the interest rates go lower, although it's complicated to tell when that will happen.
Demographics and Government Intervention
Finally, as a general rule, we have demographics and government interventions. These two factors can help you tell if a housing market will go through a significant change soon and how you can navigate it.
Demographics, for example, evaluate a group of people's age, gender, race, income, and other factors. This can help you understand which people are buying the most in certain areas, which can help you adjust your negotiation strategy.
On the other hand, government interventions can affect people on a local, regional, or national level, depending on the case. These government interventions include:
- Price controls
- Subsidies
- Taxation
- Regulations
If the action is severe enough, you can expect a significant change in your housing market of preference.
Will the Tacoma Housing Market Crash This Year?
Tacoma's housing market is far from crashing, especially considering its current conditions. The low supply and the high demand suggest a lot of activity within the market, and even though home prices are going down, it's not enough to suggest an approaching market crash.
One of the primary reasons why people believe many cities in the U.S. (including Tacoma, WA) will go through a crash is because of the rising interest rates. Rising rates, overall, have made prices decline in most regions over the past year.
However, many cities are making a smooth transition into this new "reality" of the real estate market.
Some people, however, are arguing that housing demand may decline over the following months, as people will back off from the market to protect themselves against rising rates. Still, we can't know with certainty if these rates will keep raising or if they will decrease soon.
Even though mortgage rates have affected most markets heavily, there's still a reasonable demand for homes, especially in Tacoma. You can expect this market to remain strong throughout 2023.
More Statistics About the Tacoma Real Estate Market
Here are a few more statistics about Tacoma, WA, that may help you decide if this market is for you:
- North End is the most expensive neighborhood in Tacoma, WA, with a median listing home price of $820K.
- South Tacoma, on the contrary, is the most affordable neighborhood in the city, with a median price of $385K.
- According to Redfin, about 80% of homebuyers looked to stay within Tacoma's metro area in Abril 2023.
- Only 9% of homes in Tacoma are at risk of flooding. This number is expected to increase to 10% within the next 30 years.
- According to NeighborhoodScout, 54.1% of people in Tacoma are homeowners, 45.9% are renters, and the other 5.4% represents vacant properties.
- Single-family homes represent the most common type of property in Tacoma, with a 62.7% rate.
Tacoma Housing Market Forecast for 2023
Tacoma, WA, seems to be an excellent investment option for people right now, but what can you expect for the following year? Let's break it down:
The current sale-to-list ratio for Tacoma suggests that the market is almost entirely balanced, which means that both buyers and sellers have equal chances of negotiating a better deal. However, sellers have a slightly higher advantage, which can translate into some homes selling above their listing price.
Currently, most homes in Tacoma are selling at or above their listing price, which implies there's a lot of competition in the area. As a buyer, you must act quickly if you want to secure a good deal for your next property.
Considering recent trends in Tacoma's housing market, we can argue that it will remain relatively stable over the following months. Home prices could keep declining a bit, but that won't be enough to make too much of a difference, at least for now.
Bottom Line - Is Tacoma Appropriate for You?
If you're eager to invest in Tacoma's housing market, today may be the best time to do it. The current market conditions suggest that buyers have many opportunities to negotiate a good deal on their next home, although they may have to experience bidding wars with other people first.
Due to the high demand and low supply this market offers, there's no doubt that if you invest, you will get reasonable returns on your purchase.
FAQs
Is Tacoma a Hot Real Estate Market?
Yes. Tacoma is currently considered a hot real estate market due to the incredibly high demand for homes, which leads to a more competitive and active marketplace.
Are Home Prices Dropping in Tacoma, WA?
Yes, home prices keep declining slowly in Tacoma, and they're expected to decrease throughout the year.
Is Tacoma a Good Place to Invest?
Tacoma is currently a popular real estate market, so both buyers and sellers may find several opportunities to make a profit from it. However, you should be smart with your investment if you want to avoid losing money.
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