Do you plan to buy a home in Tacoma, Washington in 2017? If so, you’ve come to the right place to begin your research. This article offers an updated look at the Tacoma real estate market, mortgage rate trends, housing forecasts, and other topics important to home buyers.
Is 2017 a Good Time to Buy a Home in Tacoma?
With the end of 2016 just weeks away, most home buyers are looking ahead to next year. And many are asking the same question: Is 2017 a good time to buy a home in Tacoma?
A better question is: How much might it cost you if you wait? Home prices in Tacoma are expected to rise steadily throughout 2017, as they did in 2016 (though they might slow down a bit). So if you buy a home in Tacoma later in 2017, as opposed to earlier, you’ll probably pay more.
Finances are another important consideration. You want to make sure buying a home in Tacoma is the right move, based on your current financial and lifestyle situation. Do you have steady income right now, and do you expect that to continue for the foreseeable future? Are your current monthly expenses manageable? Do you plan to live in the area for at least the next few years? If you’ve answered yes to these questions, buying a home in Tacoma might be a smart move.
What’s the Local Real Estate Market Like?
The Tacoma real estate market is very competitive right now, partly due to a shortage of homes for sale. Last month, the Northwest Multiple Listing Service reported on these conditions, quoting local real estate expert and MLS board member Dick Beeson.
According to Beeson:
“Inventory levels were supposed to increase by this time of year; yet stubbornly, would-be sellers remain on the sidelines, so buyers will continue to struggle to find a home and compete with other buyers through most, if not all of 2017.”
But even in a tight real estate market like Tacoma, Washington, there are things you can do to increase your chance for success. Financing is a big part of it. If you’re thinking about buying a home in Tacoma in 2017, make sure you have your financing lined up before you enter the real estate market.
For cash buyers, this means having the money in the bank, with bank statements to prove it. Home buyers using a mortgage loan can benefit from getting pre-approved by a mortgage lender. In a competitive market like Tacoma, sellers will want to know that you have your financing squared away.
As for home prices, housing analysts expect the Tacoma real estate market to cool down a bit in 2017. According to Zillow, house values in the the city rose by around 13% during 2016. Looking forward, they’ve predicted a gain of about 6% in 2017. So clearly they expect prices to rise more slowly in 2017. With that being said, the Tacoma housing market will probably continue to outpace the nation, as it has this year.
What Are Mortgage Rates Doing?
Mortgage rates surged during the second half of November, and into the first week of December. You can see this trend on the far-right side of the chart below. As a result, we will likely start 2017 with 30-year loan rates averaging around 4%, or slightly above.
Looking forward, analysts with both the Mortgage Bankers Association and Freddie Mac expect interest rates to rise gradually throughout 2017.
This outlook, combined with the forecast for rising home prices, has created a sense of urgency for home buyers in Tacoma and across the Seattle metro area. In short, those who postpone their purchases until later in 2017 could end up paying more for a home, and for a mortgage loan. So there’s a lot to consider.
Good News: Higher Loan Loan Limits in Tacoma
Federal housing officials recently announced they would increase both FHA and conforming (conventional) loan limits for 2017. This is in response to significant home-price gains that occurred during 2016.
In 2017, the loan limit for a single-family home purchase in Tacoma will be $592,250. This applies to both FHA-insured and conventional mortgage loans.
To be clear, borrowers can still obtain financing above these limits. It would just require a “jumbo” mortgage, and that often means a larger down payment as well.
In December 2016, the median home price for Tacoma was around $240,000. This means home buyers should have plenty of properties to choose from, within the FHA and conforming loan limits stated above.