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Summary: The Tacoma housing market has gone through some changes over the last few years. If you’re looking to buy a home in the Tacoma area in 2021, check out our update on the area’s real estate market to help you make a more informed purchasing decision.
The Tacoma real estate market has changed dramatically over the last few years. So, we thought it would be helpful to publish a real estate market update for those who are planning to buy a home in Tacoma, Washington, in 2021.
As we continue into 2021, home prices in Tacoma are higher than they have ever been before. In fact, the housing market in Tacoma is very hot right now, with prices rising quickly and steadily. This is partly due to the “Seattle effect” that has seattle-gets-higher-loan-limits/boosted house values all across the metro area.
According to the real estate information company Zillow, the median home value for Tacoma, Washington, rose to $399,500 as of January 2021 and is expected to rise by 9.7% this year. To put that percentage into perspective, home prices in the U.S. tend to rise somewhere between 3% and 5% annually, going back several decades. So, the recent gains in Tacoma far exceed historical averages.
Economists and analysts are predicting that the gains will happen gradually this year. But, nevertheless, the city is still projected to outpace the national average for price growth, as it’s expected that home prices throughout the nation will rise by 7.3% over the next 12 months.
That said, the inventory situation is another important factor for anyone planning to buy a home in Tacoma in 2021. We are starting the year with very low inventory levels within the housing market. According to Redfin, Tacoma saw a significant drop in inventory in 2020, with inventory shortages persisting throughout the year. The NWMLS reported over a 5% decrease in listings in 2020 from the previous year, and Seattle city limits saw a 39.3% decline in available homes for sale.
According to housing experts, a balanced real estate market has somewhere around five to six months’ worth of supply. As of November 2020, Tacoma was reported to have a meager one-month supply of homes for sale. So, it’s clearly still a seller’s market in terms of the inventory situation.
There are still plenty of buyers in the market, but not enough properties listed for sale to satisfy the demand. Home buyers who are planning to buy a house in Tacoma in 2021 should understand this supply-and-demand dynamic. It affects everything from your offer price to your negotiating abilities.
Home prices across the Seattle metro area have risen sharply over the last few years, but they’ve stagnated over the past 12 months. That said, Seattle’s prices are some of the highest in the state. According to the latest data, the median home value in Seattle is $804,504. But prices tend to drop off when you move into the surrounding areas, and that goes for Tacoma as well.
As mentioned above, the median home value in Tacoma is just over $399,500. That’s a significant difference from the median for Seattle. This is good news for those who are planning to buy a house in Tacoma, Washington, during 2021. Housing is more affordable there while allowing homeowners to still be within a decent commute to the largest city in the state of Washington for employment purposes.
As we’ve explained in previous blog posts, the official loan limits for Tacoma and the broader Seattle metro area have been increased for 2021. This change applies to FHA and conventional home loans (VA loan limits have been eliminated for 2021).
At the end of 2020, federal housing officials announced that they would increase loan limits for all of these programs due to significant home-price gains that occurred during the year. Most counties across the nation are now seeing higher limits this year compared to last.
This is good news for anyone planning to buy a home in Tacoma in 2021. These changes will give buyers a higher financing range without having to cross over into jumbo loan territory. (Borrowers with sufficient income and good credit can still borrow more than these limits, with a jumbo mortgage.)
The nation as a whole is experiencing a real estate supply crunch right now. Across the country, the average supply level was around 2.3 months as of early January 2021. The supply of homes is declining across the country as demand spikes, and lower mortgage rates make home buying more affordable.
The current supply means the market still is not balanced, and there aren’t enough homes for sale to meet demand. So, it’s affecting homebuyers in a lot of markets nationwide; and therefore, things are not just particularly tight in Tacoma and other cities in the Seattle area. Moreover, these conditions are likely to persist.
As a result, you can expect the current supply-and-demand situation in real estate markets across the country to keep putting upward pressure on home prices for the foreseeable future.
Disclaimer: This article contains projections and forecasts for the Tacoma housing market extending well into 2021. That information was gathered from third-party sources outside of our company and presented here as an educational service to our readers.
If you have any questions about mortgages in Tacoma, Sammamish Mortgage is here to help. We’re a local, family-owned company based out of Seattle & Bellevue, Washington. Not only do we serve the state of Washington, but also the broader Pacific Northwest regions: WA, OR, CO, & ID. We’ve got plenty of mortgage programs for you to choose from, giving you many options. Get in touch with us with any mortgage-related questions you may have.
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