Why Is the Tacoma Housing Market So Much Cheaper Than Seattle?

Published:
March 25, 2024
Last updated:
March 25, 2024
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People researching the Seattle-area real estate market are often surprised by the home price discrepancy between Tacoma and Seattle. Home prices within the city of Tacoma tend to be significantly lower than those in Seattle.

But why? What factors make the Tacoma housing market so much more affordable, when compared to the city of Seattle? After all, they’re both part of the same metropolitan statistical area (MSA) and only about 30 miles apart.

Many overlapping factors contribute to the difference in home prices between these two cities, and we will explore some of the below.

The short version: Tacoma tends to be much more affordable due to its historically slower development pace, greater availability of land, and lower median income. But Tacoma’s growing popularity and influx of Seattle buyers are gradually narrowing that price gap.

Let’s take a closer look at the Tacoma WA housing market, particularly in comparison to its close neighbor, Seattle.

Home Price Comparison: Seattle vs. Tacoma

Let’s start by comparing Tacoma home prices vs Seattle home prices. Here are the median home values for the cities of Tacoma and Seattle as of March 2024, according to data provided by Zillow:

  • Tacoma $470,000
  • Seattle $847,400

This means the typical home price in Seattle is approximately 80% higher than in Tacoma.

Granted, these numbers will have changed by the time you read this article, due to the ever-evolving nature of the real estate market. But it’s the difference we are concerned with here. So this comparison will remain relevant for quite some time.

Let’s move on to explore some of factors that make Tacoma home prices cheaper than those in found Seattle.

What Do the Seattle and Tacoma Housing Markets Look Like Today?

According to RedFin, the housing markets in Seattle and Tacoma are currently as follows:

Tacoma:

  • “Very competitive” housing market in early 2024
  • Homes receive an average of 2 offers
  • Homes sell in about 24 days
  • Median sale price per square foot is $301, up 7.1% Y-O-Y
  • Sale-to-list price is 99.3%
  • 29.1% of homes sold over the list price

Seattle:

  • “Very competitive” housing market in early 2024
  • Homes receive an average of 3 offers
  • Homes sell in about 42 days
  • Median sale price per square foot is $564, up 7.2% Y-O-Y
  • Sale-to-list price is 99.3%
  • 21.1% of homes sold over the list price

Why the Tacoma Housing Market Is Cheaper

There isn’t just one single reason why Tacoma is more affordable than its urban counterpart to the north. It’s more complex than that and involves everything from the history of development to local economics.

Major contributing factors include the following:

Historical Reputation: Tacoma has long held the reputation as Seattle’s “grittier” industrial neighbor. This perception, while shifting in recent years, still affects how people view the city. Additionally, Seattle was an earlier boomtown, causing intense development pressure sooner.

Available Land: Tacoma has more available land for development, when compared to the geographically constrained Seattle real estate market. This allows for more construction and greater housing supply, which helps to keep prices from spiking as intensely.

Population Density: The city of Seattle has a much higher population density when compared to Tacoma. This means there are more people per square mile, and therefore more demand for housing. When last measured, the population density in Seattle was 8,775 people per square mile, compared to 4,412 / square mile within the city of Tacoma.

Job Markets: Seattle offers higher-paying jobs on average, especially in the tech sector, and a lower unemployment rate. At the start of 2024, the city of Tacoma had an unemployment rate of 5.5%, compared to 3.3% in the Seattle-Bellevue area. While Tacoma’s economy has diversified in recent years, there is still a significant wage difference that affects the amount people can spend on housing.

Location: Tacoma is located south of Seattle and slightly removed from the core of the metropolitan area. The city’s distance from the urban center contributes to lower housing costs, due to reduced demand and competition for real estate.

Historical Trends: Historically, Seattle has experienced rapid population growth and increased demand for housing. This trend has boosted home prices significantly over the years. Tacoma, while also experiencing growth, has not seen the same level of demand and price escalation.

Housing Supply: Generally speaking, the city of Tacoma has a higher supply of available homes for sale when compared to Seattle. This increased supply, combined with lower demand relative to Seattle, helps keep home prices more affordable.

These cities differ in other ways as well, beyond home prices. While the Seattle real estate market is largely defined by high-rise condo buildings, Tacoma is more about single-family homes and historic neighborhoods.

5 Things Home Buyers Should Know

To understand why the Tacoma housing market is cheaper, it’s important to get familiar with all the factors that comprise both markets. If you’re thinking about buying a home in Tacoma, Washington, consider the following lifestyle and housing-related factors:

  1. Neighborhood diversity. Tacoma boasts a wide array of neighborhoods, each with its own unique charm and amenities. From historic districts like Stadium District and North Slope to waterfront communities along Commencement Bay, home buyers have plenty of options to explore.
  2. A growing market. Tacoma is no longer Seattle’s sleepy neighbor. Home prices are rising, especially in popular neighborhoods. Be prepared for competition from other buyers and act decisively when you find the right property.
  3. Commuting considerations. If you work in Seattle, you’ll want to assess the commute situation and have a plan in place. The Sounder train is convenient, but you have to consider the train schedule and ongoing costs. Also keep in mind that Tacoma has a growing job market of its own, with more diversity than in the past. So you might be able to live where you work, and for less money.
  4. Investment potential. As the city continues to grow and evolve, real estate experts predict that the Tacoma housing market will remain attractive to buyers and investors alike. With ongoing revitalization efforts, new developments, and a thriving local economy, Tacoma offers good investment opportunities for home buyers.
  5. Outdoor lover’s paradise. From Mount Rainier to the Puget Sound coastline, Tacoma offers endless opportunity for exploration and adventure. And you can’t put a price tag on those kinds of perks.

If you’re considering buying a home in Tacoma in 2024, be sure to partner with a local and experienced team of real estate and mortgage experts before you start the house hunting process.

Need financing? Whether you decide to settle in Seattle or Tacoma, we can help you with your mortgage needs. Sammamish Mortgage is a family-owned company with deep roots in the Seattle metro area. Please contact us with your financing questions or to apply for a loan!

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