Is Tacoma an affordable housing market?
It used to be. But it’s not anymore. And it’s a big problem.
Tacoma is the nation’s fastest-selling housing market right now, and we have been for a few years. In 2007 before the Tacoma housing market crashed, the median home price was about $285,000. After the housing crash, prices fell and fell and fell. Our foreclosure rate was the highest in the entire state of Washington. In 2012, the Pierce County housing market hit bottom, and the median home price was $196,000. And then it started to rise. And it has just kept rising.
Tacoma’s intense real estate market is the way it is for a few basic reasons:
- More people keep being born. Millennials are now aged 24-40, and they are the largest generation in the country. It’s a HUGE number of people wanting to buy homes, and many of their parents and grandparents aren’t interested in selling their homes. The demand is incredible.
- People are still moving to the Pacific Northwest. Our weather is good, our politics are generally progressive, there are some huge employers, and we have great educational institutions. If you live here, I don’t have to tell you why it’s awesome. Chances are (unless you are descended from indigenous people) that you moved here too, or your parents or grandparents did.
- Our city barely builds any new housing. Compared to other cities with populations of our size we build very little new housing. In spite of the growth management act and the fact that we KNEW these people would be moving here, we just haven’t worked out how prioritize building new housing.
- We don’t insist on increasing density. Tacoma is surrounded by water by three sides and there’s no real opportunity for us to sprawl. If we’re going to increase the number of housing units in the city that is going to mean building up, and filling in the existing lots with ADUs and DADUs.
What is the median home price in Pierce County Right now?
According to the article “Study: Tacoma is nation’s fastest-selling housing market; Seattle home prices soar 18%” published by KOMO News on October 19, 2020, talks numbers and analyzes how local real estate compares to Seattle and the rest of the country. The article shares that Seattle’s median home sales price in September 2020 rose by 18.5% YOY (since September 2019), and Tacoma’s median home sales price in September 2020 rose by 14.5% YOY.
In Move to Tacoma’s blog post “What’s Going on in Pierce County Real Estate Right Now? September 2020 Market Update” you can learn more about exactly what’s going on in Pierce County’s market.
Something that is important to know right now is that the median sold price in Pierce County is just over $430,000. (Last year in September 2019 the Pierce County median home price was at $383,000.) This means if you can somehow come up with a 20% downpayment on a $430,000 home (which would be $86,000!), your mortgage is about $2,000/month. That means you need to gross at least $6,000/month to qualify, have $86,000 saved up, and make $72,000/year.
(And before the real estate agents come in freaking out because you can buy a house with less than 20% down, just let the record show that doing that WILL increase your monthly payment and reduce your ability to compete with the ~8 other buyers competing for that $430,000 house with you.)
This is NOT sustainable.
So then why isn’t Tacoma building more homes?
This conversation (video below) facilitated by @nate_bowling at Adult Civics Happy Hour in 2018 breaks down some of the reasons we aren’t building enough. A few things have changed since 2018, but not many.
Also, back in 2017 I interviewed Dennis Hanberg from Pierce County on the Move to Tacoma Podcast, and he told us back then that the county is expecting 60,000 more people will move to Tacoma by 2030.
There is no mystery here. Not enough housing = housing costs too much money. We need more housing.
Why isn’t Tacoma building more housing?
Part of the problem here is that people who own homes in Tacoma have NO INCENTIVE to increase building/density/housing supply; the lack of sufficient housing in Tacoma benefits homeowners. This is the fundamental challenge with increasing housing supply when people build wealth in property. The City of Tacoma has begun working to make it easier to build ADU’s (accessory dwelling units) on properties in Tacoma’s single family neighborhoods. This allows people to build another small house on their lot or convert garages to housing units for extended family or to rent out. This was considered controversial for many in Tacoma who do not want to see their neighborhoods change to allow for more people.
In cities like Portland (another city that has been dealing with even more people moving to their city) they are eliminating single family zoning all together. Called The Residential Infill Project, this will allow up to 4 units on each property. These are the kinds of changes that would allow the city to accomodate both Tacoma’s millennials (the largest generation in home buying history) and folks moving here from other parts of the state and other parts of the country.
Why don’t some Tacomans want more density?
Since European colonizers first arrived in Tacoma in the 1800s, Tacoma has been growing. There’s a long tradition of folks staking claim to land and then wanting to keep everyone that came after them out. Today that plays out as people buying homes in neighborhoods and then trying to keep the housing supply in that neighborhood low (as a way of increasing the value of the home they bought).
Tacomans shouldn’t forget that racist maps of Tacoma created in the 1930s categorized any multifamily housing as bad and created a myth (perpetuated to this this day) that multifamily housing lowers the value of single-family homes, which isn’t true.
Does Tacoma’s increasing median home price cause homelessness?
Almost certainly, yes. There are studies that show when home prices increase past 32% of peoples incomes homelessness skyrockets. You can read more about how this “tipping point” in housing prices creates the homelessness crisis that cities across America (not just Tacoma) are experiencing here.
What can we do about our affordable housing crisis?
Income growth in Pierce County has not come close to keeping up with the rising home prices. Home prices have more than doubled in 8 years since 2012, but the median household income in Pierce County has only gone up 23%.
There are no simple solutions. We need more homes for people to buy. We need federally subsidized affordable housing built and maintained for folks who cannot afford to buy, and we need to have a big shift in our mentality about density as a city.
If you are a homeowner in Tacoma or a real estate agent in Tacoma you are (whether you like it or not) benefiting from this crisis. Educate yourself about the situation and advocate for people who are being harmed by this crisis however you can. I recommend listening to this interview between Nerdfarmer Podcast host Nate Bowling and real estate agent Jasmyn Jefferson about the ethics and realities of this market “The housing market and the ethics of real estate” here.
For further reading on Tacoma’s current real estate market, here are a couple of Move to Tacoma blog posts to check out:
