In terms of home prices, the real estate market in Tacoma, Washington is expected to be one of the strongest in the nation from 2012 – 2013. This is according to a new report by financial data firm Fiserv.
Fiserv projected a whopping 24.9-percent increase in Tacoma home prices, over the next two years. This was the largest projection on their list.
Tacoma is not part of the 20-city composite that makes up the S&P/Case-Shiller Home Price Index. So it doesn’t make the news as much as Seattle, which is tracked by the index. Still, the analysts at Fiserv have enough data to make an educated guess about the future of the Tacoma real estate market. And the future looks bright.
Factors Influencing Tacoma Real Estate Prices
Bubble avoidance has a lot to do with this. Tacoma did not have the kind of housing bubble that we saw in places like California, Arizona and Florida. Home prices in Tacoma rose during that period, but at a much slower pace. It was reasonable appreciation supported by supply and demand — not wild speculation.
This has left the city in a much better position than much of the nation, in terms of home prices. The Fiserv forecast is further evidence of this.
“Homes are undervalued in the Northwest,” said David Stiff, chief economist at Fiserv. “The economy is diverse … and people are still moving into the area.”
These will be the primary drivers in the Tacoma real estate market — population growth and attractive home prices. In 2000, the population in the city was 193,556. Today the population is closer to 200,000, with continued growth expected for the foreseeable future. The median home price in Tacoma is approximately $170,000.
Other housing markets in Washington State were forecasted to do well over the next two years, as well. Spokane, Olympia and Kennewick-Pasco-Richland were also high on the list.
Foreclosures and Unemployment Two Biggest Challenges
The Tacoma real estate market is clearly the darling of the Fiserv forecast. But that’s not to say the city doesn’t have its problems. Unemployment is still high, and foreclosure filings have risen over the last year.
According to RealtyTrac, foreclosure filings in Pierce County for the first half of 2011 rose 9.8 percent from the same period in 2010. This bucked the national trend, which saw a decline in foreclosure filings.
Now for the glass half-full: Tacoma foreclosure filings in the first part of this year were 19.5 lower than the second half of 2010. So while the year-over-year data is disheartening, things seem more stable in the short term. Filings in the county are lower today than they were at the end of last year.
Tacoma’s unemployment rate was 9.3 percent in June, closely matching the national unemployment rate of 9.2 percent. But Tacoma has a stronger economy than many cities in America. This will serve the city well in the coming years. This, along with the bubble avoidance mentioned earlier, is why analysts are optimistic about the Tacoma real estate market.