The Tacoma real estate market should be grabbing your attention this year, as it has just been named the nation’s hottest housing market in a new Redfin study. Real estate investors are already moving on this market; continue reading to find out why.
The Tacoma Housing Market: Signs of a Hot Market
People are switching things up in the Washington real estate market as buyers have had enough of Seattle’s high prices and have decided to move south. This surge in demand for properties in the Tacoma real estate market hasn’t gone unnoticed; here’s what you need to know.
Shortest Median Time on Market
The biggest sign of how hot the Tacoma real estate market is right now is how quickly homes are selling. The Tacoma metro area really came out on top mid-May with over half of sold home deals being closed extremely quickly. 50.2 percent of recently sold homes in the Tacoma real estate market went under contract within two weeks (a higher share than any other metro). The typical home on the market had a buyer in just eight days- the shortest median time on the market nationwide.
Inventory Is Low
As a result of the strong buyer demand in the market, Tacoma was left with just 1.3 months of supply (less than any other metro) as of the first week of May. Inventory supply levels are something property investors should always look at when investing in the hottest real estate markets. Months of supply is measured by dividing the total number of homes for sale by the number sold in a given period. This indicates whether the housing market favors buyers or sellers. Typically, any value below six months represents a seller’s market.
Related: It’s a Seller’s Market But You Can Still Invest in Real Estate
Selling Price Is Up
It’s the nature of supply and demand. We already know that sellers have the advantage in the Tacoma real estate market and this means they can negotiate a higher selling price. According to that same Redfin report, 49.7 percent of homes sold above asking price for the four weeks ending May 19 in Tacoma, which is higher than most metro areas (besides San Francisco, Oakland, and San Jose). Sales prices in the Tacoma real estate market went up 6 percent year over year to $370,000 in mid-May, as the sales level fell 5.5 percent and inventory went down by 12.5 percent.
So the Tacoma real estate market isn’t where to invest in real estate if you’re looking for the cheapest deal, but it’s still considered an affordable option, especially when compared to Seattle’s median sales price of $595,000.
Home Value Is Up
You should make a move on adding a Tacoma real estate investment to your portfolio in 2019 while you still can. Don’t let the idea of competition scare you off; people only compete over something that’s worthwhile. In this case, a Tacoma investment property will prove to be profitable. Just look at Zillow’s measure of Tacoma home values- they have gone up 10.0 percent over the past year and are predicted to rise 5.3 percent within the next year.
Mashvisor’s Data on the Tacoma Real Estate Market
Before you start searching for Tacoma houses for sale, take a look at Mashvisor’s market overview of average rental property performance right now. If you would like access to our data to analyze any city, neighborhood, or property, start out your 14-day free trial with Mashvisor now and get 20% off.
For now, here’s the city-level data.
Tacoma Real Estate Market Stats
- Median Property Price: $328,251
- Price to Rent Ratio: 21
- Average Days on Market: 31
- Monthly Traditional Rental Income: $1,305
- Traditional Cash on Cash Return: 1%
- Monthly Airbnb Rental Income: $2,471
- Airbnb Cash on Cash Return: 3%
So this gives you a good idea of how rental properties (under each rental strategy) perform citywide. However, because real estate investing is a local industry, investors need more narrow-market level data. That’s exactly what Mashvisor will give you. But before we do so, let’s talk about Airbnb regulations in Tacoma.
Related: How Data Makes Real Estate Investors Rich: A Mini Guide
Is Airbnb Legal in Tacoma?
With a surge in popularity of the online rental platform, Airbnb, the short term rental industry has been more profitable than ever. For tax purposes, Washington has defined a short-term rental business as lodging provided by an owner or operator for less than 30 consecutive days in a dwelling or residential unit for a fee. Slowly, Washington cities and towns are beginning to regulate short term rentals offered for rent by owners of residential properties. So what about Airbnb Tacoma?
The regulations in Tacoma are a bit more basic and laid back compared to what we’re seeing in other cities like New York and San Francisco. Short term rental operators in the Tacoma real estate market are required to get a business license from the city. Licenses cost $25 for people who expect to make less than $12,000 a year on their rentals and $90 for others.
Hosts who live on-site can rent out up to nine guest rooms and non-owner occupied properties can be rented out completely (but not individual rooms) for up to 30 days at a time. The units would have to be equipped with smoke and carbon monoxide detectors. Rental properties with less than three guest rooms and whole-home rentals are allowed in all zoning districts except for industrial.
Related: 5 Cities Where Airbnb Is Illegal in 2019
Where to Invest in the Tacoma Real Estate Market
North End
- Median Property Price: $383,651
- Price to Rent Ratio: 28
- Average Days on Market: 24
- Monthly Airbnb Rental Income: $4,130
- Airbnb Cash on Cash Return: 8%
- Airbnb Occupancy Rate: 61%
Eastside-ENACT
- Median Property Price: $286,571
- Price to Rent Ratio: 21
- Average Days on Market: 31
- Monthly Airbnb Rental Income: $2,648
- Airbnb Cash on Cash Return: 5%
- Airbnb Occupancy Rate: 69%
- Monthly Traditional Rental Income: $1,129
- Traditional Cash on Cash Return: 1%
West End
- Median Property Price: $362,684
- Price to Rent Ratio: 19
- Average Days on Market: 30
- Monthly Airbnb Rental Income: $3,355
- Airbnb Cash on Cash Return: 4%
- Airbnb Occupancy Rate: 57%
- Monthly Traditional Rental Income: $1,613
- Traditional Cash on Cash Return: 1%
Related: How to Choose the Right Location for Rental Properties
Do you have a free Mashvisor account? Use our Property Finder to find lucrative investment properties in the Tacoma real estate market that match your criteria in a matter of minutes!