The rapid population growth in Tacoma these past two years has taken some by surprise. According to the Office of Financial Management Tacoma grew from an estimated 198,397 citizens living here in 2010, very slowly or not at all through the recession years, to suddenly ballooning in 2016 and 2017 with around 8,000 new residents migrating to Tacoma. By April 2017, Tacoma’s population had swelled to roughly 208,100 people.
It has been enough to make the Old Woman Who Lives In A Shoe water down her broth and send her children to bed without any bread. Yet Stephen Atkinson, a senior planner for the City of Tacoma, admits that while the huge population increase came as a surprise to the City, doubling the anticipated growth numbers these past two years, Tacoma is capitalizing on it so citizens can relax and enjoy the upcoming improvements.
“This really is the rate of growth we’ve been planning for since the 1990s,” said Atkinson. “We’ve been expecting 127,000 new residents to move into Tacoma by 2040 and have been planning for a growth rate of two percent per year.”
Atkinson said Tacoma experienced foreclosures and a high vacancy rate as a result of the recession. Some of the recent growth is now being absorbed within the existing housing stock, rather than into new construction. “One of the barriers to development we have heard about in the past is that construction costs are the same in Tacoma as in Seattle, but that lease and sales prices are a lot lower in Tacoma, which means developers couldn’t get an adequate return on investment to make higher density housing projects feasible,” Atkinson said. “As our housing prices rise, as a result of the confluence of increasing demand for housing and reduced supply, that rate of return is improving.
“In addition, in places like Downtown and Stadium, the City’s subarea planning work has significantly reduced some of the costs of permitting and environmental review, as well as review time, adding an incentive (for contractors and investors) to build in those locations,” Atkinson said.
According to Atkinson, Tacoma is capitalizing on this population boom with the Sounder and the City’s planned investments in Tacoma Link Light Rail. Yet talk to the local realtors and there just are not enough houses on the market to accommodate all the incoming residential investors.
Tacoma is growing at a faster percentage rate than the nation overall. These past seven years, Tacoma’s population has increased by at least six-and-a-half percent, or by more than 12,879 people, while the nation has grown by four-point-seven percent over all. That’s according to the United States Census Bureau, census.gov, which estimated 211,277 people lived in Tacoma as of July 1, 2016.
According to Washington’s Office of Financial Management, “The state’s top 10 cities for population growth, in descending order, were Seattle, Sammamish, Bellevue, Tumwater, Tacoma, Vancouver, Federal Way, Renton, Everett and Pasco.” (ofm.wa.gov/news/release/2016/160630.asp)
“Buyers are moving here from Seattle/King County in two different ways and for two different reasons. They are moving here as homebuyers and as investors. Home buyers simply because they are priced out of the Seattle Metro/Eastside/Renton Valley,” said Dick Beeson, principal managing broker at RE/MAX Professionals.
“The median price for all of King County for July 2017 was $699,000. For Central Seattle, it was $2,264,000. On the Eastside, with Issaquah, Redmond, and Bellevue, the median price last month was between $1,000,000 and $3,900,000. Even in the Renton/Highlands area the median price for July 2017 was $785,000,” Beeson said. “Now compare that to Pierce County where the median price for even the most expensive parts of Pierce County; North Tacoma, Gig Harbor and the Brown’s Point market. Expensive.”
According to Beeson, the median sold price for July was $436,000 in Gig Harbor (a plus nine percent increase year-over-year). In North Tacoma the median price was $375,000 (a plus 15.9 percent increase year-over-year). In the Brown’s Point Market, the median price was $438,975 (a plus nine percent increase year-over-year) and the two largest markets for total number of sales were, Puyallup and Bonney Lake/Lake Tapps areas. The median sale price for July 2017 was $316,000 for Puyallup (a plus 11 percent increase year-over-year) and $356,000 for Bonney Lake/Lake Tapps (plus nine percent year-over-year).
“So, buyers really have no choice but to seek affordable housing in South Sound,” Beeson said. “We are the beneficiaries of the hottest real estate market in the country, Seattle/Bellevue/King County. It’s nice to be reasonably affordable when it comes to housing. I’m sure buyers don’t feel that way but they should because it ain’t gonna get any better for a season. They should do whatever they can to gain a toe-hold in this market.”
Investors feel the same way. Beeson said because of the affordable rents, strong for rental from tenants and with the very restrictive Government imposed rules toward multi-family property owners in Seattle, investors are coming to Tacoma. “I know of several homebuyers and investors who consider pierce County a bargain and are challenging local buyers when making offers on properties,” Beeson said.
Meanwhile, Beeson said the increases can’t go on forever and the end is of the rising prices and abating of demand by buyers is not in sight at the moment. Yet when the change will come is anybody’s guess. A gradual change would be most welcome.”
“The shortage of affordable homes in King County and high rental costs are the two forces driving people south,” Beeson said.
Presently, Tacoma’s cost of living is four percent higher than the national average, says payscale.com, and the average income is $47,827 per year here.
“It”s a well-known phenomenon that, combined with our own population growth and people relocating from other states, since the Seattle home prices are at least double those in Tacoma now and the rents are significantly higher, that people are forced to go further and further out (away from the larger city),” said Marguerite Giguere, realtor at Windermere Professional Partners in Tacoma. “In my experience, once someone is pushed as far as Burien or Federal Way they think, ‘Why not go all the way to Tacoma and live in an actual city?’”
According to the city website, Tacoma has a relatively young and well-educated labor force in comparison to the nation. Giguere says, “The problem we have in Tacoma is there are not enough housing units being built to keep up with population growth from people moving here and people coming of age here are needing homes.”
Giguere said that millennials are the largest generation in the home-buying market presently and their parents aren’t selling their homes. “A family earning $44,000/year can put maybe $1,400 per month towards their housing but in most parts of Tacoma, you will not be able to rent a two-bedroom home or apartment for that,” she said. “Not anymore. The housing situation is dire. Tacoma also has some of the fastest rising rents in the country.”