We expect the North Tacoma housing market to remain sluggish through much of this year, but home prices are unlikely to drop further.
Fourth Quarter Market Update
for North Tacoma
Increased mortgage interest rates have definitely had a cooling effect on the North Tacoma housing market in the past 6-9 months. Sales activity is down, and home prices have retracted. Given the fact that inventory levels still remain quite low, a further erosion in home values is unlikely. Like most folks in the industry, we predict a flat market for 2023.
The median home price in North Tacoma is 8% lower now than it was a year ago. We expect year over year prices to remain down through much of 2023, but it’s important to recognize that year over year sales numbers are “trailing indicators” that aren’t necessarily a good reflection of the current trajectory of the market. We’ve definitely lost value, there’s no question about that, but the housing market has probably corrected itself as much as it’s going to from a price perspective.
Year over year sales activity is way down. Only 99 single family homes were sold in zip codes 98403, 98406 and 98407 in the fourth quarter of 2022 – a significant 58% decrease in sales activity compared to the fourth quarter of 2022. This sluggishness in the market is likely to continue until mortgage interest rates improve.
It feels like houses have been sitting on the market longer than they used to, but they’ve actually been selling pretty quickly in North Tacoma – moving from active to pending in three to four weeks on average.
Despite a slight increase in inventory levels, the number of homes currently available for sale in North Tacoma is still quite low. A lot of home owners are reluctant to let go of their super low interest rates in order to make a move, which means they’re not putting their houses on the market. Low inventory levels will likely prevent a further loss in home values going forward.
Current Market Conditions
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- Realtor.com chief economist Danielle Hale predicts that sales activity in 2023 will be 14% lower than it was in 2022.
- National Association of Realtors chief economist Lawrence Yun predicts that mortgage interest rates will improve in 2023, settling around 5.7% by the end of the year, but that home values will remain flat until 2024.
- New construction permit applications are down 17% year over year. State legislatures will likely consider bills in 2023 that change land use guidelines and ease regulatory obstacles in an effort to stimulate development.
- With housing inventory levels unlikely to rise in the near term, a traditional buyer’s market is unlikely in 2023. That said, sellers will have to be realistic about what the market will bear when setting list prices, given increasing affordability issues for buyers.
In the current real estate marketplace, it remains critical for buyers and sellers to seek expert advice. If you’re thinking about buying or selling a home in the area, please contact us to discuss how we can put our knowledge and experience to work for you.
Mark Pinto is a top-producing Realtor with Windermere Chambers Bay, specializing in residential real estate in Tacoma, Gig Harbor, University Place and Lakewood.
Mark Pinto: (253) 318-0923
MarkPinto@windermere.com
