Is Now a Good Time to Buy a Home?

Home prices have been soaring as of late in the South Sound area, and I have several buyers who are wondering if they should sideline their home hunt to see if things will cool off. My wife and I are outgrowing our home and have asked this same question--if we should act now, or take a wait-and-see approach. After much research and analysis, we think that Gig Harbor and Tacoma home prices will continue to rise. Home prices are a factor of supply and demand, and it really can be summed up in one statement: more people are looking to move to Gig Harbor, as opposed to out of Gig Harbor.

Let’s take a look at why home prices have been soaring:

1)    Low inventory. Sellers aren’t putting their homes on the market for a variety of reasons--an inability to find or afford a different house, lack of new construction, and concerns about catching the virus. With so few homes to choose from and a massive wave of home buyers, home prices have soared. 

2)    Low interest rates have not only incentivized first-time buyers and upsizers, but also investors who are looking to capitalize on the strong rental market. A lower interest rate equates to a lower monthly payment, which means buyers can afford a higher price tag on a home.

3)    Shift to working-from-home. Several companies have announced a permanent or hybrid work-from-home option. This has created what I call the “Emerald City Exit” as people are moving to the South Sound from Seattle. We’ve also seen a large number of people move here from the Eastside and California, as they can get a bigger house for the same price as a Bellevue condo.

4)    Retirees are moving to Gig Harbor at an increasing rate. It came as no surprise that Gig Harbor was voted as the #4 best place to retire in the entire US (and #1 in Washington state), thanks to its natural beauty, ample social opportunities, and lower taxes.

As we start to see supply increase and interest rates rise (possibly leading to buyer demand cooling off), I wouldn’t be surprised if we saw a leveling off of home prices in the fall months. However, long-term demand for Gig Harbor and Tacoma homes will most likely stay strong, as more people move here from Seattle, Eastside, and California. We also have a severe housing shortage--the US housing market still needs 3.8 million single-family homes to meet home buyer demand--and I don’t think supply will meet that number anytime soon. Because of the short supply and high demand, Freddie Mac predicts that home prices will grow 6.6 percent in 2021 and 4.4 percent in 2022.

As for my family, we are continuing our house hunt. With interest rates so low, I’m not too concerned if home prices level off in the coming months. Ready to start your home hunt? Click here to start browsing, and give me a call or email when you’re ready to schedule showings.

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