Lay-of-the-Land in the Tacoma Area

[Chris Williams]

Hey folks! 

I'm looking at one of two areas for a 2020 move - Vancouver and Tacoma. The former due to its growing nature & proximity to Portland; the latter due to the fact that it's not in Seattle!

The plan: I plan to buy a property for a house-hack, plus AirBNB if possible. This I'll leverage into some straight investment properties, possibly out of state.

I confess to having less information on the Tacoma area. As such, I'm doing some research before taking a trip up there to sniff around. That includes checking here on BP!

Since it's been a little quiet this month, let me kick-start some discussion with a few questions:

• What would you say is the Tacoma area's economic status?
• Is the local RE market as hair-on-fire crazy as Greater Seattle?
• I know Tacoma has some industrial areas...are the suburbs a better choice for investing?
• Any 'regional red flags' of which I should be aware?

Thanks!

[Vaughn K.]

Well, since everybody else is giving you a rosy picture, I will take it upon myself to throw out some downsides! :) To give you some background, I've lived in Western Washington most of my life, and Seattle proper for 14 or so years. So I know this whole region pretty well.

First. Long haul, IMO Tacoma will continue to get more expensive and gentrified as long as the Seattle area continues to grow quickly. It has some stable employment and whatnot of its own as well, but really it's recent success is mostly tied to overflow from Seattle. It is getting nicer, fancier, and more expensive at a pretty steady rate for now, and as long as the boom in Seattle continues there is no reason this won't continue. The same is true for all the burbs in the area. If you want decent sized city, not such a small burb, that isn't south of Seattle, I think Everett has some long term potential too! Anyway, that doesn't sound so bad right?

Well, after living in this area for a long time... I'm gettin' the heck out! Why? Well, everybody has different reasons for wanting to move to an area, or move away, so your mileage may vary... But I'm getting out because Washington is going from being a sane, centrist state, to trying to play catch up in terms of crazy with California, New York, New Jersey, etc. As a matter of fact, we've been leading the way on some ridiculous ideas the last few years. 

I'm a business owner... And it is becoming VERY anti business. In the past this kind of stuff was just in King County, and even there wasn't that bad 10-15 years ago. The problem is state level politics has now shifted into what will likely be one party Democratic rule from here on out. AKA tax and regulate everything to death, and nanny state harass everybody about their day to day activities with a ZEAL! 

I actually hold a mix of conservative and liberal views on different subjects... But if the Bay Area and the way that place is ran isn't your cup of tea, you're not really getting away from it much in this area. Tacoma is better than Seattle, but for how long? Think it's awesome to escape California to a state that doesn't have a state income tax? That probably won't last too long. The Democrats have always wanted one, and electoral reality puts them closer and closer every year. We won't get one next year... But 8-10 years from now, I bet we'll have one on the books. Straw bans (as a proxy for that kind of thing) will probably be getting exported from Seattle to the rest of the state before too long. Etc etc etc. 

If you're an employee, a lot of the economic stuff won't hit you as hard as business owners... But it does potentially put a damper on overall economic growth potential for this area. I mean Amazon is probably mostly doing future expansion outside of this area because of the long term threat this stuff proposed. The former Microsoft CEO Steve Ballmer years back (last time they were pushing hard trying to get one) wrote about how adding an income tax to all the other already high taxes would kill business growth here, etc. And they're both very liberal, but sane, businessmen. Due to Washington being a very good business environment until the last few years, we still have a rather varied economy that includes a lot of middle-middle class jobs... At least for now. We will be trending more like California in the years to come, AKA a few really high end industries, and then a bunch of garbage service jobs to service those people. I'm not a big fan of that kind of thing for a variety of reasons.

Now, back to the good for a minute. If you're coming from the Bay Area (where I'm originally from!), this area is a LOT saner for now. It's cheaper, taxes are lower, it's slightly less crazy and dysfunctional too. But for how long? The simplest way of putting it is that you missed the boat! My family moved up here about 20 years ago, and Washington was AMAZING back then. In ALL ways, there were almost no cons on the pros and cons list... Other than rain of course ;) Cost of living was low, taxes were low, personal freedom was high, I really liked the culture that used to exist here too before pretentious yuppie corporate culture completely took over. But that just ain't the case anymore. 

Moving to Seattle (or Puget Sound) now is like moving to the Bay Area in 2005 or something. Give it a decade and it will probably be just as nuts here. Now, if you're okay with that because you're one of those people who plans to move about a lot for work, then maybe that doesn't matter. But I'm more the settled type, and that's why I'm throwing in the towel on the area. If I thought it was going to stay the way it is now, I'd stick around, but the direction it is heading is somewhere I don't like. Maybe you DO actually like all that stuff, but just wish you'd bought in when you could have afforded it... In that case this is a great area for you! Haha. 

Finally, remember I said as long as the Seattle boom lasts above? Well, Seattle is definitely in a real estate bubble. I believe in fundamentals, and we're way out of whack in that respect. When it corrects, I suspect surrounding areas will get hit too, but probably not as hard as they don't have as far to fall. 5 years from now I'd bet my life it will be lower, even though employment will probably be strong still. In 20 years RE will probably be more pricey than it is now though. I think the overall area economy is strong going into the future, and long term this area will pull through, but turn more into a SF/NYC/Boston type place, which it historically was not. So if you're in it for the long haul, I'd think about the pros and cons I listed above. Taxes will go up, more nanny state stuff will happen, the middle class will probably be driven out of the area (they already are really)... But it will probably survive and become more of a hyper expensive upper class only area. 

My personal calculus is I want to get the heck out... But if you work in tech and want an alternative to SF, and don't mind the fact that you're merely buying 5-10 years before it's just like that here... It might not be a bad option. 

If you DON'T like all that stuff, I'd consider other places. If you value personal freedom or low taxes, this is not a good long term place to be. If you work in tech, look to smaller tech centers like Austin, SLC, or even Boise. If you don't work in tech, there are a million more good options depending on your industry. I like to think I'm realistic about this stuff, recognizing both pros and cons, but feel free to disagree if ya like! As I said, this is based on my personal preferences, and some of the stuff above many not bother you.