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As Washington state lawmakers weigh new revenue sources to balance the state budget, proposed changes to the state’s property tax cap are raising alarms among housing advocates—including the Washington REALTORS®, who recently commissioned an analysis to better understand the potential impacts on homeowners.

The proposals under consideration would remove the long-standing 1% cap on annual property tax increases. The Senate plan would allow property tax revenue to grow by a combined rate of inflation and population growth, while the House version includes a similar formula capped at 3% annually.

Washington REALTORS® President John Blom issued a clear warning: “Don’t try to solve your budget crisis by making housing even more unaffordable for Washington families. This data shows that the proposed property tax increases would do exactly that, in Tacoma and in every community throughout the state.”

What It Means for Tacoma Homeowners

ECONorthwest, the firm that conducted the analysis, looked at potential impacts in eight Washington cities using regional population forecasts and economic data. In Tacoma, where the median home value is $484,044, the findings were especially concerning:

  • Under the Senate proposal, property taxes on the median home would rise by 17.6% over the next decade.
  • Under the House version, the increase would still total 9.9%.

These changes come at a time when over half of renters (53%) and more than one-third of homeowners (34%) in Tacoma are already considered housing cost-burdened, spending more than 30% of their income on housing.

A Tipping Point for Homeownership?

Mike Wilkerson, Director of Economic Research at ECONorthwest, emphasized that these tax proposals would add to an already heavy burden on buyers and owners. “Saving a 20% downpayment is already out of reach for many,” said Wilkerson. “Rising insurance costs and higher taxes would make homeownership even harder to attain and sustain, especially in a high-interest-rate environment.”

The average age of first-time homebuyers has climbed from 31 to 38 in the past decade—a trend that could worsen as affordability continues to decline.

An Unsustainable Path

Blom stressed that Washington’s housing market is being squeezed from every direction:

  • Home prices are up more than 50% since 2020.
  • Interest rates have doubled.
  • Insurance premiums have risen in double digits two years in a row.

“Adding a double-digit property tax hike to this list would be a step in the wrong direction,” Blom said. “We need solutions that ease affordability—not make it worse.”

TPCAR will continue to monitor this issue and advocate for policies that support housing opportunity and affordability in Tacoma and throughout Pierce County.

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