Residential real estate sales here are expected to ebb again in 2008, though the market likely will post respectable numbers given that the declines would be from a very solid 2007, industry observers say. The outlook for the commercial market next year is bright, they add.


Rob Higgins, executive vice president of the Spokane Association of Realtors, says the markets fast-rising home prices might stabilize in 2008.


After years of big increases in residential real estate prices, they may get back to more normal annual increases of 3 percent to 5 percent, he says.


Higgins says residential real estate held its own this year, despite being softer than last year and its 2005 peak in terms of number of homes sold. Through November, 6,469 homes were reported sold through the Spokane Multiple Listing Service, down 8 percent from 7,050 homes sold in the year-earlier period.


This will be the fourth or fifth best year ever as far as residential sales, he says.


Higgins says hes expecting more than 6,000 home sales in Spokane County in 2008.


The median sales price in the first 11 months of this year was a record $185,000, up nearly 6 percent from $175,000 in the year-earlier period, while the total sales volume through November this year was $1.36 billion, down less than 1 percent from $1.37 billion in the year-earlier period.


Dave Black, CEO of NAI Black, of Spokane, says 2008 will be a great year for the commercial real estate sector.


Ive found the commercial real estate market typically is good when the residential market is slowing down, he says. The commercial market is a function of employers doing different things. Theres a lot going on.


Scot Auble, president of the Spokane appraisal firm Auble Jolicoeur & Gentry, says lower vacancy rates here should cause rents to rise.


The biggest surprise in his firms fall occupancy survey of commercial property was the low vacancy rate for downtown ground-floor retail space here, which was 4.7 percent in October, down from 8.6 percent a year earlier.


The retail vacancy rate was highest in Spokane Valley, where it was 13.7 percent, although it had improved from 14.6 percent a year earlier, he says.


Auble says rents for downtown office space should edge upward because vacancy rates in the core are stabilizing, currently at about 13.8 percent. A bunch of space is off the market, like space in Crescent Court, which has been leasing well, he says.


Meanwhile, Auble says he anticipates higher rents and more new construction in the industrial market, where available space continues to fill up. The October vacancy rate for industrial space here was 5.5 percent, down from 6.7 percent a year earlier, he says.


Marshall Clark, president of Clark Pacific Real Estate Co., of Spokane, says, Based on what we have teed up to close, 2008 will be a good year.


Some big buildings that have been vacant for years, like the former Kmart outlet at 15033 East Sprague, in Spokane Valley, will be occupied by new tenants, he says.


The Northpointe area on Spokanes North Side will be in high demand, Clark says, adding, All available land around Northpointe has disappeared.


Despite two years of declining residential sales here, Bruce Hardie, broker at Keller Williams Realty, in Spokane Valley, says hes bullish on Spokane in 2008. Looking at the numbers, 2007 hasnt been a bad year, Hardie says.


The Spokane residential market has about five months worth of inventory for sale, he says, adding that less than five months of inventory is considered a sellers market and more than seven months of inventory is considered a buyers market.


I think it will be a sensible market in 2008, Hardie says. Homes are selling for an average of 94 percent of the listing price. Its not like buyers are stealing property.


The biggest issue here will be affordability, he adds. Median home-sales prices are exceeding increases in median income, he says.


The national mortgage markets troubles are beginning to affect some transactions here, as buyers are finding it harder to get loans, but Higgins says he doesnt expect the subprime mortgage woes to hit Spokane as hard as theyve hit other areas of the country, due to more conservative lending, continued home appreciation, and job growth here.


Although there is a nice increase in values, there isnt as much speculation driving prices up as in other communities, he says.