Amid an ongoing housing shortage, rising prices, and fierce competition throughout the region, homeownership can feel out of reach for many Spokane-area residents. Although mortgage interest rates have decreased, cost challenges persist due to limited housing stock; demand remains greater than supply, which continues to make this a seller’s market.  

According to Spokane Realtors, the median sales price for homes in Spokane County in February was approximately $412,000, up from about $268,000 in February 2020—representing a 53% increase over five years. Housing price increases have outpaced income growth, forcing potential buyers to downsize their expectations, target properties farther from the downtown corridor, or postpone homeownership. 

Despite the inventory challenges in the region, encouraging signs are appearing with potential homebuyers moving off the sidelines. Following a drop in home sales in Spokane County in 2023, due in part to affordability issues, transactions started to gradually edge up the following year and then spiked significantly in the fourth quarter, when home purchases more than doubled compared to the three prior quarters of 2024. 

Currently, the tone of the Spokane housing market is positive. People want to buy homes, and mortgage rates have stabilized enough that homeownership is on a positive trajectory. A likely decrease in interest rates later this year should improve affordability and predictability further compared to previous years when interest rates were rising. 

Overcoming obstacles 

There’s no denying that the Spokane area remains a challenging market for buyers, but local financial institutions are working to help bring homeownership within reach, through both prepurchase planning assistance and innovative mortgage products. 

Prospective homebuyers should meet with a local lender early to make sure they understand the purchase process and their options. Local financial institutions understand the dynamics of their community and are invested in the community’s financial health and success, making their loan officers an excellent resource for prospective buyers. 

While online mortgage qualifying tools are useful for giving buyers a general idea of the interest rate and size of loan they might qualify for, these figures can vary greatly based on seemingly minor details, and first-time homebuyers in particular may not understand all the costs involved.

For example, beyond the purchase price, will the buyer need to have cash available for earnest money, inspections, and a down payment? Even if the loan itself doesn't call for a down payment, lenders often require that buyers have some cash on hand for a rainy day fund should the home need repairs or other maintenance.  

In addition, lenders can help prospective buyers restructure other debt, such as auto loans, student loans, etc. to prepare for a home purchase. Consolidating or restructuring loans to reduce interest rates can help buyers boost their savings as they prepare for a home purchase and increase their credit availability.

Because having a good credit score is key to securing a lower interest rate, potential homebuyers should discuss their credit situation with their local lender well in advance, so they have time to implement measures to improve their score. 

Financial institutions also are rethinking traditional home mortgages to help prospective buyers achieve homeownership amid much higher entry prices.

For instance, Idaho Central Credit Union offers a 40-year fixed-rate mortgage with no down payment required. The longer loan period will equate to higher overall costs, but such a mortgage can be a good option for a buyer who wants a fixed lower monthly payment now and may be open to refinancing in the future—say, a young professional buying their first home who expects their income to grow. 

This type of loan can help them get into a home sooner and start building equity, as the monthly payment will be lower than with a shorter-term loan. As their income increases, or as interest rates drop, they may potentially refinance the remainder of the loan to realize some savings. 

Adjustable-rate mortgages are another useful option for first-time homebuyers, as they often allow a buyer to purchase a home at a lower interest rate. After a set period, the rate will reset based on the Treasury rates at that time. Adjustable-rate mortgages are not new, but they have historically been more unpredictable, making it difficult for buyers to plan for the future.

Buyers choosing an adjustable-rate mortgage should look for a loan with a capped interest margin, which will make the impact of the rate reset more predictable and minimize risk. For instance, ICCU offers an adjustable-rate mortgage with adjustments in five-year increments, or once every 10 years. These increases or decreases are also capped at a maximum of 2%. In contrast, typical adjustable-rate mortgages may have adjustments every six months following the initial five-year period.  

In addition to new lending products, buyers may be able to take advantage of government and community resources, such as first-time homebuyer grants or veteran and rural homebuyer programs. A local lender can help potential purchasers identify which programs they may qualify for and incorporate the assistance into a mortgage loan. 

Innovation, collaboration will be key

While the Spokane market appears to be stabilizing in terms of both housing costs and interest rates, home prices are expected to remain high, and we are unlikely to return to the artificially low interest rates of recent years. As a result, lenders will need to continue to innovate and collaborate with government and community organizations to proactively help residents stretch their purchasing dollars and achieve their homeownership dreams. 

Ed Tierney is chief lending officer at Idaho Central Credit Union, in Pocatello, Idaho.