Lack of homes is greatest obstacle to home buyers
Availability in Spokane among lowest in country
Eric EtzelMay 5th, 2022
The lack of affordable homes is now the top obstacle holding back potential homebuyers of all races.
That’s the conclusion of a study of the obstacles to homeownership in a new report released by the National Association of Realtors. The report compares the experiences of both potential and successful home buyers across races and ethnicities.
The other biggest—and arguably related—challenges for potential homebuyers are identified as saving for a down payment, a lack of homes that fit their criteria, and competing with multiple offers.
“Record-high home prices and record-low inventory have made the homebuying process exceedingly difficult,” says Jessica Lautz, NAR vice president of demographics and behavioral insights. “Our new study shows that while the inventory crisis is affecting potential buyers of every race, nearly all homebuyers agree that homeownership is still an important part of the American Dream.”
The findings show the second-ranking obstacle has been the difficulty saving for a down payment. Approximately three-quarters of potential home buyers currently are planning to save for a down payment. Most note it will take between six months and three years to achieve. Yet, in the Spokane area, housing prices have increased 74% in these last three years. A median home in March of 2019 in Spokane County cost $245,900. In March 2022, that same home costs $430,000.
“It creates what economists call the Prisoner’s Dilemma,” says researcher James Young with the Washington Center for Real Estate Research, referring to game theory in which an outcome depends on players’ simultaneous choices, drawn from the notion of two prisoners separately deciding whether to confess a crime. “No one can sell because there is not a place for them to move.”
Young estimates that fewer than 11% of Spokane-area residents can afford to buy a home in Spokane, a challenge made even more difficult with rising mortgage rates that decrease buying power.
One trend that has now balanced among buyers of all races, is the percentage of buyers who are likely to receive down payment assistance from their parents. In the latest NAR study, 80% of Black people were “very likely” or “somewhat likely” to assist a dependent with making a down payment on a home. That compares to 79% for white people and people of Hispanic and Asian descent.
Spokane’s lack of housing is extremely severe compared to the nation
In Spokane, the lack of housing ranks the city among the worst in the nation for the number of homes per family. A study by EcoNorthwest made headlines in January when it revealed the state of Washington ranks last among all 50 states in the number housing units to the number of existing households. Washington has roughly 1.09 housing units per family, while the national average stands at 1.14. Spokane County is among the lowest in the state at 1.03, while the city of Spokane has fallen to a dangerous level of only 0.89, which likely ranks us among the worse cities in the nation.
The Spokane Association of Realtors sees it every day. Home prices continue to rise. Multiple offers are submitted on nearly every home, and each home sells in just a matter of days. Unless we commit to rapidly building more homes, we see this problem only getting worse.
One bright spot has been that the overall number of sales continues to be strong, with 538 buyers securing a home in March. While the use of first-time homebuyer programs has been down, the Spokane Association of Realtors launched a new service that provides information on over 2,100-buyer assistance programs, with information on which homes may qualify.
“In this competitive market, you really need to be creative and strategic with how you present financing in an offer, and especially so when it comes to down payment assistance programs,” says Spokane Realtor Molly O. Cline.
She says that now, more than ever, potential homebuyers need to have an experienced real estate professional in their corner.
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