Spokane home market is on the road to balance, some Realtors say
Inventory increases; sales drop, but experts says it’s all part of a return to normalSeptember 22nd, 2022
In the Spokane housing market, active inventory, months supply of inventory, and median days on the market are all up by triple digits, while the sales are down by double digits.
And while that would indicate a down or declining market typically, prices are still rising as the housing market comes off a couple of years that have been anything but typical.
The wild swings, Inland Northwest Realtors say, are part of something that resembles a return to a balanced market, though we aren’t there yet.
“We’re still not in a buyer’s market and won’t be until inventory reaches a few months’ supply, but the landscape has changed to be more favorable to buyers,” says Darcy McMurray, broker at Spokane-based 4 Degrees Real Estate. “It was a scary landscape last year, but folks are not as panicked to purchase a home in this market now.”
Data from the Spokane Association of Realtors August 2022 Home Sales Report shows that from a year earlier, active inventory rose 110%, to 1,057 properties; inventory increased to a 1.7-months’ supply; and the median number of days a listing stays on the market has reached 14 days, a growth of 180%.
The home sales report also states closed sales declined 17%, to 655, and the number of new listings has dipped slightly to 901, a decline of 0.3% from August 2021.
McMurray says last year’s forecast of the 2022 Spokane housing market had experts predict that the market frenzy of 2021 would calm down from double-digit price increases to a slower rate and their expectations have aligned with the current market data.
She says home prices are expected to climb between 7% to 10% this year.
Mike Bass, managing broker of Century 21 Beutler & Associates, in Spokane, says, “Our median home price is up about 8% from August last year to about $420,000. Last year, it hovered around $390,000, and we’ve got more inventory than the historic lows then.”
Eric Etzel, president of the Spokane Association of Realtors and managing broker at Spokane-based Choice Realty, says there are 903 listings this year, which is a slight decline, but similar to a year earlier, which totaled 904 listings.
Bass says, “With our listings down this year, it’s a real dichotomy, what’s going on right now.”
McMurray explains that in the past few years, homebuyers experienced a perfect storm of low mortgage rates combined with a low inventory that drove home prices skyward.
Inventory has steadily increased this year, although prices are still climbing, according to the home sales report.
McMurray says that while inventory has grown it’s still well below a level that would meet current demand for homes.
“A healthy and balanced market will have a five-to-seven-month home inventory supply,” she says.
Etzel says while inventory has increased, it hasn’t increased evenly across all price ranges. He says homes priced between $300,000 to $400,000 have a higher demand and less available inventory right now.
Bass concurs and says the length of time that the listings stay on the market is driven in part by home prices.
“Homes priced $400,000 and under are the most in demand,” says Bass, adding that homes priced $400,000 or higher have less demand and consequently stay on the market a little longer.
Closed sales of single-family homes on less than one acre, including condominiums, in August totaled 629, compared with 734 in August 2021, a decline of 14.3%, according to the report.
Bass says the decline in closed sales can be attributed to buyer apprehension.
McMurray agrees and says the decline in home sales is a natural reaction to uncertainty in the world, such as the current election year, combined with stock market volatility, and climbing interest rates.
“Buyers are able to take more time to make these significant financial decisions, and I’ve noticed a bit of hesitancy, which is normal,” she says.
Etzel says another reason for declining closed sales is due to increasing mortgage rates and buyer burnout from fierce home competition.
The real estate professionals agree that serious homebuyers will continue searching for homes throughout the upcoming winter and holiday season, which hasn’t seen a typical slowdown in the past few years.
The “slow real estate season” likely will have little impact on home prices, they agree.
Etzel says purchasers who are searching for their first home are likely to continue to stay in the market, while those who already have a home have dropped out of the market to wait for more favorable conditions.
Etzel says the number of multiple offers has slowed here since the spring as a result.
Bass says, “I’m not seeing as many competing offer situations because with each mortgage rate increase, it removes a certain segment of buyers from the market.”
McMurray says she’s also noticed additional trends in local market activity.
Many of her clients are returning to the Spokane area to purchase homes to either start families or settle into retirement, after previously leaving for jobs or other circumstances. She says the return of previous residents indicates the region remains a desirable place to live and will continue to drive demand for homes.
“Spokane has 4% lower cost of living than the rest of the U.S.,” she says, adding that the city’s affordability also impacts home demand.
McMurray says she’s also noticed local sellers are accepting offers with contingencies lately, whereas last year, buyer competition was so intense that sellers were unlikely to choose any offers with stipulations when cash offers were coming in over the asking price at the time.
“Home prices are going for 99.7% of the listing price now, compared to 104% a year ago,” McMurray says.