Strong real estate demand is expected to continue
Increase in inventory of single-family homes, industrial spaces likely
Erica BullockDecember 16th, 2021
Demand for real estate in the Spokane-area market is expected to remain high in 2022, according to real estate industry leaders here.
The number of single-family homes sold through this November is 1.3% ahead of sales through the first 11 months of 2020, according to the Spokane Association of Realtors home sales report.
Rob Higgins, executive officer of Spokane Association of Realtors, says a seasonal slowing of sales through the holidays this year will bring total sales similar to the 2020 total of 8,150.
Higgins says he expects demand for housing will increase in 2022 due to millennial and Generation Z homebuyers being within prime buying ages. He also expects median home sales prices will increase at a more modest rate of 3% to 5% in 2022, after the median sales price grew 21.2% to $375,000 in November, from $309,500 in the year-earlier month, according to the Spokane Association of Realtors 2021 Monthly Home Sales Report for November.
Higgins says he anticipates increased inventory of single-family houses on the market next year. In the sales report for November, Spokane had an 18-day supply of housing inventory, at 397, compared with 335 in November 2020. He adds that the inventory isn’t likely to drop in 2022 to near the historic low of 133 single-family houses in February 2021.
“Inventory is picking up, but we still have a long way to go,” Higgins adds.
Dallas Becker, owner of Windermere Real Estate North Spokane/Deer Park, says the local residential real estate market has seen the balance of power shift to the sellers in the past three years, and he predicts that trend will continue next year.
Homebuilders will continue to have challenges acquiring land, labor, and materials and will struggle to keep up with residential demand, Becker contends.
Year-over-year price appreciation within the residential real estate market next year could see some moderation as well. Becker says that 2021 prices appreciated 24% compared with 2020 home prices. By comparison, in 2018, 2019, and 2020, the market averaged 12% price appreciation each year, he adds.
Becker says rising home prices have been absorbed by homebuyers, who also have seen their wages increase albeit to a lesser extent.
“While their buying power is diminishing, they’re able to handle it,” he says. “If we see interest rates spike up in any material way, that will definitely slow down the price appreciation dramatically.”
Becker says he expects the Spokane real estate market will return to seasonal cycles in the coming year. He says that most real estate sales haven’t slowed around the holidays in the past three years, but this year the market has slowed down in the past few months.
Devin Mecham, sales manager and certified commercial investment member at NAI Black, predicts the commercial real estate market—especially the industrial-space sector—will do well next year.
Mecham says Spokane Valley and the West Plains have hundreds of thousands of square feet of industrial space planned to go online in 2022.
He says he expects these large industrial developments will attract manufacturing and distribution companies that have been seeking large spaces in the Spokane area.
Medical office spaces and restaurants also are expected to pick up next year. Mecham says regular office spaces will take longer to rebound, since companies are uncertain when to bring their workforce back into the office. He also says online shopping likely will slow the growth of retail spaces into next year.