Strategy proposed to expand housing inventory
Concepts aim to promote attainable homeownershipNovember 19th, 2020
The Spokane Association of Realtors this month released two statistics that both excite me and concern me.
Spokane County’s median closing price in October this year was $320,000. In October last year, that number was $265,000. This is a 20.8% increase in one year – an all-time high.
Excited: If you are a median Spokane homeowner, you just made $55,000 in equity in one year. Concerned: If you are currently house shopping, a median Spokane home just got $55,000 more expensive in one year.
Spokane County’s housing inventory in October of this year saw 424 homes on the market – an all-time low. In October last year, that number was 945. This is a drop of 521 fewer homes on the market, a decrease of 55%.
Excited: If you are selling right now, less inventory drives demand up and can cause bidding wars. Concerned: If you are buying right now, less inventory drives prices up and can cause bidding wars.
The association has been keeping records for more than 30 years.
Rob Higgins, our executive vice president, has compiled and reported these numbers for most of those years. His historical look back is remarkable and personal.
In an interview last week with The Spokesman-Review, Rob told reporter Amy Edelen that persistently high demand and shortage of available properties on the market is causing the county’s housing prices to continually increase.
The county’s lack of housing inventory is a significant issue that is driven, in part, by a shortage of new construction that began having an impact after the economic downturn nearly a decade ago.
This is why we need a new approach to creating housing inventory in the Inland Northwest. In fact, we need a new word to describe what we must create.
The old approach was to focus on “affordable housing.” That sounds good in a conversation but considers only the cost of a house. Moreover, what one person finds affordable, another might find out of reach.
Let’s consider a whole new label and a whole new approach: attainable housing.
The Spokane Association of Realtors moved away from the term “affordable housing” and toward the term “attainable housing” this year on the encouragement of our governmental affairs director, Darin Watkins. He’s been meeting and talking with many of our community partners in recent months. We all, it seems, see the same challenges to housing opportunity in our area, but haven’t been able to land on one word to describe it.
“The old word, affordable, worked in the past because much of Spokane’s housing inventory was priced below $100,000 or $200,000,” says Watkins. “Many local salaries used to make these homes affordable for the average homebuyer. Now, with increasing pressure from outside our market – in both salaries and demand – affordable can’t have a Spokane definition anymore. So, we need to change.”
Listen to some synonyms for attainable: achievable, doable, feasible, obtainable, possible, viable. This is where we need to be with our thinking with respect to creating housing inventory. Homeownership needs to be all these things for most people, or the American Dream will be out of reach for most people.
Here is what the Spokane Association of Realtors, Spokane Home Builders Association, and other partners in the business of creating and brokering the sale of residential real estate are bringing to the table as we have a community conversation around housing:
•Use the state’s multifamily property tax exemption for attainable housing projects. They would qualify under the 12-year provision.
•Consider zero- to 32-foot setbacks instead of the current 60-foot setbacks on property within the city.
•Consider converting property in the West Central neighborhood that is currently light industrial to residential, leaving the light industrial space intact near the transportation corridors. Specifically, north of Lincoln Road and west of Crestline Street.
•Expand our urban growth area boundaries. A lack of available land demands that we allow managed expansion of our boundaries. Consider expanding city limits south to incorporate many areas that have already agreed to annexation.
•Consider lobbying our state Legislature to add affordability as one of the criteria to the Growth Management Act. This would include adding housing types by income to the current housing projection surveys.
•Include Housing as a Critical Infrastructure component to the state’s planning process.
We also need to address the elephant in the room: growth management.
This limited supply happened under the rubric of the Washington State Growth Management Act passed by the Legislature in 1990 and still in force today.
The GMA started with the best of intentions to get ahead of future growth: identify and protect critical areas and natural resource lands, designate urban growth areas, make capital investments, and write development regulations.
In the 30 years since GMA became law, much has changed, and development has continued to happen – just not in the areas set aside by GMA. Look to the east and look to the west of Spokane where land is accessible, and you’ll see new development.
We don’t have enough housing inventory at all levels for everyone in the Inland Northwest who wants to buy a home. They’re finding inventory in outlying areas and commuting into the cities for employment and services, stressing our already-stressed transportation infrastructure from the 1950s.
There are deep financial and social reasons for why we should all care.
Money Talks News recently published an article: “8 Reasons You Need to Become a Homeowner.” Reporter Emmet Pierce details these: Real estate appreciates. You’ll be forced to save money. You’ll build equity. You can avoid housing payments in retirement. You won’t have to worry about being evicted. You’ll have more freedom. You can remodel. You might enjoy tax advantages.
When you rent, none of these are true.
These are just the financial benefits of home ownership. There are social benefits, too – and they are compelling.
Consider the findings in “Housing as a social determinant for health: Implications for Rent Control Policy and Housing Shortage in Spokane,” by Whitworth University professor and Grand Fir Analytics principal Vange Hochheimer. The Spokane Association of Realtors commissioned this study earlier this year.
Her report highlights “two important elements of the housing market in Spokane County: the potential sensitivity of the housing market to price control or regulation policies, and the implications of housing shortages for vulnerable populations. The housing market plays an important social role in determining mental health, family health, and providing a safe environment for individuals. The literature on the social determinants of health documents the importance of housing in health outcomes.”
The National Association of Realtors has studied this over the years and found that homeownership boosts the educational performance of children, induces higher participation in civic and volunteering activity, improves health care outcomes, lowers crime rates, and reduces welfare dependency.
Owning a home is different from renting. With the home purchase comes the pride of ownership and the sense of belonging in a community where one has a financial stake in the neighborhood. Perhaps homeowners are happier just from having achieved the so-called American Dream – a sense of accomplishment, a milestone. Also, ownership entails greater individual responsibility. Homeownership requires a large – if not the largest – financial outlay of a person’s life and often requires the responsibility of a mortgage spanning 30 years. Therefore, it is a long-term commitment which may alter human behavior.
Given such an opportunity, public policy makers would be wise to consider the immense social benefits of home ownership for families, local communities, and the nation.
Our Declaration of Independence declares we are each endowed by our creator with certain unalienable rights, among these, life, liberty, and the pursuit of happiness. If these remain unattainable for any in our community, all in our community are missing out on the great potential of humanity and the simple need for everyone to have a place to call home.
Tom Clark is the 2020 president of the Spokane Association of Realtors, which was founded in 1911. Clark is a broker with Kestell Company Realtors and has 30 years of experience as a residential real estate broker. He can be reached through the association at 509.326.9222 or