Residential Building Fell In 1994 As Inventories, Interest Rates Rose
Sagging Spokane area construction activity in the last half of 1994 dragged totals for the year below those for 1993.
In December, the city issued the fewest number of permits for singlefamily homes - 11 - since February 1988. That was one of the worst years for home building in the last quarter century.
The county issued 54 permits, down almost 40 percent from the 89 of a year ago.
And January figures were even lower; just five permits in the city, 40 in the county.
On the Idaho side of the border, the value of permits issued in 1994 by the cities of Post Falls and Coeur d’Alene and Kootenai County increased 7 percent to $183.3 million.
While most economic indicators show the housing and construction markets slowing down, economists and industry officials say that doesn’t mean the market is weak. A slowdown was inevitable after five years of strong growth.
“We got pretty spoiled,” said Michelle Malinak, executive director of Spokane Homebuilders Association.
For all of 1994, residential building in Spokane County, including incorporated and unincorporated jurisdictions, finished 3 percent lower than in 1993. The value of all residential permits issued was $230.6 million, down from $238 million in 1993.
The number of projects was down even more - 10 percent - as the number of building permits issued by the city and county of Spokane dropped to 1,893 from 2,104.
The city issued 468 permits for single-family homes, 22 percent fewer than in 1993. County permits slipped 5 percent, with 1,425 being issued.
Malinak said builders are moving cautiously into 1995.
The inventory of unsold homes is up, she said, and interest rate hikes over the last year have been a rude awakening for buyers accustomed to cheaper mortgages.
She said builders are reducing but not eliminating their inventory. “They will definitely build spec homes,” she added.
She said some builders also may turn to remodeling if the new-home market slows drastically but added that she considers that unlikely.
“We in the Spokane area are still real positive,” Malinak said.
Phil Kuharski, longtime observer of the Spokane economy, also remains optimistic. The Prudential Securities broker noted that 1994, though not the year 1993 was, topped every other year since 1980.
“We’re going to see lower numbers for 1995 and 1996 but not a tailspin,” Kuharski said. Continued population and job growth should provide the underpinnings for additional building activity, he said.
Construction has helped lift the Spokane and Kootenai County economies out of a funk that had persisted through most of the 1980s. Any relapse in the sector would have implications for retailing, financial services and other segments of the economy.