When Debbie Mills put her late mother’s northeast Spokane house up for sale in November, her Realtor suggested she ask just less than market price. Mills received a full-price offer in a little more than a week.
But in a time of tightening credit nationally, the would-be buyer couldn’t secure financing and the contract expired. Mills expects a new, $119,900 deal on the roughly 900-square-foot bungalow to close soon, and she attributes her success to pricing.
“I looked at other houses that were $5,000 to $7,000 above,” said Mills, 50. “There’s just a ton of them out there, so by pricing them just under, you’re definitely going to get the exposure.”
While the Spokane housing market is cooling from a few years ago, it’s still robust compared with much of the rest of the nation, which has seen falling prices and sales.
A new federal report says Spokane was among the 20 markets that saw the greatest real estate price appreciation in 2007, with prices of homes bought or refinanced in the city rising 7.12 percent.
Coeur d’Alene experienced 1.82 percent price appreciation last year, but saw a slight decrease during the fourth quarter, the federal report says.
Nationally, home-sales prices dropped 1.3 percent in the last three months of 2007 and 0.3 percent during the year – the first annual decline in 16 years – according to the Office of Federal Housing Enterprise Oversight’s index. By another measure, U.S. home prices dropped 8.9 percent in the final quarter of 2007 compared with a year ago, according to the Standard & Poor’s/Case-Shiller home price index released Tuesday. That marked the steepest decline in the index’s 20-year history.
Given the national picture, making the top-20 group “is a pretty good list to be on for Spokane, Washington,” said Randy Barcus, chief economist for Avista Corp.
Local experts said while the rate of appreciation has slowed and the number of homes sold has decreased, statistics indicate values are holding their own.
A recent report from the Washington Center for Real Estate Research at Washington State University, for example, found that the median resale price in Spokane County increased 7.9 percent in the fourth quarter, to $194,200. The number of homes resold fell 31 percent compared with the fourth quarter of 2006.
Many experts say the national market won’t hit bottom for another year, and only after excess inventory is sharply reduced and credit markets improve.
Currently, only the most creditworthy qualify for mortgages. Lenders nationally began keeping a tight leash on credit when interest rates on adjustable-rate mortgages climbed, declining values ate into equity and owners started losing their homes to foreclosure at a fast pace.
The Coeur d’Alene market recently made Mortgage Guaranty Insurance Corp.’s list of “at-risk” or “restricted” markets, meaning loans secured by property there must follow special underwriting criteria.
Coeur d’Alene saw lots of construction over the past five years, Barcus said.
“When we have an inventory-adjustment time, a credit crunch, the faster-growing areas are going to be affected more,” he said. “I see this slippage in the fourth quarter to just be sort of a normal adjustment.”
Fears of a national recession prompted by the subprime loan crisis do have a flip side. Mortgage loan rates have dipped as the Federal Reserve slashed interest rates in an attempt to spur the economy.
In Spokane, it took about six months for intensive-care nurse Randy Fleming to sell his 2002 four-bedroom home near Wandermere Golf Course. While he had to lower his asking price and switch real estate agents to get that sale, the tradeoff was that he obtained a better rate on the loan for his new home than would have six months ago earlier, said Fleming, 38.
“We got an exceptional rate with that,” he said. “I guess timing is everything.”
Like many cities on the list, such as Huntsville, Ala., and Billings, Spokane’s home-price appreciation last year was due in large part to job growth, said Barcus, the Avista economist. “We are pretty sure many of the people who are moving here from other places are coming with equity from those other places when they take these jobs,” he said.
Mills moved to the area early last year from the Phoenix area, which saw 3.42 percent price depreciation in 2007. An investor bought her house there for $340,000.
“If we would have sold it a year earlier, we would have gotten about $100,000 more for it,” she said.
What happens in the local real estate market will depend largely on what consumers do, which is difficult to predict, said Glenn Crellin, director of the Center for Real Estate Research.
“Many potential buyers reading the press, listening to the electronic media, have been scared off on stories that are based primarily in markets that are doing less well, telling them the real estate market is in deep trouble,” Crellin said.
Mills might list her current home here within a year, if she thinks she can get back what she invested.
“Coming here, I think the housing prices are still a little bit under the Phoenix prices,” she said. “It’s still a good area to buy and sell a home.”
Fleming, the nurse, echoed that sentiment: “We’re having a normal market, and people just need to do appropriate things and have a little patience.”