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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Housing market ‘slowed appreciably’

It’s getting tougher to sell a home in Spokane.

Buyers worried about the market and hindered by tightening credit purchased nearly a third fewer single-family homes through April than during the same period last year, a pace slower than any of the previous seven years. As cautious builders scaled back the pace of construction, the value of permits for new homes fell 42 percent from last year.

And the number of homes on the market continues to climb, with 3,218 available earlier this week. That’s a further sign that houses aren’t selling.

“The market has slowed appreciably for our area, as it has around the country,” said Rob Higgins, executive vice president of the Spokane Association of Realtors. “The numbers are showing some big changes.”

For sellers, the news may forecast longer waits and price reductions as wary buyers shop around. For industry professionals, who still say the Spokane-area market is faring better than other parts of the nation, it could signal leaner economic times.

“It’s been a long time since we’ve had a really significant down cycle in real estate markets nationwide,” said Glenn Crellin, director of Washington State University’s Washington Center for Real Estate Research. “Here in the state of Washington, while there is softness in the marketplace, and that can certainly not be denied, this is not a market that one should panic in. … In many ways, this is normal, just a shade more severe than we’ve seen in recent years.”

Spokane County home sales total $264 million so far this year, down from $440.65 million for the same period in 2007. That’s a return to pre-boom levels of 2004 or 2005, Higgins said.

Stronger sales of 441 homes recorded by the Spokane Multiple Listing Service countywide last month helped reduce the gap compared to last year. Sales typically increase in the spring, peaking later in the year.

While pricing homes correctly is key, many homeowners have used equity to pay other bills, often leading them to ask for more than market value, said Mike Muglia, a Realtor with Owner Assist Realty.

“Their home is doing really well – it’s the fact that they’ve tied other debt to that home,” he said.

Tom and Ruth Lang have dropped the asking price for their five-bedroom south Spokane Valley rancher by $15,000 after listing it early last year for $310,000. They want to use the proceeds to buy a less expensive home, freeing up mortgage money to visit their son, who’s stationed overseas with the military.

“We’re just doing it to see if we can get out of debt,” Ruth Lang said.

While people are taking lots of fliers, they seem to be turned off by the price, she said.

“They’re wanting this house to be $200,000, and it’s not.”

Average prices have dipped slightly after years of gains, while the year-to-date median crept up. Higgins attributed the shrinking average to fewer pricey homes selling. Sales of homes costing more than $500,000 have been cut in half, he said.

“The high end has really been hit hard,” he said. “That’s because financing is not available.”

Spokane County and the cities of Spokane and Spokane Valley recorded 334 permits for construction of single-family homes, duplexes and townhouses through April, for a total value of $55.36 million.

Spokane Home Builders Association President Brett Sullivan attributed decreased construction permits to tougher credit markets and “collective caution” by builders about adding inventory.

His father’s company, Spokane Valley-based Sullivan Homes Inc., recently announced it would stop tackling new projects. That’s partly because Jim Sullivan wants to retire, but also because of the market, Brett Sullivan said.

The number of Realtors association members, another market indicator, has decreased since last year, Higgins said. He expects membership to drop about 10 percent to 12 percent.

“So many of our members have never seen ‘the slow market,’ ” Higgins said.

Peter and Nancy Steele are trying to sell their Spokane Valley home themselves to avoid Realtor costs. They intend to downsize to a downtown condo they’ve reserved. They recently reduced the price $6,000, to $199,000, after a house across the street went up for that price.

“There’s just got to be one buyer out there, and that’s all we’re looking for; we’re still optimistic,” Peter Steele said.