Spokane7
65°
August 26, 2011 in City
Report makes mountain of market bump
Do you feel recession-proof, Spokane? All steel-plated and financially indestructible?
No? Maybe you should feel a little harder. Because Forbes magazine – “the No. 1 source for business news on the planet” – has declared Spokane one of the nation’s “recession-proof cities.”
Feel better now?
It’s a sign of how lousy the national economy is that Spokane’s mere stagnancy in home values is declared a triumph. But, just in case you’ve seen anyone whistling and snapping their fingers over this declaration, here’s the buzzkill: Our supposed recession immunity is based on a nice but very small and very nebulous bump in estimated real estate values for one quarter over the previous miserable quarter.
Which brings the mean estimated home value – as estimated by Zillow, anyway – to just 2 percent lower than a year ago. Actual sale prices here have gone down by almost three times that rate.
See? Recession-proof! Just a small decline in home values, on top of the steady declines that preceded it. This is what earns us a spot on a list of cities that have figured out a way to “wrangle up the modest beginnings of a real estate rebound this year,” according to the Forbes piece, published online last week.
Modest is putting it mildly. Modest, in this case, is whatever there is below an understatement. Because maybe we are indeed wrangling up a recovery here at the Spokane corral. I want that as much as anyone else who owns a house here. But there are reasons to still be concerned.
“There are lots of reasons to still be concerned,” said Glenn Crellin, an economist and the director of the Washington Center for Real Estate Research at Washington State University.
Among them: Through the second quarter, the sale of existing homes in Spokane County is down by 23 percent this year, compared with 2010. That’s according to the WCRER’s latest Housing Market Snapshot. New construction is way down, too – with building permits off 16.6 percent. Median price of those sales is down 5.8 percent.
Down 5.8 percent from 2010, that is – a year that was worse than the year before that, which was worse than the year before that …
So, yeah, it’s modest, this real-estate rebound. Definitely.
The Forbes piece was one of those shallow, catchy, Internet page-view traps. I saw it first on my email account home page, which likes to run lots of lists (5 Easy Steps to Get Rich!), scare headlines (Does Mother’s Milk Cause Cancer in Infants?), and sexy come-ons (Did Beyonce’s Dress Go Too Far?).
In this environment, “10 Recession-Proof Cities” qualifies as hard news.
At least it would if there were anything hard in it, like a fact. But by the time you make your way from the sexy headline into the story, “recession-proof” has softened into “recession-resistant” – either of which would be news to our long-term unemployed – and then into “recession-resistant real estate market,” and then into the statistical basis for all this optimism: a report from Zillow.
Zillow is the website that has, in some ways, revolutionized real estate information. It attempts to derive a value for each home in a market based on many different factors – not simply recent home sales. Its “Zestimates” sometimes come under attack as unreliable, particularly from people in the real estate game, who have held the lock and key on real estate information for so long that they can’t stand even the suggestion that there’s another way.
But Zillow makes it clear how it arrives at its estimates, and that there are potential pitfalls, and I think they are doing an interesting service, if one that needs to be taken with a grain of salt. Like just about every statistic in the entire universe.
But Zillow’s estimates of the overall Spokane market, based on its estimates of each home here, are simply not enough to declare the beginning of a recovery. Zillow says its estimate of home values here increased about 6 percent from the first quarter of this year to the second. But overall, we’re still behind last year.
Furthermore, from June 2007 to June 2011, these estimates have fallen hard. The mean home value for the Spokane metro area has fallen from $187,000 to $149,000 in that time. And so far this year, Zillow says, more homes sold at a loss and fewer sold for a profit than last year.
But are we coming out of these woods? Is that a little glimmer up there in the tunnel? Are we wrangling anything up?
Crellin says the best predictor of a market’s future is the inventory – the number of homes for sale versus how fast they’re selling. A good, stable figure is an inventory of five to seven months. Any shorter and prices rise sharply. Any longer and prices usually go down.
As of the end of the second quarter in Spokane, Crellin said, we have an inventory of 10.1 months.
“That tells me we should expect to see prices decline,” he said.
Shawn Vestal can be reached at (509) 459-5431 or shawnv@ spokesman.com. Follow him on Twitter at @vestal13.
The draw of the unknowable 
DickAdams on August 26 at 7:00 a.m.
Lest we forget the Spokesman Review was in the gun sights of Forbes publishing a story regarding the scam capitol naming the city of Spokane. I recollect the SR pointing the finger back. I`m not sure which finger.
Lulubelle on August 26 at 7:41 a.m.
At least we’re not in Las Vegas or Phoenix.
Glass half full…….if my plans didn’t include retirement out of country to escape the oppressive right-wing wackos, I’d be buying some real estate here.
DickAdams on August 26 at 10:05 a.m.
Sometimes the truth stings a bit and digested food through the bull is regurgitated by ding bats. Figures.
polistra on August 26 at 10:05 a.m.
Great writing.
Zillow has an abysmal record of predicting Spokane prices in the first place, because it assumes a kind of neighborhood uniformity that doesn’t apply here. Most western cities were built in discrete additions or subdivisions, with all the houses in the Phelps addition alike, then all the houses in the Northview addition alike, and so on. Spokane didn’t do that. It exploded in 1910 to almost its current plat size, and most growth since then has been randomly placed infill. So nearly every neighborhood has an interesting variety of styles, ages and sizes.
The_Seer on August 26 at 10:05 a.m.
Anemic growth in Spokane is par for the course. The region is in constant recession and outlying counties experienced double digit unemployment rates prior to this latest collapse of capitalism.
We aren’t “recession proof” but proof of recession.
Dazzeetrader11 on August 26 at 11:34 a.m.
Lulu…please don’t delay your plans.
Spokane doesn’t see the highs or lows of other places.
Not so much in the growth category….a blip here and there.
It should not surpise anyone SPokane is like this. It’s very very controlled in Spokane. Untill big project happen and big business is allowed in, it’ll remain like it is.
Go look at the West plains…largely out of the control of Spokane’s powers that be., Some funded by the casinos but lots of private money is streaming out there. Opportunity is there and the vacuum is being filled. Housing projects, new large malls, restaurants, etc. Much is helped out by the Co Commissioners. Nothing by the Spokane Mayor but light things.
Growth. Outside of the controlling factors in Spokane. I think more will occur….as long as the controllers keep their hands off.
The_Seer on August 26 at 11:47 a.m.
Dazed quipped: “Go look at the West Plain.”
I have. That “growth” has far outpaced any investment in infrastructure to support it. Try crossing over the freeway from the Medical Lake exit at rush hour. I’m sure all the private developers who benefit from the crush of new growth are willing to expand that traffic zone.
Having more strip malls built by Vandervert when plenty of vacancies at strip malls built by Vandervert exist isn’t a sign of progress. It’s just a sign there are more strip malls.
westerly on August 26 at 12:08 p.m.
Recession proof? Sure with all jobs mainly minimum wage in Spokane, begets plain, old low pay jobs..no growth either up or down..stagnant is a better term. Spokane is a great place to live if you work for the city, county, government sectors,most of the peeps are struggling. So why doesn’t Microsoft, Google or Boeing move in and hire tens of thousands?? Plain old stagnant..has been for many years.
greenlibertarian on August 26 at 4:52 p.m.
In the early 1990’s Spokane and the Tri-Cities traded off for the highest residential real estate appreciation in the country, for about 5 years as I recall.
Real estate has not reached its nadir yet, not here, and not in most places. Good time to buy if you’re secure in your income stream.
sherrymartin122 on August 28 at 1:32 a.m.
It pays to shop around for a mortgage refinance. Mortgage rates have gone down like anything. My brother in law just got a 30-year fixed loan at 3.76% He told me search online for “123 Refinance” for the lowest rate.