Spokane Housing Is A Hot Bargain Dwellings Are Going Fast, But Sellers Aren’T Seeing Much Upward Movement In Pricing

High volume.

Flat prices.

The two local real estate trends that emerged month by month over the past year were confirmed by a round-up of year-end sales data.

Although more homes were sold in Spokane in 1998 than in any of the past three years, the average price barely moved from 1997.

According to information collected by the Spokane Association of Realtors, 5,274 homes were sold last year, the most since 1994 and a 9 percent increase over 1997. Despite all that buying and selling, however, the average price inched up only half a percent, from $115,172 to $115,810.

The reasons, many local real estate professionals believe, are two national events affecting real estate markets throughout the country: low interest rates and tax law changes.

With the cost of borrowing money as low as it’s been this decade, many first-time homebuyers are entering the market, said Glenn Crellin, director of the Washington State Center for Real Estate Research.

“With first-time homebuyers, they are very active in the lower end of the market,” Crellin said.

As a result, their frequent purchases of lower-priced homes tend to pull down Spokane’s overall average. For the year, 1,971 homes, or 37 percent of the year’s total, sold for less than $89,000.

The 1997 change in the capital gains tax law also had a huge impact on sales, said Linda Besse, an agent with Prudential Crane Realty. Before the tax code change, home sellers had to pay capital gains taxes if their new homes cost less than the home they were selling.

As a result, Besse said, there was little incentive to buy a less-expensive home, even though it made sense for empty nesters or families moving to Spokane from more expensive markets.

Now, “people aren’t feeling they have to purchase homes that are quite as expensive,” she said. “I’ve had some people coming from out of town not as anxious to buy the more-expensive homes.”

Also playing a role in keeping the average price down is the large number of new homes being built.

In 1998, 1,217 homes were built vs. 858 last year, about a 42 percent increase.

While lower-priced new homes are often built then marketed to prospective buyers, higher-priced homes are more likely custom built. As a result, the high-priced homes wouldn’t show up in the SAR’s statistics, helping drop the average price.

Further, new-home construction also can keep prices down for previously owned homes, said Crellin.

“If you have an awful lot of new construction, homes (for sale) that would be competing with the new homes wouldn’t be able to increase prices as rapidly as they would like,” he said.

The end result means a very dependable market, said Neal Johnson, designated broker at Windermere Real Estate/Leroy Johnson Inc.

“We don’t have the demand that Seattle has,” Johnson said. “We’ve got a real stable supply of homes. We know how many homes are on the market at any given time, we can predict what the house will sell for.

“There’s never a bidding war.”