Real estate gets unreal

Rose and Brian Hulvey never envisioned their search for a bigger house taking on the competitive feel of a “Survivor” episode.

But there Rose was on her lunch hour, dashing from house to house with a real estate agent. Since most of the properties had multiple offers by the end of the day, she couldn’t wait until after work to see them. Brian, a long-haul truck driver, got details by phone.

Four months went by before the couple landed a house that met their criteria: a Spokane Valley rancher with a gas furnace, fenced yard, and a sales price under $190,000. Along the way, they encountered bidding wars and several near misses.

“It was pretty frustrating,” Rose Hulvey recalled. “You’d find something you liked, and it was gone before you could get in to see it.”

A shortage of inventory has upped the ante for local house hunters. The busy real estate season is under way, but the number of homes for sale is at historic lows. For consumers, the low inventory means less choice and less time to make decisions.

“You have to be prepared to jump on homes as soon as they hit the market,” said Dave Crosby, a Spokane Valley real estate agent who is president of the Spokane Association of Realtors. “There is no room for anything else.”

Spokane County has about 1,400 homes listed for sale – about half the inventory that was on the market two years ago. Kootenai County’s 1,200 active residential listings also reflect a significant decline.

The drop in inventory has occurred over a four-year period, said Rob Higgins, executive vice president of the Spokane Association of Realtors. It mirrors national trends.

Low interest rates made homes more affordable, bringing a surge of first-time buyers into the market.

“It’s pretty easy to qualify for a house,” Higgins said. “I think that everybody who can is buying one.”

In addition, the stock market’s uneven performance over the last several years has revived interest in real estate as an investment. Investors are buying up property with the expectation that prices will continue to rise. The trend is probably more pronounced in Kootenai County, which has had more national exposure to wealthy investors, Higgins said.

Bill Hatch, North Idaho College’s real estate instructor, tells his students that two forces are at work in the region: local residents are buying family homes, and new migrants to the Inland Northwest, who sold property in more expensive markets, are buying a house here and using their leftover cash to purchase rentals and investment property. That’s creating a certain amount of bitterness among local buyers, particularly as prices rise, Hatch said. Through April, the average sales price in Spokane was $151,363. It rose to $191,145 in Kootenai County, a 25 percent price gain over a year’s time.

Local market conditions didn’t come as a complete surprise to the Hulveys. Rose works in an attorney’s office, where she prepares the paperwork for real estate closings, so she knew that homes were selling quickly. Still, she was surprised by the need to make snap decisions. “It was stressful,” she said.

In mid-April, the Hulveys put their existing home on the market. Its rapid sale was another jolt. Their real estate agent posted the house on the Multiple Listing Service at 10 p.m. By late afternoon the next day, the couple had three full-price offers.

Shortly after the Hulveys’ home sold, Rose spotted a “For Sale by Owner” advertisement. She called several times during the day to let the owners know how interested she was. After viewing the home that evening, Rose made an offer – contingent on Brian’s viewing and liking the house. The sale recently closed. The Hulvey’s new house is on a quieter street, and it has a fenced yard for their 3-year-old daughter. Real estate agents tell similar stories about the competitive market. They’re checking computerized listings 10 or 12 times a day, so they can alert clients as soon as new properties pop up in their price range. Some clients get automatic e-mail alerts.

A fair number of homes, however, are sold by the time an MLS listing is posted. That’s happened five times in the last six months to Cheryl Miller, a GMAC Realtor, who’s looking for property in Coeur d’Alene’s Sanders Beach area.

One of her clients wants to buy investment property there. Eventually, the couple plans to retire to a smaller house in the quaint, older neighborhood, which is within walking distance of Lake Coeur d’Alene and downtown shops and restaurants. But Sanders Beach is a hot place for investors at the moment. The homes are gone by the time Miller learns about them. The couple did make an offer on one house, but lost it in a bidding war.

The market’s pace staggers even some longtime real estate agents, according to Miller. “Everyone’s got their mouths open,” she said.

Real estate markets always go in cycles, noted Hatch, who’s spent 30 years in the industry. “Sooner or later, I suspect that there will be a bubble,” he said, “but I’m not sure how much of a bubble it will be.”

Sales of single-family homes and condos hit a record high in April, with more than 7 million units sold nationwide.