Hot housing market cooling off

With four bedrooms and two bathrooms, a community pool across the street and good schools, Sue Harris thought she had the right real estate bait to lure a big spender, perhaps a Californian.

Not so. The Spokane Valley woman has come down in price $30,000 since putting her house on the market nearly two months ago. And everybody from homeowners to the local planning department seems to be feeling the chill of a cooling housing market in Spokane Valley.

“We were originally at $289,000 and that was a pipe dream,” said Harris, who had previously seen other homes in her Chester Hills neighborhood sell for $279,000 to $400,000. “Then we were at $269,000 and now $259,000.”

Building-related revenues at the Spokane Valley Community Development Department are down almost $300,000 from a year ago, Marina Sukup the department’s director confirmed. Building permits issued through July trail the first seven months of last year by 813, which isn’t to suggest the area’s building boom has gone bust.

It was a banner year in 2005 for both new construction and home sales, a trend that stretched into last spring with average home prices in Spokane Valley jumping 20 percent in a single year. Now the market seems to be slowly returning to a normal pace.

“One thing that’s happening is there are more homes on the market,” said Rob Higgins, who tracks market trends for the Spokane Association of Realtors. “When there are more homes on the market, there’s more competition. More houses means more time on the market.”

In 2005, when all of Spokane County achieved a record best for real estate sales, the inventory of homes on the market at any given time was only 1,300. That inventory now stands at 2,565 homes, Higgins said, which is driving prices down.

The asking price on Spokane Valley homes may be going down, but the number of homes sold isn’t. In the first seven months of this year 1,098 homes were sold in the greater Spokane Valley, which includes Liberty Lake. That’s 31 sales better than the first seven months of 2005.

However, this year real estate agents and brokers report seeing fewer homebuyers from out of state, the kind Harris was hoping to attract. Those buyers, flush with cash from home sales in higher-priced markets like California, were known for paying more than many local buyers were willing or able.

Now those out-of-state buyers have problems of their own, said Bob Kraft, Realtor with Windermere Real Estate in Spokane Valley. The volume of homes sold in California between April and June was only three-fourths of what sales were for the same period in 2005, according to the National Association of Realtors. That drop was the third worst decline in the country.

Those out-of-town buyers tended to bolster the new home market, Kraft said. And new home sales are now struggling to keep up with new home construction in Spokane Valley. If contractors stopped building new houses today, Kraft said, it would take real estate agents more than six months at the current sales pace to sell all the new houses currently on the Spokane Valley market.

The existing home market is not so overstocked, said Kraft, who believes there are about three months worth of existing homes on the market.

And the average prices of those homes are not increasing as quickly. Houses built in the mid-1970s, of which Spokane Valley has many, have only increased in price about 13 percent in the last year.

It’s the price of newer homes which is pushing the average up 20 percent annually.