Spokane is hot. So hot, it ranks near the top of the list of the nation’s homebuilding “markets to watch,” according to a new report examining real estate trends from the Urban Land Institute.
In its annual look at the year ahead, the Washington, D.C.-based nonprofit ranked the Spokane and Coeur d’Alene region third in the nation for homebuilding prospects, behind Indianapolis and the Westchester, New York, and Fairfield, Connecticut region.
Spokane polls just ahead of Salt Lake City in terms of homebuilding potential. Seattle is 10th on the list, Portland sits at 23rd and Boise comes in 29th.
The report notes that cities in the nation’s mountain region, which includes Spokane, experience strong growth when markets on the coast are “perceived to be too expensive.”
“In general, a competitive cost of living and high quality of life are seen as advantages” in mountain region cities, the report said. It noted that Tucson, Arizona; Albuquerque, New Mexico; and Spokane “say that the lower cost of living in these markets is an advantage to their economies.”
The international think tank – which also has offices in London, Hong Kong and Frankfurt, Germany, and is focused on the responsible use of land – predicted a soft landing for the nation’s real estate market. It suggested there would be no bust to the current boom in property markets in its 2018 Emerging Trends in Real Estate report, done jointly with PricewaterhouseCoopers researchers, which compiled its findings after conducting more than 800 interviews and taking 1,600 surveys from an array of real estate, economic and development professionals.
In what could be good news for the region, the housing shortage offers opportunities for developers who can crack the market of affordable single-family homes that has so far proved elusive to homebuilders.
The potential windfall for developers that can figure out the right combination of price and location attractive to old and young can’t be understated, the report says. Affordable city living is key to growth, the reports suggests, especially considering the urban preference shared by baby boomers and the millennial generation.
The report also pointed to the strength of “secondary cities” such as Spokane, and said their strength may stem from three things: not being overbuilt in recent years like major cities; a newfound interest among investors who have realized the “nuances” of secondary markets; and the “significant growth” in the amount of foreign capital looking for a home in American markets.
One investor surveyed in the report said secondary markets were preferable to investing in international markets.
“Why deal with the uncertainty of a global market when there are opportunities in secondary markets like Salt Lake City and San Antonio?” the investor said. “I feel a lot more comfortable with my ability to understand these markets than I can a market in China or India.”
The think tank’s report also saw the Inland Northwest climb 14 positions in its section that ranks the overall health and prospects of the real estate market. While the climb up the list is promising, the Spokane-area still sits near the bottom in the 57th position. Last year, the region was ranked 71st of 74 markets.
The top-ranked real estate markets in this year’s list are Seattle, Austin, Texas, and Salt Lake City.