Beth and Larry Belcher found the perfect home in Spokane, but it wasn’t easy.
The Belchers, who sold their home in California in October, were drawn to Spokane because of friends in the area and Larry had been stationed at Fairchild Air Force Base several years ago.
The couple was aware of Spokane’s housing market dynamics: low inventory, rising prices and high demand. But they didn’t expect to overcome an additional hurdle of searching for a home during a pandemic.
The couple looked at nearly 100 properties via virtual tours and in-person before closing on a home this month.
“Looking for homes during COVID-19 was a little more difficult, but it helped to have sellers who were receptive,” said Beth Belcher, adding the seller allowed them to tour the home, one person at a time, wearing a mask, gloves and booties. “The home we found is in an incredible area and it’s everything we wanted.”
The Belchers are among several homebuyers who had to adjust to the “new normal” of the real estate market brought on by COVID-19, which hit at the peak of the spring homebuying season.
But the new normal may not be that much different than the old normal, some local market observers say. They believe the Spokane area will continue to attract buyers, such as retirees and teleworkers, looking to escape larger metros in search of affordability and quality of life – now and post-pandemic.
The statewide stay-at-home order, which went into effect in March, placed limitations on how Realtors can conduct business during the pandemic, forcing them to sell homes through virtual tours and close deals electronically.
Nationwide, the housing market had significant momentum entering 2020, but COVID-19 affected buyer and seller willingness to moves toward sales because of social distancing concerns and economic uncertainty, according to Realtor.com.
In the Spokane market, real estate agents are seeing a higher rate of contracts failing to close, mostly attributable to financial instability among buyers, some of whom were laid off from their jobs or are concerned they will be during escrow, said Ken Sax, designated broker at Keller Williams Realty.
And there are some sellers who didn’t want to move out of their homes after closing on a sale because they didn’t feel safe doing so during the stay-at-home order, Sax said.
However, Spokane’s housing market has shown little signs of slowing during the pandemic.
“It’s still a very strong sellers market and some are saying ‘I am going to wait to sell,’ ” said Sax said, referring to the real estate market during the stay-at-home order. “But for sellers putting houses on the market – assuming it’s priced competitively – we are seeing multiple offers.”
Spokane’s median home price rose 9.9% to $280,091 in April, compared with $254,950 in April 2019, according to the Spokane Association of Realtors. More than 508 single-family homes and condos on less than 1 acre sold in April, compared to 575 homes in April 2019.
The county had a 1.2-month supply of available homes on the market in April. A healthy housing market usually contains a six-month supply.
April’s housing market reflects sales that went under contract in March and because there’s a 30- to 60-day backlog of sales, it’s likely that housing market statistics in May and June could post more dramatic declines, said Rob Higgins, executive officer for the Spokane Association of Realtors.
Higgins anticipates a reduction in the number of sales, but home prices will remain relatively stable throughout the year, primarily fueled by low inventory and high demand for homes in the low- to mid-price ranges.
Nationally, home prices are projected to decline slightly by the end of 2020. Buyer demand is expected to seesaw throughout the year and low inventory will persist, according to Realtor.com.
While mortgage rates are favorable, qualifying criteria will be tougher than in recent years as lenders seek to protect against risks amid economic uncertainty. Some lenders are requiring larger down payments in addition to higher credit scores, said James Young, director of the Washington Center for Real Estate Research at the University of Washington.
“Lenders are doing what they need to do,” Young said. “They want to see the payments coming in and they want their expected return.”
That scenario puts first-time homebuyers in a predicament because they will continue to compete with cash buyers, such as retirees selling their homes in higher-priced markets and using the equity to purchase a home in a more affordable area like Spokane, Young said.
“This was happening before the pandemic. I think the pandemic will speed it up temporarily,” said Young, adding it will be a big trend in the real estate market this year. “They can buy a home, pay cash and have $200,000 left over to buy an investment property.”
First-time homebuyers may fare better by purchasing fixer-upper homes and completing repairs over time, Young said.
Another trend to watch in the real estate market, Young said, will involve people previously on the fence about moving from larger cities before COVID-19 who will now be definite in their choice to relocate.
Part of that is the shift to telecommuting and a desire to live in an area with less density, a condition precipitated by COVID-19, he said.
“In the next three to six months, that’s going to be very big driving factor in secondary markets in this region,” Young said.
Higgins agrees telecommuting will continue to draw interest from out-of-area residents.
“I think the future looks bright as far as Spokane real estate, and part of that equation is working remotely,” he said. “That was happening regardless and with COVID-19, it’s been an accelerator to that and we are going to see that happening much more rapidly.”
Although the nation has experienced unemployment levels exceeding that of the Great Recession, Spokane has a diversified mix of industries that could lessen the economic impact from the coronavirus pandemic, Young said.
The Amazon fulfillment center is slated to open this year on the West Plains, bringing more than 2,000 jobs to the area. Spokane also is strategically placed with decent transportation networks to spur business growth, Young said.
Sax echoed that Spokane may be better poised to sustain coronavirus-related impact and said he doesn’t anticipate any huge swings this year in housing market dynamics.
“I feel like Spokane is going to come out of this situation very well,” he said. “I attribute it to new infrastructure and businesses, such as Amazon and our average sales price is a lot less than other major metro areas.”
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