When Spokane resident and first-time homebuyer Monica Hauck began searching for a property to purchase this summer, she knew it wasn’t going to be easy.
With a budget of $250,000, Hauck and her boyfriend, both in their 20s, set out to find a house with at least two bedrooms and a backyard.
Over the course of three months, the couple viewed more than a dozen homes of various types in Spokane Valley, Millwood and Newman Lake, but when they attempted to submit an offer on a home, other offers already were 40% to 50% above asking price.
“We found four or five homes that we really loved and that we could see ourselves living in, and just to not be able to put an offer in is pretty heartbreaking,” Hauck said.
Hauck is among several homebuyers facing the scenario of multiple offers in Spokane’s hot housing market, which has low inventory, high demand and increasing prices.
Despite fall’s arrival – the time of year when housing markets across the country usually see a cooling in activity that matches the weather – Realtors say the Spokane-area market shows little signs of slowing down.
“It’s a pretty competitive scenario for buyers right now,” said Tom Clark, president of the Spokane Association of Realtors, adding although there was an uptick in listings during the last couple of weeks of September, it was common to see multiple offers and homes selling above asking price.
Spokane’s housing market is typically strong in the spring with a lull during summer as people go on vacation. In the fall, activity tends to pick up again, Clark said.
This year was different.
“In this case, it didn’t slow down for the summer,” Clark said. “It just kept going full speed ahead.”
Record low mortgage interest rates and lack of available inventory pushed Spokane’s median housing price to more than $300,000 for the first time this summer.
Spokane’s median home price rose 17.2% to $313,500 in September, compared with $267,500 in September 2019, according to the Spokane Association of Realtors. More than 778 single-family homes and condos on less than 1 acre sold in September, compared with 799 homes in September 2019.
The county had 478 available homes on the market in September, representing less than a month of supply. A healthy housing market typically contains six months of supply.
“Until we see increase in supply, we’re probably going to see upward pressure on prices,” Clark said.
The nationwide median home price in August was $310,600, up 11.4% from $278,000 in August 2019, marking 102 months of year-over-year gains, according to the National Association of Realtors. September data is not yet available.
“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” Lawrence Yun, NAR’s chief economist, said in a statement. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”
In its Oct. 3 Housing Market Recovery Index, Realtor.com said home list prices show no signs of slowing down nationwide.
“We expect a larger than usual number of sellers to remain active during the month of October, which should bring a few more options for first timers, but size and price may remain a key challenge,” Realtor.com said in the report. “The number of buyers remains surprisingly high for seasonal standards and despite the cooler weather, this October represents an unusually good time to sell a home in most markets around the country.”
As companies have allowed employees to work remotely during the coronavirus pandemic, it has accelerated a trend of people moving from larger metro areas to midsized cities – like Spokane – in search of affordability and a better quality of life.
That trend is anticipated to continue through the rest of the year, said Kyle Krug, a broker with John L. Scott Real Estate.
“COVID-19 has generated a lot of buyers who can work from home,” Krug said. “You can work for Microsoft in Seattle, live in Spokane and still make that Microsoft money.”
Buyers are not only moving from Seattle to Spokane, but they are coming from California, Colorado, Nevada and Arizona, Krug said.
“They are coming in droves and they are coming from all over,” he said.
Because remote work is expected to become a growing part of workforce culture even after a coronavirus vaccine is available, the need for housing will continue to grow nationwide – especially in areas attractive for those who can telecommute, according to Yun.
“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” Yun said. “To assure broad gains in homeownership, more new homes need to be constructed.”
The Spokane area continues to be impacted by a lack of available land, rising lumber prices and a labor shortage in the construction industry, said Joel White, executive officer of the Spokane Home Builders Association.
While homebuilders have significant demand for new projects, land is not available at a cost that they can build a product that buyers can afford, White said.
To meet the demand for more housing, Spokane needs to increase housing supply through a mix of housing types – single-family homes, condominiums, townhomes and cottages – at varying prices, he said.
Competing in a hot market
So how can homebuyers strengthen their offers on homes in the Spokane market?
Krug advises potential homebuyers to work with an experienced real estate agent and complete the underwriting process ahead of time to boost their chances of securing a property.
Hauck, the first-time homebuyer, echoes that it’s important to work with an experienced Realtor and loan officer who can explain and help navigate Spokane’s market dynamics.
Hauck, who is still searching for her dream home, also contends that potential buyers should be persistent.
“Because it’s going to be a long road if you are interested in buying a house,” she said.
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