Strong demand, intense competition for homes, an influx of out-of-area buyers and historically low mortgage interest rates have led to skyrocketing home values in Spokane County in 2020.
Spokane County’s housing market gained $5 billion in value last year, raising its worth to $57 billion and making it the 82nd-most valuable out of 100 metro areas nationwide, according to a recent Zillow report.
Over the past decade, Spokane’s housing market value has grown $29 billion, outpacing larger markets, such as Louisville, Kentucky; Birmingham, Alabama; and Hartford, Connecticut.
Zillow compiled the data using information from the U.S. Census Bureau and real estate website Zestimates, which incorporates public and user-submitted data as well as home facts, location and market conditions.
“Home sellers are in a great spot, equity-wise,” Spokane Association of Realtors President Eric Johnson said. “They can take out lines of credit on homes for improvements and have an opportunity to capitalize on that.”
Although homebuyers are in a tough situation because there’s not enough housing supply to keep up with demand, low interest rates are increasing their buying power, he said.
“If there’s incentive (to buy) right now – that’s the reason,” Johnson said. “The disadvantage is you are paying top dollar, but at the same time, the odds that the market will drop off are pretty low right now.”
Johnson said the city, county and state need to develop regulations allowing land to be developed responsibly to address the area’s housing shortage.
“Whether it’s rentals or single-family (homes), we need to create more supply so demand has somewhere to go and prices can stabilize a little bit,” he said.
The Spokane County Assessor’s Office reported a sharp spike in the median single-family home value over five years. A home’s assessed value is based on a percentage of its appraised value to determine the amount of property taxes owed, while a home’s market value is how much a buyer is willing to pay for the property.
The median assessed value of a single-family home is $254,000 in 2021, compared with $168,000 in 2017.
The total assessed value of single-family homes in 2021 is $39.4 billion, compared to $34.8 billion in 2020, according to data from the assessor’s office.
“From what we are seeing in even the most recent sales, the local real estate value for single-family properties is not slowing down,” Tom Konis, Spokane County Assessor, said in an email. “The lack of inventory and the historically low interest rates along with people figuring out that they can work remotely even from a different city than their business is located in has led to the local market exploding.”
Spokane County’s median closing price was $300,000 in 2020, a 15.4% increase compared to $260,000 in 2019, according to data from the Spokane Association of Realtors.
Some 8,150 single-family homes and condominiums on 1 acre sold last year, a 2.2% increase compared with 7,976 properties in 2019, according to the association.
One of the primary drivers of Spokane’s booming housing market is people relocating to the area, said Grant Forsyth, Avista Corp.’s chief economist.
“Really since the economy started taking off here in 2014 or 2015 when we finally escaped the worst effects of the Great Recession, 80% of our population growth was from people moving here … when you have a bunch of people moving to the region, it increases the demand for all kinds of goods and services,” Forsyth said.
The county’s strong housing market is spurring economic activity and employment in the construction sector, he said.
“When you are in a pandemic, it’s useful to see part of your economy operating at a high level,” Forysth said. “To some extent, the housing market is offering a little bit of relief … we’ve got construction of new homes and remodeling going on. A lot of that touches a lot of activities that are good for the economy.”
The downside of home-price escalation is that it affects affordability, especially for first-time homebuyers facing competition from people moving to the region from larger metro areas who can afford to pay cash for properties, he added.
Despite the coronavirus pandemic, residential and multifamily building permit activity in the county was robust in 2020, Forsyth said.
The county issued 26,605 residential permits valued at $656 million in 2020, a 13.16% increase compared with 25,415 residential permits valued at $580 million issued in 2019, according to data from the assessor’s office.
U.S. market value
The U.S. housing market gained $2.5 trillion in value in 2020, marking the greatest increase since 2005, according to Zillow’s analysis. The nation’s housing stock is worth $36.2 trillion.
Zillow expects this year’s housing market to be even stronger, possibly exceeding last year’s $2.5 trillion gain.
“2020 was a record-breaking year for the housing market with intense competition among buyers driving up home prices,” Zillow economist Treh Manhertz, said in a statement. “Builder confidence, perhaps in reaction to the boosted demand, hit record highs and more homes are being built as a result. Add that together and you see why the housing market gained more than in any year since the Great Recession.”
“Whether it’s rentals or single-family (homes), we need to create more supply
so demand has somewhere to go and prices can stabilize a little bit.” Eric Johnson Spokane Association of Realtors president
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