At this point, the increases are almost starting to feel normal.
Spokane County single-family residential property values rose 12.6% this year, according to the assessor’s office. That’s a big jump, but county appraisal supervisor Joe Hollenback said it’s about the same as last year.
Hollenback said single-family homes have risen by roughly that amount each of the last four years. That means the average single-family home is about 1.5 times as valuable today as it was four years ago.
The county looks at real estate sales to set assessed values. The value of a house is largely determined by home sales in your neighborhood.
All of the county’s assessments are based on market values as of Jan. 1, so they don’t necessarily reflect accurate market prices in May. Spokane real estate brokers said that what’s happening in today’s market is extraordinary.
“Just unbelievable, almost unexplainable things are going on,” said Tom Clark, a broker with Kestell Co. Realtors and the governmental affairs committee chair for the Spokane Association of Realtors.
Not all Spokane County cities and neighborhoods saw their single-family home values increase at the same rate. Hollenback said the increases were greatest in areas with more lower-end homes.
There are more people who can afford those properties, so competition might be more fierce, driving up prices, Hollenback said.
Northeast Spokane had the biggest single-family property value increase, at 17.8%. The smallest jump belonged to the neighborhood directly north of Interstate 90 in central Spokane.
Property values are increasing dramatically throughout much of the country. According to the National Association of Realtors, the median existing single-family home sales price in March 2021 was $334,500, an 18.4% jump over the year before.
Even with much of the country experiencing rising prices, Spokane has stood out. Last month, Realtor.com named Spokane the 10th-hottest real estate market, based on how long it took for homes to sell and how often people looked at listings online.
Rob Higgins, the executive vice president of the Spokane Association of Realtors, said the median Spokane-area home sales price rose 24% from the first quarter of 2020 to the first quarter of 2021.
For context, housing prices here increased 10% from May 2019 to May 2020, Higgins said.
There are a handful of reasons home values are skyrocketing.
People want to come here. It’s common for people from Western Washington, Oregon and California to sell their homes and use the profits to buy comparatively cheap ones in Spokane. COVID-19 accelerated that trend, Higgins said.
Lumber prices are at record highs, too. And homeowners can be reluctant to sell, despite the attractive sales prices, because they’re afraid they won’t be able to find a new place to live.
But virtually everyone agrees that there’s one key reason housing prices keep climbing.
“It’s driven by extremely high demand and extremely low inventory – record low inventory,” he said.
Today, the Spokane area has a roughly two-week supply of homes on the market. That means that all of the homes currently for sale will, on average, sell within two weeks. In the past, there might have been four months of inventory available.
New home construction declined after the housing bubble burst and the Great Recession hit in 2008. Higgins said today’s supply shortage is due to more than a decade of underbuilding.
“It’s caught us now,” he said. “There’s no quick solutions to the problem. It’s a long-term issue. We’ve got to build more houses to meet the demand.”
People who own property are, for the most part, the winners in this scenario, Higgins said. First-time homebuyers are the losers.
Higgins explained that people often buy progressively more expensive homes. In order to do that, it helps to own property that you can then sell as you trade up for a better place.
“If you don’t get on the ladder, that doesn’t bode well for the future,” Higgins said.
Buying a home in Spokane is fiercely competitive. Sellers can get offers almost the instant they put their property on the market. They might get a handful of offers, whereas in the past it would have been common to only get one.
Potential buyers are willing to pay tens of thousands of dollars over the asking price. Higgins said 18% of buyers are paying in cash, up front.
“Everything that hits the market has so many offers on it that it brings out the crazy in everybody,” Clark said.
Clark said he expects to see home values to go up for a while longer, but they can’t keep ticking upward forever.
“I don’t think we’re going to stay at this pace for another year,” he said. “I don’t know how we could. I don’t see the market crashing or a bubble bursting, but I can certainly see and anticipate the market slowing down to where we get to a more even playing field between buyers and sellers.”
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