Buyers continued to find homes more expensive than ever in Spokane County as the median closing price hit $450,000 in May, but there are signs the market may cool.
The median closing price for homes and condos on less than 1 acre in May was a 20% increase compared to the $375,000 median in May 2021, according to data from the Spokane Association of Realtors.
The county’s previous all-time high median sales price was $430,000 in March.
Spokane Association of Realtors Executive Officer Rob Higgins said while he found last month’s record-breaking median price surprising, he anticipates steep price increases in the county to moderate later in the year.
“We’ll still see year-over-year increases, obviously, but I don’t think they will be close to 20% ,” Higgins said.
Last month’s median price reflects sales that occurred in April, when the market saw brisk demand from buyers looking to lock in lower interest rates, he added.
“With the mortgage rate increases, I think we’ll see that start to impact closed sales in June and July,” Higgins said.
Mortgage rates continued to inch downward last week, but remain significantly higher than last year, affecting affordability and purchase demand, Freddie Mac reported.
“Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing,” Freddie Mac wrote in its weekly mortgage rate report. “This is welcome news following unprecedented market tightness over the last couple years.”
As of Thursday, the 30-year average mortgage rate was 5.09% and the 15-year average was 4.32%, according to Freddie Mac.
With a 10% down payment of $45,000 and a 30-year mortgage, buyers would be looking at a monthly payment of $2,651 for a $450,000 home, according to Mortgagecalculator.org.
With a 20% down payment of $90,000, buyers can expect to pay around $2,238 per month.
Downtown Spokane had the greatest median closing price at $677,500 in May – reflecting four sales – followed by a $482,500 median in Spokane Valley and $472,500 in south Spokane. The median on the West Plains was $455,995, while north Spokane’s median was $400,000, according to the Realtors association.
Developers are looking to capitalize on larger lot sizes and vacant land with space for subdivisions in Spokane Valley, Taelor Fayette, said broker with Professional Realty Services and lead Realtor of Impact Real Estate.
“Developers are playing to our needs by finding room to build, and the homes they build are costing more because of the overall inflation in materials,” Fayette said. “So the Valley has more homes at higher prices.”
North Spokane has been popular among first-time homebuyers, some of whom were able to take advantage of low interest rates in the past few years, Fayette said.
In Spokane County, 633 single-family homes and condos on less than 1 acre sold in May, a 10.8% decrease compared to 710 homes in May 2021, according to data from the Spokane Association of Realtors.
Fayette anticipates interest rates will continue to rise, resulting in an uptick in available homes that will remain on the market longer.
The local market is transitioning from a place where buyers had little to no power in negotiating prices to now having a seat at the table, Fayette said.
“I’m having conversations with clients and industry peers daily,” she said. “I’m reassuring them that their fear of a fall ought to shift to awareness of a leveling of the playing field.”
The county had 955 new listings in May, a 14.9% increase compared to 831 new listings in May 2021.
The county also had less than a month of inventory in May. That means it would take less than a month to sell all the available homes on the market.
However, inventory last month was up 93.1% when compared to May 2021.
The national median existing home price for all housing types in April was $391,200, up 14.9% from $340,700 in April 2021, according to the National Association of Realtors. May data will be released later this month.
Fayette encourages buyers to prepare for buying a home. That includes ensuring financing is in place and optimizing credit to obtain the best interest rate, she said.
“We may not see 15%year-over-year price growth, but Spokane is still one of the most affordable and desired places to live,” she said. “More people will move here and be a part of a healthy growth rate in our economy and population. Our focus as a community needs to be on sustaining that growth well.”
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