Rising interest rates had little effect on Spokane County’s real estate market in April as the median price remained above $425,000 for the second consecutive month.
The median closing price for homes and condos on less than 1 acre was $426,248 last month, a 20.1% increase from the $355,000 median price in April 2021, according to data from the Spokane Association of Realtors.
“It is still a very strong market in Spokane, although we have a headwind of rising interest rates,” said Rob Higgins, executive officer of the Spokane Association of Realtors.
Emblematic of the strong market is south Spokane, where the median closing price last month soared to $528,000. That’s an all-time high for the area, according to data from the Realtors association.
The South Hill has long been a popular residential area with its Craftsman-style homes, proximity to downtown and top-ranked schools, said Marissa Lewis, broker and sales manager at John L. Scott Spokane South Hill.
“They’ve built fun communities like the Perry District that has been exponentially growing and has been so desirable lately,” she said.
The South Hill is attracting a combination of existing Spokane residents and out-of-area buyers, some of whom are paying cash for properties, Lewis said. Cash offers made up 20% to 25% of sales in the past two years.
“We are seeing a good chunk of people coming from out of town and a lot of professionals and doctors who want to be close to the hospital,” she said.
The median closing price in April was $464,100 in Spokane Valley, followed by $412,303 on the West Plains. North Spokane’s median was $365,000, while downtown’s median was $360,000.
There were 580 single-family homes and condos on less than 1 acre that sold in April, a 10.8% decrease compared to the 650 homes sold in April 2021, according to data from the Spokane Association of Realtors.
The county had 852 new listings in April, a 9.2% increase compared to 780 new listings in April 2021.
The county had a little over half a month of inventory in April. That means it would take less than a month to sell all the available homes on the market.
While it was typical for homes in the Spokane area to sell $30,000 to $40,000 over list price in 2021, buyers went into overdrive this year, paying anywhere from $90,000 to $100,000 over asking price, Lewis said.
“I can only speak to what I’m seeing, but a lot of it is buyer fatigue,” she said. “They are trying to win the game and are going higher and higher to be done with the process.”
Mortgage rates continued to rise last week as the 30-year fixed average rose to 5.27% – its highest point since 2009, according to Freddie Mac.
Spokane County’s slight month-over-month cooldown could signal multiple offer situations will be less intense with fewer homes selling above list price, but the market is expected to remain brisk, according to a recent John L. Scott market report.
“Looking ahead, although we anticipate the number of unsold homes on the market will increase on a seasonal basis, there will still be elevated buyer focus on each new listing,” J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, said in the report. “Despite higher interest rates, there is still a significant backlog of buyers looking to purchase a home.”
Higgins also anticipates housing demand in Spokane County will remain strong, but rising interest rates may temper rapid price appreciation seen early in the pandemic.
“… I think we are going to see a slowdown in rapid price appreciation,” he said. “(Rising interest rates) will put some out of the market for a while until they can save up more money to purchase a house.”
Eric Etzel, president of the Spokane Association of Realtors, said rising interest rates will affect overall purchasing power, but it’s too early to tell how many buyers could be priced out of the market as a result.
“Some buyers will be priced out of market. If they want to buy a house, they might have to adjust their purchase price to accommodate what they can afford,” he said. “I still think there are buyers out there that will have the financial strength to make an additional down payment to bring down their overall mortgage.”
He encourages buyers to be patient and remain optimistic if they find themselves in multiple-offer situations.
“The right house is out there for them. I’ve been telling buyers that for the last few years,” he said. “Sometimes it takes several offers.”
Lewis echoes that Spokane will remain a sellers market in the near future, although interest rates may cause a slight slowdown from the frenzy that has occurred during the pandemic.
“Multiple-offer situations will continue to happen, but we will see less of it,” she said.
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