Spokane County homebuyers might be finding they have more leverage when purchasing a home this fall.
The county’s housing market, which was red hot in the summer with bidding wars and homes going under contract within days, continued to level off in September.
The median closing price for homes and condos on less than 1 acre was $409,950 in September, a 7.9% increase over September 2021’s median of $380,000, according to the Spokane Association of Realtors. The median price was $416,450 a month before.
Increasing mortgage rates, which hit a 20-year high on Thursday, have caused hesitancy among some buyers and slowed home sales.
As of Thursday, the 30-year average mortgage rate was 6.92% and the 15-year average was 6.09%, according to Freddie Mac
“The increase in interest rates, I think, can cause a little fear from buyers,” said Tiffany Claxton, CEO of the Realtors association. “I think inflation has also played a factor and as interest rates continue to increase, people are trying to figure out how that’s going to play in their average mortgage price.”
In Spokane County, 618 single-family homes and condos on less than 1 acre sold in September, a 27.3% decrease compared to 850 homes in September 2021, according to the Realtors association.
Despite a decrease in home sales last month, the market has not completely leveled out, partly because of a persistent housing shortage, Claxton said.
The county’s housing inventory was 1.8 months in September, a 73.1% increase compared to less than a month of supply in September 2021. That means it would take nearly two months to sell all homes listed on the market.
The last time housing inventory in the county was at a supply of 1.8 months was in June 2019, according to data from the Realtors association. A balanced market – favoring neither buyers nor sellers – typically has about six months of inventory.
“It’s turning toward a buyers’ market, but we’re not there yet,” Claxton said. “Now, a buyer has the opportunity to look at three, four or five listings and the ability to add back in inspections and contingencies, whereas during the last two to three years, it has been so competitive that buyers were removing contingencies and putting in all cash offers with a 15-day close.”
The boost in inventory is a promising sign the local housing market is becoming more balanced, Claxton added.
Downtown Spokane had the greatest median closing price in September, at $477,000, followed by a $459,250 median in Spokane Valley and $436,800 in south Spokane. The median on the West Plains was $395,000, while north Spokane’s median was $363,000, according to the Realtors association.
Spokane’s North Side tends to have a lower average sales price because homes are typically older and aren’t at a premium like historic properties on the South Hill or new construction in Spokane Valley, said Dallas Becker, designated broker for Windermere North Spokane.
“The availability of property and lower-than-average sales price have been a bit of magnet in north Spokane for two to three years,” Becker said. “People were looking for a home that fits their budget and weren’t nearly as selective.”
“Now, they are selective again,” Becker continued. “This is consistent across the market. People moving into town are looking for proximity to the central core and we’re still 25 minutes within downtown Spokane.”
North Spokane continues to attract out-of-area and first-time homebuyers because of its affordability compared to other areas of the region, he said.
“Because of affordability, it’s only natural first-time homebuyers are going to navigate to north Spokane,” he said. “We are seeing a lot of our older neighborhoods re-energized, which is great.”
Mortgage applications nationwide decreased 2% for the week ending Oct. 7, according to the Mortgage Bankers Association.
“The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes.”
In Spokane, Canopy Credit Union has seen fewer mortgage and home loan refinancing applications amid rising interest rates, said Jessica Sengbusch, real estate loan officer and underwriter for Canopy Credit Union.
“We are seeing a lot less mortgage refinances coming through because most people have lower rates than what they are showing right now, and we are seeing a lot less purchase applications,” Sengbusch said. “The rise in interest rates affects their purchasing power, what they can be approved for and makes it a lot more expensive.”
The credit union, however, is experiencing an increase in requests for home-equity lines of credit as people opt to stay put and fix up their current homes, Sengbusch said.
“A lot of members are upgrading their homes versus going out to buy a new one,” she said.
The shift in interest rates is prompting Canopy Credit Union to consider offering its members adjustable rate mortgages – a loan with an interest rate that changes based on the market – meaning consumers’ payments could go up or down throughout the life of the mortgage.
Adjustable-rate mortgages may allow credit union members to get approved for a higher dollar amount with a lower interest rate in the beginning of the loan, Sengbusch said.
“At Canopy, we sit down with members and make a game plan to see where they are at,” Sengbusch said. “If you can qualify with rates being high and if it’s a payment you can afford, you can look at refinancing in the future.”
Sengbusch recommends that homebuyers plan ahead and get preapproved mortgages.
“When rates are higher, there is less competition in the market. You may be able to get a home easier than when rates are low,” she said. “Now, with high rates, you are definitely seeing an influx of inventory and more sellers are paying closing costs again.”
For home sellers to remain competitive in the local market, they should realize there’s a shift occurring, Claxton said.
“We’re not in the same place we were in six months to a year ago, where the market was warranting much higher listing prices,” she said.
She advises prospective sellers to work with a Realtor who is knowledgeable with local market dynamics.
“They are looking at current trends and the ebb and flows of the market to make sure your property is competitive with those around it and that your home can be sold,” she said.
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