Spokane economy outlook provides some hope for real estate sales

While home sales remained somewhat flat in 2025 in Kootenai and Spokane counties, good job and wage numbers and 30-year mortgage rates that dipped below 6% this week could provide the catalyst for an improved real estate market.

Matthew Clarke, a vice president at Washington Trust Bank, said Idaho is among those states leading the nation in job growth over the past four years at 2%. Over that same time, the national average was 1.35%. Washington trailed somewhat at about 1% job growth.

“Jobs create income. Income fuels spending and spending is still responsible for roughly two-thirds of economic growth,” Clarke said Thursday during the 2026 Real Estate Market Forum at the Spokane Convention Center.

Most of the jobs in Idaho have come from construction.

“When I’m looking at Washington, I’m not seeing the same kind of strength,” he said. “I’m also seeing something that’s different and similar to what I’m seeing at the national level.”

The job gains in the Evergreen State mostly have come through education and health care.

“A lot of the jobs that are being created in that space are typically at the lower end of the compensation spectrum,” Clarke said.

Those job gains in the Gem State have come through an influx of people moving in from Washington, Oregon and California.

Overall, Idaho again continues to outpace the national average over the past four years in wage growth with gains of 7.2%. Although part of that reason, Clarke explained, was that Idaho had been lagging in that area in years prior.

That compares with 4% increases in Washington and 3.6% over the same time period for the nation as a whole.

“The overall message I want to say to leave you with for both Idaho and Washington is that each economy is very much on solid footing as we enter into some policy and political uncertainty,” Clarke said.

But the overall economic picture also has some potential pitfalls, he said.

Clarke noted that he and Washington Trust economist Steve Scranton like to focus on what they call “affordability ratios.”

“We look at regional wages, regional home prices, where interest rates are and come up with what we believe is an appropriate monthly mortgage payment,” Clarke said.

Ideally, consumers should spend about 30% of their income to cover housing. Others at the conference noted that the median price for home sold in Kootenai County in 2025 was about $575,000 and the same metric for Spokane in 2025 was $406,000.

“At the national level right now, it’s 35%,” Clarke said of the income percentage going to pay for housing. “Spokane … is hugging right around the national average right around 38%.”

“But if you look at Coeur d’Alene, given the average home price and average monthly wage, it’s 72%. It drives home the point that it takes two incomes to support housing in both Idaho and Washington,” he continued. “And mind you, this is before all of those other expenses like insurance, energy and food.”

The high cost of homes makes it difficult for working families and younger people to buy.

Scranton noted that the mortgage rate has been flirting with 6%.

“For long-term rates to come down, one of two things has to happen,” Scranton said. “If inflation truly starts to come down … or one that we don’t want to see, of course, is that the economy develops problems and starts moving towards recession. That would definitely bring long-term rates down.”

Another speaker at the forum showed that building permits for new single-family homes in Spokane County had dropped to 146 in 2025 from 317 in 2024.

“Spokane has been the tale of two counties for permitting,” Scranton said, “because Spokane’s growth in permitting has been in the multifamily side” or in duplexes and apartments.

“Coeur d’Alene has still been more on the residential side. I would classify Kootenai County as looking more normal from what it’s been historically,” he said.

As for people being able to afford homes, Scranton does see some improvement.

“We have a fundamental supply problem,” he said. “We don’t have enough homes at the price level of what consumers need to be able to afford a house.”

But the inventories of homes in Spokane County, which is now up to 3.3 months, meaning that’s how long it would take to sell all the homes currently listed for sale, has ticked upward. The supply of homes in Kootenai County is about 2.8 months.

“I would say we need more … inventory in order to be able to address this affordability issue,” he said.

He noted that through normal attrition, baby boomers are no longer the most populous generation.

“The millennial (generation) is the biggest group now,” Scranton said. “They want to own homes. They are still in apartments and they’re saying, ‘I’ve got kids now. I’ve got pets. When is it gonna become affordable?’

“I don’t have your answers.”