Homebuyers in Spokane County can’t seem to catch a break as the median home price reached another all-time high in March.
The median closing price for homes and condos on less than 1 acre soared to $429,998 last month, a 26.3% increase from the $340,550 median price in March 2021, according to data from the Spokane Association of Realtors.
The county’s previous all-time high median sales price was $400,000 in February.
Strong demand and lack of available homes are continuing to drive up prices, said Rob Higgins, the association’s executive officer.
Higgins initially thought the county’s double-digit price increases would stabilize this year after the frenzied market of 2021, but activity continues to accelerate with multiple offers and properties selling for thousands of dollars above asking price.
“I was thinking we weren’t going to see those numbers this year. I still think we’ll slow down in the second and third quarters because interest rates will be going up,” he said. “Traditionally, that will impact the percentage increase of the closed sales price. That’s generally the case, but we’ll see if it applies this time.”
Spokane Valley homebuyers are grappling with even higher prices as the median reached $485,000 in March, according to Realtors association data.
Spokane Valley is a desirable area for many homebuyers because of larger home lots, desirable schools and shorter commute times.
Spokane Valley is drawing a combination of out-of-area buyers, retirees, investors and millennials, some of whom are paying anywhere from $40,000 to $60,000 over asking price, said Donlee Marlin, broker with Live Real Estate.
“You don’t pay asking price ever. But once you hit over $500,000, it’s a different threshold,” she said. “Then, you aren’t seeing that many multiple offers.”
The median closing price in March was $450,000 in South Spokane, followed by $419,998 on the West Plains. North Spokane’s median was $370,000, while downtown’s median was $297,000, according to the Realtors association.
“I think we are continuing to see the same trends – low inventory and new construction cannot keep up,” Marlin said. “And the cost of goods is so much higher, so that’s driving up the cost of a home, especially a new home.”
“I do think, in time, things will change as building catches up a little bit,” Marlin added.
The national median existing home price for all housing types in February was $357,300, up 15% from $310,600 in February 2021, according to the National Association of Realtors. March data will be released later this month.
Mortgage rates increased 1.5 percentage points over the past three months, marking the fastest three-month rise since May 1994. The increase in mortgage rates has softened purchase activity as the monthly payment for those looking to buy a home rose by 20% from a year ago, according to Freddie Mac.
The 15-year average mortgage rate was 3.91% and the 30-year average was 4.72%, Freddie Mac reported last week.
A 1 percentage point rise in interest rates can make a huge difference in buying power, especially when home prices are around $500,000. Rising interest rates prompted some previously undecided buyers to make the leap to homeownership, Marlin said.
Millennials, who make up the largest share of homebuyers in the nation, could decide to temporarily take a break from the market and remain in rentals. Homeowners looking to move into larger properties might also opt to stay put amid concerns of finding another home in Spokane’s competitive market, Marlin added.
Sales data show that about 19% of homes sold in Spokane Valley last month were built in 2019- 2021, compared to 8.9% in Spokane. Because the homes were built amid a nationwide lumber shortage and rising building costs, it could explain why those properties were more expensive, said Tim Olsen, broker with John L. Scott Real Estate.
Olsen echoed that he’s also seeing multiple offers in the Spokane Valley market. While there is demand in all areas of Spokane Valley, potential buyers express the most interest in living within the Central Valley School District, he added.
Some 562 single-family homes and condos on less than 1 acre sold in March, a 5.2% decrease compared to 593 homes in March 2021, according to data from the Spokane Association of Realtors.
The county had 739 new listings in March, a 4.3% decrease compared to 772 new listings in March 2021.
The county had less than a month of inventory in March. That means it would take less than a month to sell all the available homes on the market.
Olsen anticipates inventory will improve heading into the summer. “We’ll start to see more homes come on the market now into June,” he said.
Although it will be tough, first-time homebuyers still have a shot at finding a home, Higgins said.
“I would tell them to make sure they get all their financing in place … Over the last couple of years, it has been pretty difficult with multiple offers and cash speaks a lot,” he said. “Low- and moderate-income homebuyers are being squeezed like never before.”