Are Home Prices Finally Coming Down in Spokane?

The question on everyone's mind in Spokane, Washington, is whether home prices are finally coming down. Let's dive into the latest data to uncover the trends and what they mean for buyers and sellers.

The Current Market Landscape

The latest figures show a slight decline in home prices. From April to May, the median home price dipped from $435,275 to $435,000—a 0.1% decrease. However, when comparing year-over-year, prices have actually risen by 2%, despite higher interest rates over the past year. This indicates that while there's been a minor month-over-month decrease, the overall trend still leans towards gradual appreciation.

Market Predictions

Predicting future trends in the real estate market is always challenging. If interest rates drop slightly, even to around 6.9%, we might see an uptick in market activity and potentially higher prices. However, if rates hover around the higher range of 7.3% to 7.5%, the peak we've seen in May might hold for the rest of the year, mirroring last year's pattern.

Economists' forecasts have shifted, with less optimism about significant interest rate reductions in the near term. Initially, a drop to mid-5% was anticipated by the end of 2023, but now it appears we may not see those levels until 2026 or 2027.

Factors Influencing the Market

One notable factor affecting the Spokane market is the surge in new listings. May saw over 1,200 new listings, a 28% increase from last year and a 15% rise from the previous month. This influx has slowed the market slightly, leading to higher active inventory. As of May, there were 1,400 active listings, up 44% from last year.

Inventory and Market Conditions

Breaking down the data by price distribution reveals interesting trends. The most inventory is found in the $400,000 to $500,000 range, aligning with Spokane's average price point. However, the number of homes listed and sold in different price ranges shows a diverse market landscape:

• Under $200,000 and above $1 million: Limited inventory and fewer transactions.
• $300,000 to $500,000: High concentration of both listings and sales.
• Above $500,000: Significant inventory increases, particularly in higher price ranges, indicating a shift towards a buyer's market in these segments.

Months of Inventory by Area

The months' supply of inventory is a crucial metric for understanding market dynamics. Overall, Spokane has 2.3 months of inventory, still within the seller's market range but edging towards balance. Here's a breakdown by area:

• Spokane Valley: Below $500,000, inventory remains low, but above this threshold, it quickly transitions to a buyer's market. For example, between $600,000 and $750,000, there's an 11.5-month supply.
• Green Acres: Shows similar trends with more inventory above $500,000.
• City of Spokane: Generally a seller's market, but above $750,000, it moves towards a balanced or buyer's market. Notably, there's a 24-month supply for homes above $1.5 million.
• Liberty Lake: Mostly a seller's market below $750,000.
• Mead: Interesting trends with a significant inventory at the $500,000 to $600,000 range, suggesting competitive conditions for sellers in this segment.

Impact of Distressed Listings

Despite some speculation, distressed properties (foreclosures, short sales) remain scarce in Spokane, making up only 0.2% of listings. This low percentage indicates that buyers looking for significant bargains may need to connect with wholesalers or seek off-market deals, typically requiring cash or hard money loans.

The Spokane real estate market presents a mixed picture. While some segments are shifting towards a buyer's market, others remain competitive for sellers. Understanding the specific dynamics of your desired price range and area is crucial for making informed decisions. Whether you're buying or selling, staying informed about these trends will help you navigate the market effectively.

If you found this analysis helpful and want to discuss your real estate needs further, feel free to reach out. Whether you're moving in, out, or within Spokane, I'm here to help guide you through the process.