Why is it So Hard to Buy a Home in Spokane?

Feeling like it's impossible to buy a home in Spokane, Washington? You're not alone. Let's break down the numbers to understand why and explore some potential relief in the future.

Economic Overview

In 2021, home prices were already high, but the situation has only worsened. According to economist Matthew Gardner, the annual income required to afford a home has significantly increased from 2021 to 2024, exacerbated by rising interest rates.

Supply and Demand Issues

The primary reason prices haven't dropped is due to supply and demand. There's a low supply of housing despite high demand. Even with high prices and interest rates, buyers are still active. Well-priced, desirable homes sell quickly, while others languish on the market.

Current Market Conditions

For those ready to buy, this could be an opportune time. There's less competition, and sellers are more willing to negotiate. This dynamic may change if interest rates drop, bringing more buyers into the market and potentially driving prices up again.

Home Price Trends

In Q1 2021, the average home price in Spokane was $350,000. By 2022, it rose to $425,000. Despite a temporary drop to $407,000 in 2023, prices have rebounded to $426,000 in 2024. While prices have stabilized, interest rates have nearly tripled, making homes less affordable.

Increased Costs

Higher home prices mean higher down payments and closing costs. Additionally, the cost of maintaining a home has risen. From 2021 to 2024, the average monthly cost for maintaining a home increased from $565 to $686.

Principal and Interest Payments

In 2021, the average monthly mortgage payment was $1,400. By 2024, this has increased to $2,230, largely due to higher interest rates. Other costs, such as property insurance and taxes, have also risen, making homeownership even more expensive.

Income Requirements

In 2021, an average income of $76,000 was sufficient to afford a home. By 2024, this figure has jumped to $130,000. This assumes 31% of income goes towards housing payments and 12% towards other debts, resulting in a 43% debt-to-income ratio.

Future Projections

While interest rates might drop, leading to increased affordability, home prices are expected to remain relatively flat. The hope is for a more balanced market, but drastic price reductions are unlikely.

Strategies for Potential Buyers

To afford a home in this market, potential buyers need to save more, reduce debt, and explore grant opportunities for down payments. Reach out to local nonprofits and credit unions for assistance.

Buying a home in Spokane is challenging, but understanding the market dynamics can help you navigate these difficulties. Prepare financially and stay informed to increase your chances of finding the right home.