The TRUTH About the 2023 Spokane Housing Market

  Spokane home prices have declined 12% since April 2022, but this could be the first time ever where that actually doesn’t matter.    Now, don’t get me wrong, 12% is a big number and it sucks if you’re stuck right in the middle of it trying to buy or sell a house today or you bought your house in the last 12 months and have watched the price go up and then fall right back down.    And maybe this is a bad analogy but the housing market is just going through a period where it’s more like the stock market. Over the last 100 years, there’s been over 25 bear markets meaning stocks dropped 20% or more over a short period of time. That means we see a 20% decrease every 4 to 5 years.    Can you imagine if the housing market went through a decrease of 20% or more every 4 to 5 years? People would be so panicked all the time, even more than they currently are.    Now you can have extreme drops like what we see in Bitcoin or Tesla stock but even when those riskier investments go through a period of rapid increase and then fall off, many people still come out on top and make money.    These people are the ones that have been in the game the longest and that’s what ties us back to the Spokane housing market.    Over the last 2 years alone, prices have increased 28% and in the last 5 years prices have increased 88%.    So looking at a 12% decrease really doesn’t effect the vast majority of homeowners in the Spokane area.    I think we can agree that we are still pretty far from any type of significant housing crash, but we could potentially be getting closer, especially if that’s what you’re hoping for.    Which makes me curious, what are you hoping will happen? Are you a homeowner that is hoping prices continue to go up but maybe not as extreme as they have in the last few years? Or are you a buyer and hoping for the market to crash so you can jump in? Let me know down in the comments, I would love to hear from you.    So how do you plan for 2023 as a home buyer or seller? Interest rates look like they might have leveled out a little, home prices have bounced back up in the last month, so what should you expect? That’s what we’re going to talk about so you can make an informed decision.    To determine where the Spokane housing market might be going, let’s take a look at what is happening today.  Currently in the Spokane MLS, there are one thousand one hundred and twenty three homes available ready to accept an offer. That’s an increase of over 400% from this time last year when we had 273 active listings available. Now that market was a totally different market when interest rates were literally half of what they are now so to give ourselves a better idea of what normal is, the three years prior to covid averaged seven hundred and ninety eight homes for sale so our inventory is still up almost 70% from a normal market.    It’s nice to take a look at that time period and compare it to where we are today because it was a little more normalized. There weren’t a ton of multiple offer situations, maybe a few here and there but buyers weren’t getting insane deals on properties every day either. Actually the days on market and the months supply of inventory were pretty similar to what they are today but we’ll dig into that later in the video.    The thing to note about our current active inventory is that even though it is piling up, there are actually less sellers bringing their home to the market than there were this time last year, about forty percent less.    This is because at least a third if not a half of all homeowners in the United States have an interest rate of less than 3%.    They’re just hunkering down with their cheap money and making do with what they have because in order to make an upgrade in a house their money payment would increase significantly.    The other point to understand in regards to inventory is called months supply of inventory. When trying to make an informed decision or just get to know what the overall health is of a real estate market, this is one of the best data points to look at because it’s taking a direct look at the correlation between supply and demand.    This is a great data point to look at what is happening right now because you can literally look day by day at how many homes are accepting offers, how many homes are selling which helps keep track of how many buyers are in the market and how many sellers are stuck on the market. This is the only data point in real estate that can be really calculated at this granular level without needing to zoom out and look at the market over a month-long period such as calculating the average sold price.    So as I’m filming this video, I’m looking up the current December data myself because it still is December and the Spokane MLS won’t release the December numbers until January, but here’s what I’m coming up with. The Spokane MLS shows that in November 2022 we had 2.1 months supply of inventory. Meaning if no homes came on the market, it would take 2.1 months for all of them to sell.    Looking at what has sold in the last 30 day period, we are sitting at 2.7 months of inventory here in Spokane. We haven’t seen a 3 month supply of inventory in Spokane since the middle of 2016 so hitting that would be pretty significant.    In comparison to last year, we had less than 2 weeks of inventory when things were crazy but to show you how far off we are from a housing crash like the last one, in December 2009 there were seven and a half months of inventory. There were only 500 homes sold with over 3500 homes sitting on the market.    So I could end the video right here and say guys, we’ve got a long way to go from 1100 active listings to 3500 active listings but there’s still more information so that you can go into 2023 a real estate rockstar. Just remember that less than 3 months is still considered a sellers market and above 6 months is a buyers market so if you are feeling pain in the market right now, then you better hope that we don’t see 6 months supply because only 40-50% of homes actually sell in a market like that which isn’t fun really isn’t fun for anybody.    And I know most of you are saying, alright Haydn, we know you’re a real estate agent and even though we will give you a call when we’re ready to buy or sell here in Spokane, you’re only factoring in your knowledge as a local expert and not taking into account all of the national concerns like the recession or interest rates.    Which you’re totally right! I have absolutely no idea what’s going to happen, nobody does! Not the president (well maybe the president) but it sure doesn’t seem like Jerome Powell does. We’ve gone through 4 rate hikes this year but as of the Fed’s last monetary policy meeting on December 14th, they showed us that they are slowing the rate of increase on interest rates. Now Powell is very quick to say that he doesn’t believe that we should be celebrating or that we’re even close to where we need to be to get inflation down, the fact that they didn’t increase rates as much as we thought they did was really good news for mortgage rates.    Mortgage rates aren’t directly tied to the federal reserve interest rate but they do react to what the Fed does and what they believe they will do in the future. So when there was even an ounce of good news that they increased the rate less than predicted, interest rates dropped and even fooled us into thinking we might see something in the 5% range for christmas but that didn’t happen.    The best thing we can do in regards to interest rates is just be prepared for what could happen and Nadia Evangelous, economist from the National association of realtors breaks this down into 3 options.    “In scenario #1, inflation continues to remain high, forcing the Fed to raise interest rates repeatedly. That means mortgage rates will keep climbing, possibly near 8.5 percent. In scenario #2, the consumer price index responds more to the Fed’s rate hikes, and there is a gradual deceleration of inflation, causing mortgage rates to stabilize near 7 percent to 7.5 percent for 2023. In scenario #3, the Fed raises rates repeatedly to curb inflation and the economy falls into a recession. This could cause rates to likely drop to 5 percent,” she explains.   So even if we do hit a recession, your home buying power may increase as rates tend to drop once we’ve hit that. If that is a possibility and something you’re looking forward to, I would make sure that any money you plan on using for a home purchase is on a high yield savings account and not sitting in stocks. You’ll want to make sure you have paid off as much if not all of your debt because credit card interest rates will continue to rise and you want to keep your cash safe if you plan on using it within the next couple of years.    And even though we are seeing a lot of articles about how 4 out of 5 economists believe we will be in a recession or there is a 70% chance of a recession, many people believe it will be mild and nothing that will change our lives long term.    So we started this year with probably the toughest, I won’t even say probably, we did start 2022 in the toughest buyers market Spokane has ever seen. Not enough inventory, way too many buyers, interest rates at an all time low. It was basically guaranteed that you would be competing against 5-10 other buyers who wanted the home just as bad as you. I’ve been in situations where buyers were paying well over one hundred thousand dollars above the asking price which in Spokane is 20-25% of the purchase price.    If you didn’t have a year or two of your salary in the bank and ready to put it all into the house, it was going to be very tough for you to get your offer accepted.    We saw a massive change in the market with a rapid increase in interest rates that caused the affordability in Spokane to plummet as people could afford the two thousand dollar a month payment on a four hundred thousand dollar house when interest rates were low but now that same house has a payment of 3600 dollars or more per month.    So where we are today is a market where buyers and sellers are beginning to understand the new normal. Over the last couple months it was very difficult in terms of communication and negotiation because sellers were stuck in 2021 and buyers were already in 2023 in terms of their mindset and how they wanted the transaction to go.    We’re starting to see a lot more understanding now. Buyers are coming in with the offer they want but realizing it’s not a 2008 style housing reset that we’re going through and sellers are realizing that they will most likely have to give some concessions or make some repairs in order to get their home sold because they won’t receive multiple offers like they use to.    With this, my best guess for 2023 and many economists at the national association of realtors where the best housing information comes from, is that home prices will stay relatively flat. It’s likely that we’re hovering around the bottom of the dip we experience but nothing is being predicted to cause the prices to shoot up. Something drastic would have to happen either way that we just can’t predict. If somehow interest rates fell into the 4’s, I think we would start heading right back to the crazy market of 2021, but if they hit 8 or even 10% like some people are predicting in order to curve inflation, I think our market would stall completely or hit what we call stagflation. No one would be buying or selling. We would have very few new listings and very few sold meaning there would be very little activity in the market for both buyers and sellers.    So why I bring all this up is because if you are someone who is sitting on the sidelines, waiting for the perfect time to buy, I truly believe that right now is it. If rates go down, you can always refinance, and if rates go up you will be happy about the one you locked in. I’m currently running numbers on investment properties every day to see what I can find here in Spokane that will work because there are a lot more aspects to real estate than just the price and interest rate that make something a good deal.    My biggest advice is to just remain open minded, get pre approved and be ready for when the right opportunity comes up because before you know, you’ll have missed the bottom of the market and continue to rent or not make the move you’ve been dreaming about.    And if you’ve been considering selling in 2023, I don’t think you need to feel rushed to do so. The market is very slow right now and many buyers are discouraged by the lack of new inventory in the market so they aren’t getting pre approved and actively looking to buy.    So it might benefit you to wait a little until the Spring time when more homes are hitting the market because it’ll peak the interest of more home buyers and many of the homes listed for sale right now will expire and list down the road as well, starting the spring fresh and bringing some new life to our inventory. Plus if you’re looking to stay in the area, you’ll have more options to pick from unless something really stands out to you that is listed today.    What you should do is start prepping your home for sale now so that you can have an amazing listing when the time is right. Making your property stand out amongst the rest is extremely important right now so make a list of all the things you need to do whether it’s painting, some minor updates or planning for landscaping in the spring. I’m happy to stop by for 5 to 10 minutes and give you some quick and honest feedback on what you need to do to maximize your value for as little money as pocket because i can promise you in most cases it is not the kitchen or the bath remodel that will be a good investment.    And if you are looking to make a move in or around Spokane, knowing the good but especially the bad is very important so make sure to check out my top 10 things to know before you decide to live here.

View more

Key Advantages of Buying a Home in Today's Market

You may have heard that now is an excellent time to buy a home. But why should you consider making such a big purchase right now? Here, we’ll discuss three key advantages of buying a home in 2023 and how they benefit you as a potential homebuyer.   More Homes Are for Sale Right Now The number of homes available on the market is higher than ever before—which means that buyers have tremendous selection when it comes to finding their dream house. This also means that if you’re willing to shop around and look at multiple properties, you can find something that fits your budget and meets your needs. With so much inventory currently on the market, competition between buyers has decreased—giving sellers more room to negotiate on price.   Home Prices Are Not Projected To Crash Another advantage of buying a home today is that there isn’t any indication that home prices will crash in the near future. This means that you can rest assured knowing that purchasing a property now won’t lead to devaluation down the line. In fact, experts are predicting that housing prices will continue to rise over the next few years (albeit at a slower rate). So, purchasing now could even be seen as an investment—as long as you keep up with maintenance and repairs over time!   Mortgage Rates Have Risen, but They Will Come Down Finally, mortgage rates have recently risen due to inflation fears (which is normal for any economic cycle). However, experts predict these rates will come back down soon enough—and this could be an excellent opportunity for buyers who are considering taking out a loan or refinancing their current one. Interest rates are still historically low compared with previous decades, so even if they don’t come back down immediately, it might still be worth looking into securing financing while they’re low.   Buying a home is always an exciting process—but in 2023 there are some unique advantages for those interested in homeownership right now. Increased inventory gives buyers more options when shopping around; current projections suggest no forthcoming crash in housing prices; and mortgage rates remain relatively low compared with past decades (even though they have recently risen slightly). All in all, this makes for an ideal moment for those interested in buying their first or second home!

View more

Negotiating Power is on the Rise for Home Buyers

As the housing market continues to rebound post-COVID, buyers are discovering that their negotiating power has increased. In today’s market, there are several advantages that buyers can leverage to their benefit when shopping for a home. Here are two of the most common and advantageous strategies buyers can use when looking for a new home.   The Return of Contingencies Contingencies in real estate transactions offer protection to both buyers and sellers. For example, an appraisal contingency protects buyers from paying more than a property is worth and a financing contingency protects them from having to come up with additional funds if they cannot get approved for the loan they need. Many contingencies were removed during the height of the pandemic but as the market recovers, sellers are willing to include more contingencies in sales contracts, giving buyers more flexibility and peace of mind during negotiations.   Sellers Are More Willing To Help with Closing Costs In today’s market, many sellers are willing to offer help with closing costs in order to sweeten the deal and make it easier for potential buyers to purchase their homes. Depending on what kind of help you ask for, some or all of your closing costs could be covered by the seller at no cost to you – which can add up to considerable savings over time! Be sure to ask about this option when you start negotiations so that you know exactly what help you’ll have when it comes time to close on your home.   With interest rates still near record lows, now is an excellent time for prospective homebuyers to take advantage of their newfound negotiation power. By taking full advantage of contingencies and asking sellers for help with closing costs, savvy shoppers can get a great deal on their dream homes without breaking their budgets. So if you’re looking to buy a new home soon, remember these two strategies – they just might save you thousands in the long run!

View more