Friday, January 10, 2020 / by Dennis Isip
We are finally here, Spokane has experienced 20 years of real growth in real estate. If you bough a home in 2000, it's very likely that your home may have doubled in value within the last 4 years. The typical home with 3-4 bedrooms, and 1 or 2 baths, with living space of about 1600 sq ft, was valued at $109,500 in 2000.
Today, assuming that you've kept up with its maintenance requirements, that house is now valued at $270,052. Further appreciation may yet continue in this upcoming year of 2020. However, we need to watch it very closely. As the data indicates, there has been a drop in number of homes sold in 2019, compared to 2018 and 2017.
There are 2 possible reasons: 1) Spokane is continued to be plagued by the extreme lack of housing inventory, or 2) the buyer demand (especially from out of town) is softening up.
There has been a dire shortage of homes for the significant part of the past 36 months. Inventory has been consistently hovering at 1 month. Back in 2010, inventory was about 9 months.
Data indicates that new construction has been increasing since 2011, however it is not nearly at the pace of growth that buyers are requiring. In addition, construction costs are significantly more (land, labor, material and new regulations are all contributing factors), compared to 10-15 years ago. As the result, most of the new homes available, tend to be way above the median prices.
Spokane's real estate market is really driven by people moving from the coastal cities (Seattle and Portland, and also from California). They are attracted by the low cost of housing in Spokane. It means that if the major markets are softening for whatever reason, there will be a relief in pressure to relocate.
However, it’s not that straightforward. There are 2 major employers that are supporting housing demand: Amazon new distribution warehouse in Cheney, and Fairchild Air Force Base’s expansion of their tanker fleet, bringing in 1000 more jobs. Amazon is rumored to bring in 1500-3000 new jobs.
In summary, it’s too early to tell if the dip in housing demand is just temporary, or an indicator of a trend reversal.
It will be my personal mission to follow the numbers very closely in this coming year. Subscribe to my YouTube channel to get the most recent updates.