Homebuyers in Spokane County found more available properties in June as rising interest rates slowed the intense competition that included multiple offers and cash bidding wars.
Housing inventory in June reached its highest level in more than two years, exceeding more than a month of supply for the first time since May 2020, according to the Spokane Association of Realtors. That means it would take a little more than a month to sell all properties listed on the market.
For comparison, the county’s housing inventory was about 12 days in June 2021.
“We’re seeing less cash offers and so you are going to have opportunity, especially with more inventory, for buyers to go out there and be successful with home purchases,” said Tom Hormel, Realtor at RE/MAX of Spokane and 2023 president -elect for the Spokane Association of Realtors.
The median closing price for homes and condos on less than 1 acre was $440,000 in June, a 15.6% increase over June 2021’s median of $380,500, according to the Realtors association.
June’s median receded from the record-breaking $450,000 median recorded a month prior.
South Spokane had the greatest-median closing price at $500,000 in June, followed by a $485,000 median in Spokane Valley and $462,750 in downtown Spokane.
The median on the West Plains was $410,000, while north Spokane’s median was $380,000, according to the Realtors association.
In Spokane County, 730 single-family homes and condos on less than 1 acre sold in June, a 9.2% decrease compared to 804 homes in June 2021, according to the Realtors association.
While an uptick in housing inventory is promising, buyers should anticipate the market to remain competitive.
A balanced market – favoring buyers nor sellers – typically has about six months of inventory and there’s still a shortage of housing units in the county, Hormel said.
“We can’t build fast enough to overcome that, so demand is going to continue because supply is still massively low,” he said.
An increase in new listings is a bright spot for buyers with 805 homes available as of June 8, a 137.5% increase over 339 homes during the same time in June 2021.
Sellers, who wanted to change homes but were unable to find anything earlier in the year, are no longer waiting it out, Hormel said.
“I think they had fear they would put their home on the market and not be able to find something,” Hormel said. “Now, with inventory rising, they can put their home on the market and find something.”
Sellers are also motivated to put their homes on the market due to economic uncertainty, said Ken Sax, a broker who oversees about 770 licensees in Washington for Professional Realty Services International.
Sax said that as a result of rising interest rates, he’s seeing more price reductions on homes and rate buydowns, which is a financing technique where buyers attempt to obtain a lower interest rate for the first few years of a mortgage.
As of Thursday, the 30-year average mortgage rate was 5.3% and the 15-year average was 4.45%, according to Freddie Mac.
With an increase in supply, the county’s housing market may begin to normalize with prices holding steady or slowing, Sax said.
“That’s just supply and demand,” he said.
Sax said he continues to see risky buyer behavior in the market, such as waiving contingencies or home inspections.
When buyers waive mortgage contingencies, they forfeit their deposit to the seller if financing falls through.
There are “creative transactions that can have unintended consequences,” Sax said. “We are still seeing risky behavior by buyers sticking their neck out more. They need to really understand what is at stake.”
Sax encourages buyers to work with a local lender to help them navigate the process of obtaining a mortgage loan.
Rising interest rates created a subtle, but anticipated, slowdown in mortgage loan applications, said Guy Ottersen, vice president of lending and member experience at Canopy Credit Union.
“It hasn’t been a huge amount, but a decrease nonetheless,” he said, referring to mortgage loan applications. “We are seeing a nice uptick in home equity loan applications.”
Ottersen said he’s seeing a rising interest for Canopy’s manufactured home and land loans, in addition to home equity loans for which the credit union offers a fixed-rate.
Canopy will soon roll out a HomeReady program that allows qualified buyers to purchase a home with a down payment as low as 3% of the purchase price, Ottersen said.
Otterson advises potential homebuyers to start the mortgage preapproval process early and be aware of each lender’s annual percentage rate when shopping round for loans.
Veros Real Estate Solutions, a Santa Ana, California-based real estate valuation data and predictive analytics company, on Thursday released a report forecasting that home prices nationally will appreciate 4.5% over the next 12 months, a drop from 7.1% predicted during the first quarter of this year.
A 4.5% average annual appreciation forecast signifies the national housing market is beginning to normalize from the overheated pandemic market of the previous two years, the report said.
“Now that the Fed has finally gotten serious with fighting inflation, interest rates have moved up significantly and that is causing demand in some markets to slow significantly,” Eric Fox, chief economist at Veros Real Estate Solutions, said in a statement.
Veros named the Spokane metro area as the second-strongest performing market over the next 12 months with 8% home price appreciation. The top metro area was Raleigh-Cary, North Carolina, at 8.1%.
Lilac City’s housing market will continue to require patience from both buyers and sellers, Hormel said.
“I think we’ll have a brisk summer. I think we’ll see inventory rise a little bit more, but I don’t know how much more,” he said.
Hormel advises sellers to avoid overpricing their homes.
Although the market will be brisk, it’s not the same playing field as last year when homes were sold within days and fetching dozens of multiple offers, he said.
“Please don’t expect a two- or three-day sale with 15 offers,” Hormel said. “That’s not the market we’re in.”
Sax agreed, saying that Spokane County is still a seller’s market. But it’s going in a direction favorable to buyers.
“A neutral, balanced market is six months,” he said. “We have a long way to go, but the pendulum is starting to swing the other way.
“For a seller, it means sell now. Because the longer you wait, I think it will equate to less of a sales price.”