Spokane Real Estate Market Update: Trends, Challenges, and Opportunities

Seasonal Market Trends

Spokane’s real estate market has a distinct seasonal rhythm. Traditionally, sales start to pick up in May and remain robust through August. While there’s a dip in activity in late summer, September and October often see a resurgence. As the holiday season approaches, things tend to quiet down, with sales slowing during November and December. There's a brief uptick in January, driven by the "new year, new me" mentality, before the market gradually starts to warm up again in spring.

Comparing Sales Volume: 2022 vs. 2024

A key indicator of the market's health is the number of transactions. In the busiest month of 2022, there were 704 home sales in Spokane's MLS. Fast forward to 2024, and the peak month saw just 523 sales, highlighting a significant slowdown. This drop is largely attributed to rising interest rates, which have made home affordability more challenging for buyers.

The Impact of Interest Rates on Home Affordability

The Federal Reserve's rate hikes have had a noticeable impact on the housing market. Higher interest rates mean larger monthly mortgage payments, making it harder for buyers to afford homes. Even those looking to upgrade, such as families moving from a two-bedroom to a larger home, face significantly higher costs due to the increased rates.

Inventory Trends and Supply-Demand Balance

As a result of fewer transactions, inventory has grown slightly. In August 2024, there were 1,252 homes for sale, compared to 1,039 in 2022. While this may not seem like a substantial increase, the combination of more homes on the market and fewer buyers has started to balance supply and demand. However, there is still a housing deficit in Spokane, with not enough homes to meet the needs of the population.

Addressing Housing Demand with Multi-Family Development

To alleviate the housing shortage, Spokane has seen a surge in multi-family housing projects, including apartments and townhomes. The city is actively incentivizing developers to build these types of properties to meet the growing demand. While this helps address the shortage, the demand for single-family homes remains high. Many people still prefer owning their own home over renting an apartment.

Challenges in New Home Construction

Meeting the demand for single-family homes is complicated by various factors. Rising costs due to inflation and increased regulatory requirements have made it more difficult for builders to construct new homes while maintaining profitability. Consequently, fewer new homes are being built, which further contributes to the supply-demand imbalance.

Recent Trends: Lower Interest Rates and Market Balance

Over the past few months, interest rates have started to come down slightly, prompting more buyers to enter the market. This increased demand has resulted in a more balanced market, where neither buyers nor sellers have a distinct advantage. However, future trends will depend on various factors, such as economic policies, election outcomes, and the potential for a recession.

Looking Ahead: Will It Become a Seller’s Market?

Spokane could see the market shift back in favor of sellers depending on economic conditions. Several factors will influence this, including the Federal Reserve's handling of inflation, the commercial real estate landscape, and regional growth. Spokane and the surrounding Coeur d'Alene area continue to experience strong demand, which is a positive sign for the future.

Need Guidance? We're Here to Help

Whether you’re looking to buy or sell a home, navigating the current market can be complex. The Manna Group is here to help you understand the pros and cons of your options. Reach out to us to discuss your real estate needs in more detail and get personalized advice.

For more information, contact Shane Bangle and the team at The Manna Group, your trusted Spokane real estate experts.