Spokane County homebuyers may find they have more clout when shopping for a home this fall.
The county’s housing market, which was hot in the summer with bidding wars and homes under contract within days, continued to stabilize in September.
The median closing price for homes and condos on less than an acre was $409,950 in September, up 7.9% from the September 2021 median of $380,000, according to the Spokane Association of Realtors. The median price was $416,450 the previous month.
Rising mortgage rates, which hit a 20-year high on Thursday, caused some buyer hesitation and slowed home sales.
On Thursday, the 30-year average mortgage rate was 6.92% and the 15-year average was 6.09%, according to Freddie Mac
“Rising interest rates, I think, may cause a bit of fear among buyers,” said Tiffany Claxton, CEO of the Realtors Association. “I think inflation has also played a part and as interest rates continue to rise, people are trying to figure out how that’s going to play into their average mortgage price.”
In Spokane County, 618 single-family homes and condos on less than an acre sold in September, down 27.3% from 850 homes in September 2021, according to the Realtors Association.
Despite a drop in home sales last month, the market hasn’t fully stabilized, in part due to a lingering housing shortage, Claxton said.
The county’s housing stock was 1.8 months in September, a 73.1% increase from less than a month of supply in September 2021. That means it would take almost two months to sell all houses listed on the market.
The last time housing inventory in the county was at 1.8 months supply was June 2019, according to data from the Realtors Association. A balanced market – favoring neither buyers nor sellers – typically has around six months of inventory.
“It’s looking to a buyer’s market, but we’re not there yet,” Claxton said. “Now a buyer has the ability to review three, four or five listings and the ability to add inspections and contingencies, whereas for the last two or three years it has been so competitive that buyers were removing contingencies and set up all cash offers with a 15-day closing.
Rising inventory is a promising sign that the local housing market is becoming more balanced, Claxton added.
Downtown Spokane recorded the highest median closing price in September at $477,000, followed by a median of $459,250 in the Spokane Valley and $436,800 in South Spokane. The median on the West Plains was $395,000, while the median for North Spokane was $363,000, according to the Realtors Association.
The north side of Spokane tends to have a lower average sale price because homes are generally older and not expensive like historic properties on the South Hill or new construction in the Spokane Valley, Dallas Becker said, Designated Broker for Windermere North Spokane.
“Property availability and the below-average sale price has been a magnet in North Spokane for two to three years,” Becker said. “People were looking for a house that fit their budget and weren’t as selective.”
“Now they’re selective again,” Becker continued. “It’s consistent throughout the market. City movers want proximity to downtown and we are always 25 minutes from downtown Spokane.
North Spokane continues to attract out-of-area buyers and first-time buyers due to its affordability compared to other areas in the region, he said.
“Because of affordability, it’s natural for first-time home buyers to head north to Spokane,” he said. “We’re seeing a lot of our old neighborhoods revitalized, which is great.”
Nationwide mortgage applications fell 2% for the week ending Oct. 7, according to the Mortgage Bankers Association.
“The news that job growth and wage growth continued in September is positive for the housing market as higher incomes support housing demand,” said Mike Fratantoni, senior vice president and MBA chief economist, in a statement. “However, he also pushed back on the possibility of a near-term pivot from the Federal Reserve on his plans for additional rate hikes.”
In Spokane, Canopy Credit Union has seen fewer mortgage refinance and home loan applications amid rising interest rates, said Jessica Sengbusch, mortgage loan officer and underwriter for Canopy Credit Union.
“We’re seeing a lot less mortgage refinances coming in because most people have lower rates than what they’re currently posting, and we’re seeing a lot less purchase inquiries,” Sengbusch said. “Rising interest rates affect their purchasing power, which they can be approved for and make it much more expensive.”
The credit union, however, is seeing an increase in applications for home equity lines of credit as people choose to stay put and fix up their current homes, Sengbusch said.
“A lot of members are upgrading their homes rather than buying a new one,” she said.
The change in interest rates is prompting Canopy Credit Union to consider offering its members variable rate mortgages – a loan with an interest rate that changes based on the market – meaning that consumer payments could increase or decrease throughout the term of the mortgage.
Variable-rate mortgages can allow credit union members to get approved for a higher amount with a lower interest rate at the start of the loan, Sengbusch said.
“At Canopy, we sit down with the members and come up with a game plan to see where they stand,” Sengbusch said. “If you can qualify with high rates and it’s a payment you can afford, you can consider refinancing in the future.”
Sengbusch recommends homebuyers plan ahead and get pre-approved mortgages.
“When rates are higher, there is less competition in the market. You may be able to get a house easier than when rates are low,” she said. “Now with high rates, you’re definitely seeing an influx of inventory and more sellers paying closing costs again.”
For home sellers to stay competitive in the local market, they need to realize that change is afoot, Claxton said.
“We are not in the same place where we were six months to a year ago, where the market justified much higher listing prices,” she said.
She advises potential sellers to work with a realtor who is familiar with local market dynamics.
“They look at current trends and the ebbs and flows of the market to make sure your property is competitive with those around it and your home can be sold,” she said.