Spokane has been one of the hottest real estate markets in the country for many years. Home prices in the Spokane real estate market are expected to rise at a steady pace in 2022. There is a high housing demand in the Spokane housing market and the current supply equals 19 days. Months Supply of Inventory is a calculation that quantifies the relationship between supply and demand in a housing market. In Spokane, it would take 19 days for the current inventory of homes on the market to sell given the current sales pace. It shows that Spokane housing marketing is favoring sellers.
A new study confirms what Spokane homebuyers have long suspected: Lilac City's real estate market is one of the most overvalued in the country. Florida Atlantic University and Florida International University researchers recently released a list of the nation's top 100 most overpriced housing markets. Spokane came in sixth place, with home prices more than 45 percent above the expected value based on historical pricing data.
The median home price in Spokane County increased to $430,000 in March 2022, up from $341,750 in March 2021, according to data from the Spokane Association of Realtors. However, an increase in mortgage rates and price reductions, combined with cooling of sales, may be signs of a market rebalancing. Closed sales of single-family homes on less than one acre including condos through March 2022 total of 538 compared to 572 through March 2021. Home sales were down 5.9% from a year ago.
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Spokane Housing Market Trends 2022
Spokane is currently a hot seller’s real estate market – which means that the demand from buyers is exceeding the current supply of homes for sale. Historically low-interest rates, tight inventory, and strong demand are continuing to favor sellers in the Spokane housing market. The pricing of homes is trending higher and is more attractive for sellers in the current phase. The shortage of supply and an increase in the demand for housing will push the prices higher.
According to Realtor.com, the Spokane housing market is a seller's market, which means there are roughly more buyers than there are active homes for sale. The median list price of homes in Spokane, WA was $420K, trending up 23.5% year-over-year. The median listing price per square foot was $213. The median sale price was $400K.
Ideally, a buyer would prefer a sale to ask price ratio that’s closer to 90%. The sellers in Spokane have managed to hold good leverage in these negotiations in the past month. On average, they could sell homes for 102.13% of the asking price. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
Below is the summary of the monthly housing report for March 2022, released by the Spokane Association of Realtors for single-family residential/site-built properties on less than one acre and condominiums. Inventory remains very tight leading to a surge in home prices. Demand is outpacing the supply.
- Spokane home sales were down 5.9% from a year ago.
- Closed sales of single-family homes on less than one acre including condos for March 2022 total 538 compared to March 2021 when the total was 572.
- The average closed price through March 2022 is s $457,967 (+23.2%) compared to $371,874 through March 2021.
- The median closed price through March 2022 is $430,000 (+25.8%) compared to $341,750 through March 2021.
- Inventory as of this report totals 233 properties which represents a 13-day supply.
- Last year at this time supply was at an 11-day supply.
- The number of new listings in March 2022 was 739, down from March 2021 when 768 new listings were reported.
Year To Date Home Sales Report (Jan to March)
- Year-to-date home sales were down 9.9% from a year ago.
- Closed sales of single-family homes on less than one acre including condos through March 2022 total 1,351 compared to 1,500 through March 2021.
- The average closed price through March 2022 is $434,033 (+21.3%) compared to $357,877 through March 2021.
- The median closed price through March 2022 is $400,000 (+21.6%) compared to $329,025 through March 2021.
- Inventory as of this report totals 233 properties which represents a 13-day supply.
- Last year at this time there were 209 homes on the market, an 11-day supply.
- Through March this year, there were 1,774 new listings compared to 1,830 over the same period last year (Down 3.1%).
According to the Spokane Association of Realtors, the Net Closed Volume for the month of March 2022 was $340,772,305. There were 1,373 listings processed, and 823 closed sales. Compared to last month, Net Closed Volume is up $120,042,088. Listings are up 459, sales are up 283. Compared to last year, Net Closed Volume is up $27,197,839. Listings are up 27, sales are down 86. Mandatory sales volume was $326,542,055. Non-Mandatory sales volume was $14,230,250. Pending sales (figured on list price) were $401,541,284. There were 943 pending sales processed.
Spokane Real Estate Market Forecast 2022
What are the Spokane real estate market predictions for 2022? Spokane's housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the nation. Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. Since the last decade (May 2012), the typical home value in Spokane County has appreciated by around 163.22%. The Spokane house prices remained almost flat from 2012 to 2015. Home values have gone up 28.2% over the past year alone. The typical value of homes in Spokane is currently $442,221.
It indicates that 50 percent of all housing stock in the area is worth more than $442,221 and 50 percent is worth less (adjusting for seasonal fluctuations). ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The supply is exceeding the demand, giving purchasers an advantage over sellers in price negotiations. In other words, there are more homes for sale than there are buyers in the marketplace. Spokane is a seller's real estate market.
- The typical home value of homes in Spokane-Spokane Valley Metro is $434,526.
- Spokane Valley home values have gone up 27.7% over the past year and will continue to rise in the next twelve months.
- Spokane County home values have gone up 28.2% (current = $442,221) over the past year and will continue to rise over the next twelve months.
- Spokane City home values have gone up 28% (current = $411,211) over the past year and will continue to rise over the next twelve months.
Here is the Spokane, WA real estate price appreciation graph by Zillow since the last decade.
Spokane Real Estate Investment: Should You Invest in Spokane?
Now that you know where Spokane is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Should you consider Spokane real estate investment? Many real estate investors have asked themselves if buying an investment property in Spokane is a good investment? You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2022.
Let's talk a bit about Spokane before we discuss what lies ahead for investors and homebuyers. Spokane is the second-largest city in Washington State. It is sited on the Spokane River in the foothills of the Rocky Mountains. The population of Spokane is around two hundred thousand. However, the Spokane real estate market includes the broader metropolitan area that is home to nearly 600,000 people.
Spokane housing market has a mixture of owner-occupied and renter-occupied units. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached homes are the most common housing units in Spokane. Other types of housing that are prevalent in Spokane include duplexes, rowhouses, and homes converted to apartments. Spokane single-family homes account for 65.75% of the city's housing units.
This real estate market of Spokane is sizzling hot though it is often overlooked for hotter markets like Seattle and San Francisco. Spokane homes are selling faster than Seattle homes. Inventor is very tight (would last only for 12 days at the current pace of sales). Why should one invest in this hot market in Washington? Well, to begin with, Spokane has a record of being one of the best long-term real estate investments in the U.S. over the past 10 years.
Like most cities in Washington State and nationwide, Spokane has experienced home price increases over the last couple of years. Looking at just the latest twelve months, Spokane appreciation rates continue to be some of the highest in the nation, at 31.91%, which is higher than appreciation rates in 98.04% of the cities and towns in the nation, according to Neighborhoodscout's data. Based on the last twelve months, short-term real estate investors have found good fortune in Spokane. Spokane appreciation rates in the latest quarter were at 10.78%, which equates to an annual appreciation rate of 50.59%.
Although this article alone is not a comprehensive source to make a final investment decision for Spokane, we have collected ten evidence-based positive things for investors who are keen to buy an investment property in Spokane. Let’s look at the state of the Spokane real estate market and the factors driving the market in the short and long term.
Spokane's Geography Limits Housing Supply
Geography up and down the West Coast limits the potential housing supply. We can’t build on water. The desire to preserve views and community limits how high vertically builders are allowed to build when they redevelop properties, while the mountains don’t provide a lot of places where you can build more than a basic bungalow. This explains why the Spokane real estate market along with Portland, San Francisco, and other Pacific coast cities are seeing rapid appreciation. In Spokane’s case, the riverfront is simply desirable but the mountains limit how far the city can expand. So, too, do the many national parks and wilderness areas near the city.
California’s Loss is Spokane’s Gain
In 2017, more than 130,000 people fled California to the surrounding states. Nor is this trend going to slow down, given that half of the adults say they are considering leaving the state. Housing costs and availability were two of the most commonly cited reasons, though security, crime, taxes, and jobs were also factors. And while Californians moving to Texas makes the headlines, in reality, most stay closer to home. In 2016 alone, more than 50,000 Californians moved to Washington. Furthermore, urban dwellers tend to move from city to city, moving from downtown San Francisco to the Spokane real estate market, where they can afford to buy homes.
Spokane isn’t like Oregon
We can talk about the number of people fleeing the oppressive regulations and high tax rates of California driving up real estate prices across the West Coast and the Rocky Mountains. However, not all states are equally attractive. We’re recommending investing in Spokane rental properties instead of hot markets like Portland, Oregon because of Oregon’s recent legislation. For example, they became the first state to implement statewide rent control. State law to limit how fast rents can rise is intended to help renters, but it creates cash flow for landlords that inevitably leave them unable to maintain properties.
Long term, these rules hurt renters, too, because an inability to recoup the cost of construction and maintenance prevents new housing stock from being built. Given how well economists understand that rent control hurts housing quality and affordability by limiting new construction except for luxury units that are exempt from rent control rules, we’re sure future laws that undermine the profitability of real estate in Oregon will go into effect soon. Invest in the safer, saner Spokane real estate market instead.
Spokane Housing Costs Remains Cheap Compared to Other West Coast Cities
Silicon Valley made the news when the cost of the average home there passed the million-dollar mark. The median home price in California passed half a million in 2017, and while home sales in California have slowed, demand has not. Yet Spokane remains relatively affordable. You could buy two Spokane rental properties for the price of one property in California, and if you hunt for a bargain or choose smaller starter homes, you could buy several rental properties in the Spokane housing market for the price of one property in a hot California market. The fact that living in Spokane is cheaper than the U.S. average is only another reason for people to move here.
Spokane Beats Seattle, Too
Seattle is larger than Spokane, but the Spokane real estate market is hotter because the area is cheaper than Seattle. Millennials, in particular, are flocking to the Spokane housing market because rents are half that of Seattle, while home prices are a third that of Seattle. Note that if a one-bedroom apartment in the Seattle market costs around $1000, you could charge $2000 or more for Spokane rental properties with enough space for a growing family. Seattle may be making its own tax mistakes from the soda tax to its fight to pass a city income tax. This makes buying in more sedate Spokane a wise choice.
A Low Cost of Doing Business and Low Taxes
There are a number of regulations in Washington State that limit the amount of property taxes that can be imposed on homeowners and the amount by which these taxes can grow in any given year. As a result of those rules, Washington State has tax rates below the national average. The state’s average effective tax rate is 0.93%, though high home values mean the median annual property tax payment is over $3,600.
Taxes on an individual property are based on two factors: the assessed value of the property and the total tax rate that applies to that property. The assessed value is determined through annual revaluations based on market data, and physical inspections that take place at least once every six years. Tax rates apply to those assessed values.
Tax levy increases are capped at 1 percent per year or the rate of inflation, whichever is less. Thus, if a county's budget is $3,000 this year, it cannot exceed $3,030 next year. This restriction does not apply to new levies or other exceptional circumstances, such as annexation or new development.
Spokane Valley has a business-friendly tax environment. The city imposes neither a Business and Occupation (B&O) tax nor a corporate income tax. In addition, the city has maintained a low property tax, opting not to impose the state-allowed one percent annual increase in city property taxes during the past many years.
The Rental Regulations
The student market consisting of 18 separate universities does pump a lot of renters into the Spokane housing market, but it isn’t a huge market segment in and of itself. However, the impact of the Washington State University campus in Spokane is massive. The Spokane housing market is certainly impacted by the relocation of the College of Pharmacy to the local campus, the new Health Sciences Campus, and tens of millions of dollars of new educational facilities.
The biomedical research facilities should add to the number of high-paying research and educational jobs in the area. A side benefit of the large campus and the associated jobs is that it makes the Spokane area’s population much younger than average, guaranteeing demographic momentum as people remain here for work and choose to buy homes for their growing families.
Landlords can raise the rent: Because rent control is illegal in Washington State landlords can raise the rent as much as they want as long as they comply with the appropriate notice period and have not issued the notice to discriminate or retaliate against the tenant. Rent increases go into effect in the first full month following the notice of the increase. Landlords can raise the rent but any notice of the rent going up needs to be delivered to the tenant at least 60 days in advance.
A landlord can evict a tenant for failing to pay the rent due. Before landlords can start with the eviction action for not paying rent, landlords must provide the tenant with a form called a 14-Day Notice to Pay or Vacate. Landlords and tenants are required to uphold the terms of the lease agreement at all times. A lease violation may result in eviction by the landlord. The landlord must present the tenant with a 10-Day Notice to Comply, giving the renter 10 days to remedy the violation.
Move out process: This final phase in the eviction procedure involves removing the renter from the property. Depending on the basis for eviction, Washington law stipulates that a tenant has between 3 and 5 days to vacate the property. If the tenant is being evicted for nonpayment of rent, they have 5 days to vacate the premises after the posting of the Writ of Restitution. For any other circumstances, the renter has only 3 days to vacate the premises.
The landlord may continue filing for an eviction lawsuit if the tenant fails to resolve the issue and remains inside the rental unit after the given number of days. However, there are some lease violations that are deemed “non-curable.” These non-curable violations require a 3-Day Notice to Quit. Tenants cannot fix the violation and are required to move out by the end of 3 days.
For non-renewal of the lease after the end of the rental period, tenants can be evicted if they stay in the property even a day after their written lease ends (and have not arranged for a renewal). This type of notice usually only applies if the landlord wants to end the tenant's lease. The required notice time given to tenants is 20 days regardless of their tenancy type.
The City Is Poised to Take Off
One reason why Spokane long lagged behind Seattle was its higher unemployment rate. Seattle has a roughly 3% unemployment rate, significantly lower than the 5% unemployment rate seen in Spokane. Spokane’s economy, though, is seeing a surge of higher-wage jobs. Out of the tens of thousands of new jobs created since 2010, the majority of them pay more than the average county wage – which is in line with the national average. The promise of better pay will lure many people to Spokane to live, fueling demand for the Spokane housing market.
Conclusion
Spokane is a relatively cheap real estate market on the West Coast. It is already seeing increased demand and property valuations, while it remains a safe place to invest in real estate. Skip Seattle and Silicon Valley and invest in the future growth of Spokane. Good cash flow from Spokane investment properties means the investment is, needless to say, profitable. On the other hand, a bad cash flow means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Spokane in a growing neighborhood would be key to your success.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Spokane.
Consult with one of the investment counselors who can help build you a custom portfolio of Spokane turnkey investment properties in some of the best neighborhoods. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Spokane turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Apart from the Spokane real estate market, you can also invest in another hot market like Seattle. Seattle’s tech landscape and real estate market are rapidly evolving. Google just upped the size of its new Seattle campus. Facebook has been on a hiring spree in the Seattle area, particularly for its virtual reality arm Oculus, which is growing fast in Microsoft’s backyard of Redmond. GeekWire reported on new HQ leases for top Seattle startups Rover and Outreach. Other companies continue to grow and that will pick up any slack. Tech has blown up Seattle. For the past 5 years, we have seen 50% price growth in this market which has priced out many middle-class buyers.
Another city in Washington where you can invest is called Tacoma. Tacoma sits at the southern end of Puget Sound and straddles Commencement Bay. Being a large port town, it is already flanked by smaller cities and backed by mountains. This prevents the city from simply expanding outward, forcing developers to pay for the more expensive redevelopment of existing properties. This will keep prices in the Tacoma real estate market high as long as the job market remains strong. It certainly limits the ability to quickly bring new supply to a tight housing market that has only 1.5 months of inventory on hand.
The third real estate market which is good for investment is Walla Walla. The Walla Walla real estate market is much more stable than coastal real estate. Property prices have appreciated about six percent in the past ten years. This is slow, steady growth. It is far better than the depreciation you see in some rural areas. It doesn’t provide the excitement of Seattle and San Francisco property prices rising by double digits, but you also don’t see housing prices crash because a tech giant decides they want to leave the area, citing insane real estate prices.
Let us know which real estate markets you consider best for real estate investing in 2020!
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
References:
- Spokane demographics
https://en.wikipedia.org/wiki/Spokane,_Washington - Latest Market Data, Trends, and Statistics
https://www.spokanerealtor.com/market-snapshot
https://www.spokanerealtor.com/mls-weekly-news-information
https://www.zillow.com/Spokane-wa/home-values
https://www.littlebighomes.com/real-estate-spokane.html
https://www.neighborhoodscout.com/wa/spokane/real-estate
https://www.movoto.com/spokane-wa/market-trends
https://www.realtor.com/realestateandhomes-search/Spokane_WA/overview
https://www.sammamishmortgage.com/spokane-the-other-hot-market - Foreclosures
https://www.realtytrac.com/statsandtrends/wa/spokane-county/spokane/ - WSU impact
https://advantagespokane.com/workforce - Taxes
http://mynorthwest.com/905380/washington-taxes-ranking - Oregon / rent control
https://www.heraldtribune.com/news/20190304/oregon-becomes-first-state-to-impose-statewide-rent-control
https://www.brookings.edu/research/what-does-economic-evidence-tell-us-about-the-effects-of-rent-control - California’s loss
http://www.ktvu.com/news/ktvu-local-news/california-exodus-study-says-more-people-leaving-state-than-moving-here
https://www.cnbc.com/2019/02/12/growing-number-of-californians-considering-moving-from-state-survey.html
https://www.tsishipping.com/blog/moving/top-10-places-californians-now-call-home-2018 - Restricted density/building height
http://www.spokesman.com/stories/2017/mar/12/spokane-leaders-look-to-lift-restrictions-on-build - Spokane is relatively cheap
https://www.prnewswire.com/news-releases/california-home-sales-close-year-on-downward-trend-as-home-prices-post-mild-gains-car-reports-300780469.html - It beats Seattle
http://mynorthwest.com/905380/washington-taxes-ranking
https://www.krem.com/article/news/local/spokane-county/why-live-in-spokane-over-seattle-its-way-cheaper/293-561489776 - Relatively landlord-friendly
https://www.nolo.com/legal-encyclopedia/overview-landlord-tenant-laws-washington.html
https://www.krem.com/article/news/local/spokane-county/tenants-union-landlord-association-look-at-regulations-on-rent-increase/293-605044268 - High wage jobs
http://www.spokesman.com/stories/2017/feb/13/spokane-area-economy-is-creating-higher-wage-jobs - High appreciation
https://www.krem.com/article/news/local/spokane-county/spokane-co-home-values-increase-dramatically-for-2019/293-587065966
https://www.krem.com/article/news/investigations/2-on-your-side/spokanes-housing-market-hotter-than-seattles-for-first-time-in-six-years/293-eaa7b3d2-3281-410d-95b8-26c07f8e54c4
