Mortgage Rates and Economic Indicators Shape Spokane’s Real Estate Landscape

As July 2024 unfolds, the Spokane real estate market finds itself at a crossroads, influenced by a complex interplay of economic factors and regulatory changes. Mortgage rates have kicked off the month slightly higher than June, with 30-year mortgage rates averaging around 6.71%. This uptick is largely attributed to recent economic indicators, particularly the Bureau of Labor Statistics’ report on job growth and unemployment.

The U.S. economy added 206,000 jobs in June, marginally exceeding projections. However, the unemployment rate saw a slight increase from 4.0% to 4.1%. This deceleration in the labor market is generally viewed as a positive sign for mortgage rates this year. It increases the likelihood of an imminent reduction in the federal funds rate by the Federal Reserve, which could lead to a subsequent drop in mortgage rates.

Federal Reserve Policy and Its Impact on Mortgage Rates

The Federal Reserve’s aggressive rate hikes in recent years, aimed at curbing economic growth and managing inflation, led to a surge in mortgage rates. Now, with the Fed pausing its rate hikes and potentially considering rate cuts, mortgage rates are anticipated to experience a further decline. Experts predict a gradual easing of rates, with average rates potentially hovering around 6% for the year 2024.

For homeowners considering leveraging their home equity for significant expenditures like home renovations, a Home Equity Line of Credit (HELOC) could be a viable alternative while awaiting a reduction in mortgage rates. This option allows homeowners to tap into their equity without refinancing their entire mortgage at potentially higher rates.

Spokane’s Real Estate Market: Current State and Future Predictions

The Spokane real estate market is currently in a phase of calm, typical of the period preceding the flurry of activity usually seen in February and March. Historically, December and January are slower months in terms of sales and average pricing. However, industry experts predict modest price growth in the coming year, potentially fueled by the anticipated gradual easing of mortgage rates.

Adding another layer of complexity to the market, regulatory changes are set to take effect from January 1, 2024. Residential real estate brokers in Washington will be required to have a signed brokerage services agreement before providing services to consumers. Additionally, sellers will no longer be required to provide compensation to the buyer’s agent. These changes are likely to reshape the dynamics of real estate transactions in Spokane and across Washington state, potentially influencing both buyers’ and sellers’ strategies in the coming year.