Spokane Real Estate Market Shows Signs of Stabilization Amid High Interest Rates

The Spokane housing market is exhibiting signs of leveling out, marking a significant shift from the rapid growth seen in recent years. For the first time in over a decade, Spokane County has experienced a slight decrease in home values, with the average home seeing a 0.72% year-over-year decline. This change comes as a surprise to many who have grown accustomed to the area’s booming real estate market.

High mortgage interest rates are playing a crucial role in the slowdown of both local and national housing markets. Currently, the 30-year fixed mortgage rate stands at approximately 7.01%, nearly triple the record low of 2.65% reached in January 2021. These elevated rates are causing potential buyers to hesitate, while sellers may need to make adjustments to attract buyers, such as adding improvements to their homes.

Market Stabilization and Inventory Growth

Despite the slight decline in values, there are positive indicators suggesting a return to a more normal market. The median price of a home in Spokane has held steady at $425,000 compared to the same month in 2023, indicating a stabilization of prices. Additionally, the number of homes available on the market is slowly increasing, with a 31% rise in inventory compared to the same period last year. This growth in inventory could help further stabilize prices and provide more options for potential buyers.

Regional variations are also worth noting. While Spokane is experiencing a leveling out, other areas like Coeur d’Alene are seeing growth in inventory as well. The median home price in Coeur d’Alene stands at $527,000, up 1.8% over 2023, demonstrating that market conditions can vary significantly even within the same region.

Economic Factors and Future Outlook

The housing market is influenced by broader economic factors, including inflation, consumer confidence, and the upcoming presidential election. These elements can impact consumer decisions and the overall market sentiment. However, there is potential for positive change on the horizon. Economists are anticipating a possible rate cut in September, which could provide a boost to the housing market. Lower interest rates would make homes more affordable and potentially increase demand.

As the Spokane real estate market navigates this period of adjustment, both buyers and sellers will need to adapt to the changing conditions. While the current high interest rates pose challenges, the stabilizing prices and growing inventory suggest a more balanced market may be emerging. As economic factors continue to evolve, including potential interest rate cuts, the Spokane housing market will likely continue to adjust, potentially offering new opportunities for both buyers and sellers in the coming months.