With many employers allowing employees to work from home during the pandemic, people are leaving the high-density coastal cities for ex-burbs and smaller cities closer to nature, where there is room to spread out. Almost daily protests, sometimes turning into violent riots, is another factor causing people to leave the I-5 corridor for safer locations. Retirees have long fled Seattle to Spokane for lower housing prices and higher quality of life.
The pandemic is now also causing working age people to move from crowded cities like Seattle and Portland to quieter places the Spokane/Coeur d’Alene region, as well as to Boise. Here in Spokane, people have traffic-free commutes. Thirty three golf courses are available for golf fans. County courses are quite affordable. Broadway performances are available for arts fans at the First Interstate Center for the Arts. Live bands play at multiple venues around Spokane including the Knitting Factory, Zola’s, The Big Dipper, Mootsy’s, The Bartlett, and the Baby Bar. Visitors from bigger cities are surprised to see such luxurious hotels as the Historic Davenport. The Davenport Hotel opened in 1914 as a destination in its own right where guests could experience world class service. In 1914, it was the first hotel with air conditioning, a pipe organ, central vacuuming, housekeeping carts, and accordion ballroom doors. Back then and again today, it has grand rooms like the Spanish Renaissance lobby and the Hall of Doges, Spokane’s oldest and most exquisite ballroom. Could Spokane be the right place for you?
Spokane Housing Market Trends and Statistics
The Spokane Washington real estate statistics for the year to date are astounding.
- The average sold price in October 2020 for closed sales on the Spokane MLS was $346,098 compared to $287,985 in October last year.
- The median sold price in October 2020 for closed sales on the Spokane MLS was $320,000 compared to $267,500 in October last year.
- There was less than a one-month supply of inventory on the Spokane MLS in October 2020.
The demand for homes far exceeds the supply, and houses have been selling a few days after they are listed with multiple offers.
Spokane Real Estate Market Forecast 2020-2021
The year to date numbers in 2020 saw a significant rise in sold prices . The increase in average sold price from $287,985 to $346,098 in Spokane area real estate represents an increase of just over 20%. This is higher than the nationwide average of 15.5%. Almost half of homes sold are selling above list prices. Builders are sold out of inventory and when they announce new phases, they are immediately sold out without clearing their waiting lists. The price of lumber has roughly doubled during the pandemic, partly due to people staying home and working on their own houses during lockdowns, and partly due to quarantines that prevented lumberjacks and lumberjills from working.
New construction prices that are seen on Trulia or Zillow for Spokane are not real numbers because there is no inventory available. Builders are completing framing, and sometimes even drywalling, before signing contracts, because they don’t want to underestimate the costs of lumber. With houses selling in a few days in most price ranges, and record low interest rates, there is likely to be momentum driving values up for some time. The proposed Biden $15,000 first time homebuyer tax credit, if passed, would bring sales in from the future and continue the momentum for some time. However, 20% appreciation should not be expected for the next year. Past performance is no guarantee of future performance. With the elections over, there is less reason for violent protests in Seattle and Portland. News of protests turning violent, coupled with the new ability to work from anywhere, surely resulted in some people moving from the west coast to the inland northwest. There is less reason for rioting now that the elections are over. Some protests are continuing, and sometimes they are getting violent, but the crowds are becoming smaller and more controllable by authorities.
There is a rise in applications for jobless benefits. New shutdowns are likely to create more labor weakness. Some restaurants and businesses will not survive and will close for good. On the other hand, every time we think we are at a peak in values, another month of data comes in well above expectations. A small city can easily be overwhelmed by an influx of people from larger cities. People who are currently unemployed and relying on government programs are set to lose their unemployment benefits at the end of December. The prohibition on foreclosures is also set to finish at the end of December. Zillow is forecasting a 9.9% one year increase in Spokane in the next year. That doesn’t sound unreasonable. But what’s next for the Spokane market, and on the national real estate market, depends largely on government programs and whether they are extended, as well as tax policy, so it is dangerous to rely on computer modeling predictions. We are in unprecedented times.
Spokane Real Estate Market: Is it a good place for investment?
Spokane, along with Boise, have been listed by Zillow Research as some of the top mid-sized metros to watch. Such cities are leading the country as the top markets for growth, replacing expensive high density cities like San Francisco and Seattle. There is also more space and lower density in Spokane than Seattle, just what the doctor ordered in this Covid-era. The pandemic has redefined the ideal place to live from places near nightlife and restaurants to places with more wide open spaces and where homes with home offices are affordable. Spokane is much less expensive than Seattle as it has fewer high tech employers. If employers continue to allow tech workers to work remotely, Spokane is a short one hour flight from Seattle, or a four and a half hour drive. The Spokane west plains area is closer to Seattle and also close to the airport and has small towns like Cheney, Medical Lake, and Airway Heights that still have neighborhoods with a sense of community. Rural living is still possible, and high speed Internet is available. Here are some of the reasons people are attracted to the Spokane/Coeur d’Alene region:.
- A River Runs Through It: Seventy-six lakes and rivers nearby allow opportunities for whitewater rafting, kayaking, swimming, and fishing. Residents can head in pretty much any direction and find a body of water. Take a swim, paddle your kayak, or hit the wake. There are several lakes in the West Plains and nearby lakes in Idaho. Some of the Spokane County lakes are: Badger Lake, Eloika Lake, Fish Lake near Cheney, Fishtrap Lake near Sprague, Horseshow Lake, Liberty Lake, Medical Lake (with a fantastic waterfront park), Newman Lake, Silver Lake, Williams Lake, Downs Lake, Clear Lake, and Chapman Lake.
- Affordable Ski Town: While traditional ski towns in Colorado and Wyoming are no longer affordable locations for most skiers, Spokane has five ski areas within 70 miles: Schweitzer Mountain Resort in Sandpoint; Mount Spokane, Silver Mountain in Kellogg, Lookout Pass on the Idaho-Montana state line, and 49 Degrees North, north of Spokane near Chewelah.
- Sports Fans Rejoice: Sports fans can watch live baseball (Spokane Indians), hockey (Spokane Chiefs), indoor football (Spokane Shock), and college sports. Gonzaga University’s men’s and women’s basketball teams make many appearances in March Madness and the Eastern Washington University Eagles frequently perform well in the Big Sky Conference. EWU’s Roos Field is the only college football stadium with red turf.
- Even Spokane’s Downtown is Beautiful : In addition to lakes and rivers all over the area, Spokane’s downtown is safe and beautiful. It boasts the second largest urban waterfalls in the country, the upper Spokane Falls. The falls can be enjoyed on foot from several viewing spots, from a pedestrian suspension bridge, from the historic Flour Mill, as well as from gondolas that leave from Riverfront Park. Riverfront Park is a 100 acre park along the Spokane River and encompasses the Upper Spokane Falls. When the Upper Spokane Falls is combined with the Lower Spokane Falls just outside Riverfront park, you have the largest urban waterfall in the country.
- California’s Loss is Spokane’s Gain: Astronomical housing costs, high state taxes, crime, the desire to leave high density populations due to the coronavirus, and the ability to work from anywhere granted by tech giants (at least for now) have caused people to flee cities like San Francisco. When even a small percentage of those people choose to relocate to a small city like Spokane, it has a big effect. Zillow’s 2020 Urban-Suburban Market Report revealed that inventory had risen 96% year over year in San Francisco. Empty homes in San Francisco have been flooding the market. With most restaurants and entertainment venues closed due to Covid, (except for take-out), there is little reason to stay when lower cost, lower density, areas like Spokane have high speed Internet.
- Spokane isn’t like Portland or Seattle: While protesters in Seattle and Portland deface and try to burn down buildings, Spokane’s Sherriff called in the National Guard after the first night of protests. Spokane has more conservative, family-friendly values, and does not tolerate lawlessness as those cities do. Neighbors put up signs for political candidates of opposing parties without getting into fights. People with differing views are treated with civility. rates and unemployment rates may be driving out people from many states, it is locations like Oregon that have capped the rent all across the region.
- Spokane Real Estate Appreciation is Strong: Spokane’s real estate prices in October 2020 were 20% higher than October last year. Zillow is predicting a 9.9% appreciation rate in Spokane over 2021. While that rate is not guaranteed and depends on government programs, fed interest rate, tax changes, and whether employers require employees to come back to the office, Spokane is significantly less expensive than Seattle and is likely to continue to see in-migration.
Spokane Real Estate Market: Spokane Investment Properties
Properties values in Spokane are at an all-time high, despite a bad economy, due to low interest rates, fear of inflation that drives investors into hard assets, a new found ability to work from anywhere, a desire to avoid high density due to Covid, and because prices are much lower than those in Seattle, Portland, and the major cities in California. 20% appreciation next year is unlikely but the 9.9% Zillow prediction is not unreasonable, even if we are in bubble territory, due to momentum.
Multifamily Properties in Spokane Washington
Multifamily properties in Spokane are currently in short supply. Investors who sell in Seattle and are doing a 1031 exchange have a limited amount of time in which to find a replacement property. Properties are often selling above asking price. Multifamily properties in Spokane are currently selling at a lower price per square foot than single family prices because multifamily property prices are based on rent and cap rates where single family property values are untethered from rental values. Therefore, there are opportunities to convert duplexes to single family properties or to convert apartment buildings into condos, with proper legal help.