Multiple factors led to a strong buyer’s market in Spokane during the pandemic: an increase in lumber prices as quarantined people fixed up their own homes (plus a halt in production during quarantines), people not wanting to sell because they would then have to move during the pandemic, tech workers (who normally had to live in high cost of living areas) and others being allowed to work from home, a prohibition on foreclosures reducing available inventory, and Federal Reserve stimulus leading to incredibly low interest rates.
Now that the pandemic appears to be ending, some of the tech companies are wanting their employees to come back to the office. There may be a temporary change in attitude as the Delta variant causes new concerns, but companies seem to want to keep an eye on employees by having them come in, even if their work can be done remotely.
Over the weekend, I read two articles indicating that the frenzy may be coming to an end. The first article was from Redfin:
https://www.redfin.com/news/housing-market-update-new-listings-on-par-with-2019/
“The month of June was a clear turning point in the ultra-hot housing market of 2021,” according to Redfin Lead Economist Taylor Marr. “As home prices continue to set records, some buyers have hit their limit and are stepping back. At the same time, homes are hitting the market at pre-pandemic levels again, which may finally ease competition and bring some sense of balance to the market. The upshot is that fewer bidding wars could actually keep some on-the-fence buyers in the market and lure back some of the homebuying dropouts.”
The second article was from Housing Wire and indicated that there was an increase in housing inventory. Lumber prices are finally coming back down and distortions that caused the red hot buyers market in Spokane might be ending.
After months of declines in sales of existing homes, sales increased in June, according to the National Association of Realtors, due to a rise in housing inventory.
Lawrence Yun, the chief economist of the National Association of Realtors, said “That’s due to more housing starts and existing homeowners listing their homes, all of which has resulted in an uptick in sales. Home sales continue to run at a pace above the rate seen before the pandemic.”
“At a broad level, home prices are in no danger of a decline due to tight inventory conditions, but I do expect prices to appreciate at a slower pace by the end of the year,” according to Yun. “Ideally, the costs for a home would rise roughly in line with income growth, which is likely to happen in 2022 as more listings and new construction become available.”
So maybe there is some relief in sight for buyers who have been discouraged after losing out on bidding war after bidding war.
I checked asking price versus sold price here in Cheney for several months this year and found that the typical sales price was 17% above asking price. That kind of supply-demand imbalance may soon be coming to an end if these economists are correct.