Housing sales hit record low levels across the US. So far, the housing markets of Spokane and Coeur d’ Alene are also slow.. but showing signs of remaining stable. At the recent Market Real Estate Forum, analysts gathered to make their best predictions and share key indicators for the economy.

Among the key highlights for Spokane County:

• Housing sales to remain steady with demand outpacing supply
• Unemployment down to 4.3%
• Population growth stabilizing at around 1-2% annually
• New housing starts are slow – but growing
• Housing affordability gaps continue to grow

Housing Sales

Housing sales data Spokane County shows volume has fallen from a peak of 7,521 sales in 2005 – down to only 3,845 through the third quarter of 2023. That reflects a drop of 10.9% below the prior year and 28.7% under the year prior (2021). As in preceding years, the largest share of homes sold in the County continues to be in Spokane Valley (31.5%) followed by the northwest quadrant (27.3%).

Housing prices have fallen with the median home price in 2022 of $451,953, down to a 2023 median price of $414,995. It’s estimated these rates are still elevated over the historic norm and will likely remain that way for the near future as demand continues to outstrip supply.

Unemployment

The unemployment rate at the end of 2023 for Spokane County is 4.3%, down from 4.8% in 2022 and 5.4% in 2021. Approximately 7% of total non-ag jobs continue to be in the manufacturing sector. However, the job mix is changing dramatically with a greater number of high-paying tech and health care jobs.

Kootenai County’s unemployment rate is now 3%.

Spokane County Growth Stabilizing

According to the Washington State Office of Financial Management (OFM), annual population growth in Spokane County has remained around 1.5% – with the exception of a COVID era boost of 4.7% in 2020. As growth moderated to a mere 0.5% in 202, it appears to have stabilized to an rate of 1.6

Spokane County Housing Starts

When it comes to new housing starts – data through September suggest a decline of 5.9% year-over-year if the current pace (of 359 single family permits per quarter) continues through the year; at 1,436, this would be the lowest figure since 2014. With the county’s burgeoning population growth, the area could likely sustain continued development for a while, though the pace of development may slow due to labor shortages, the rise in constructions costs, and a concern of over-saturating the market. If the current pace holds through the remainder of 2023, multifamily permits would decline by 13.2% year over year

Spokane County Lot Production

Spokane County Lot production has a somewhat tumultuous history. In 2016, the number of lots created finally broke through the 1,000-threshold and has remained there since. The most recent peak for lot production was in 2022 at 1,685 lots created in the city and county (still about 45% below the historical peak in 2006). Most of the lot production occurred in the southeast section of Spokane County, followed closely by the southwest. In 2022, lots platted totaled 1,685 (a 12.8% increase over the prior year). Of these, only 90 were in the City of Spokane, with the remaining 1,595 in Spokane County.

Residential Vacancy Rates

The most recent historical survey showed an overall vacancy rate of 1.8%. This was up 40 basis points from 1.4% in September 2021. Liberty Lake had the highest vacancy rate at 3.1% and Cheney had the lowest at 0.8%.

Office/Medical Vacancy Rates

Leasing rates are expected to remain stable or increase slightly in 2024. Currently at an 8.5% vacancy rate in Spokane County.

Housing Affordability Index

The Housing Affordability Index measures the ability of median income family to carry the mortgage payments on a median price home. When the index is 100 there is a balance between the cost and the family’s ability to pay.

Spokane County hit the 100 index factor in the second quarter of 2019. In Q3 2023, it reached 69.6 – the lowest rate in the history of the index. By comparison, the Q3 2023 statewide index is 57.2. Which means, only 57.2% of people living in Washington can afford a median priced home.

The affordability crisis is even more acute for first-time homebuyers, with an index rate of 49.7 for the county in Q3 2023 and 40.8 statewide.