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Like many U.S. cities, the Spokane, Washington, real estate market experienced a cooling trend last year brought on by rising mortgage rates. This led to a slight decline in home prices across Spokane County and a general slowdown in home sales activity.
However, this market has undergone another shift over the past few months, offering a more optimistic forecast for the housing market in Spokane, WA, in 2024. Home prices in the area have risen again as the market adjusts to a higher mortgage rate environment.
Buyers and sellers may wonder what the housing market outlook for Spokane, Washington, in 2024 is. Here are the latest trends and developments within the Spokane real estate market and some “best guess” predictions stretching into 2024.
The median home price for Spokane County, Washington, peaked at around $399,000 in July of last year. It nearly crossed the $400,000 threshold for the first time.
This trend resulted from a steep upward climb in house values that began in the early pandemic days and stretched into the first half of 2022.
But after reaching that all-time high, home prices in Spokane declined for several months. This trend was not unique to Spokane or even the state of Washington. Nearly every city in the country experienced a downturn in home prices during the second half of last year.
Rising mortgage rates had a lot to do with this trend. The average rate for a 30-year fixed mortgage loan more than doubled during the 12-month period from January 2022 to January 2023. Fast-rising mortgage rates cooled the real estate market and reduced demand among home buyers, particularly those with tighter budgets.
We are witnessing another transitional stage within the Spokane, Washington, real estate market. As of November 2023, home prices in the area have risen for the past five months. Similar trends have occurred within other housing markets across the state and nationwide. As of this writing, the average home price in Spokane, WA, is $374,653, according to Zillow.
Granted, the month-to-month home price gains in Spokane have been modest. But it signals a turning point in the real estate market, suggesting gradual but sustained price growth might be ahead.
Home price forecasts for the Spokane real estate market mirror those for the state of Washington. Most analysts expect prices to rise slowly but steadily in keeping with historical norms.
Spokane’s real estate market presents diverse investment opportunities, especially in emerging neighborhoods showing signs of economic and developmental growth. Investors should focus on areas with new infrastructural projects, like public transport expansions or commercial developments, which typically lead to property value appreciation. Additionally, regions with historically low supply and high demand can be lucrative for rental investments.
Single-family homes, particularly in suburban areas, remain a strong investment choice. However, the trend of remote work and lifestyle changes post-pandemic has also increased the attractiveness of larger properties with home-office capabilities. Furthermore, multi-family units in urban centers are gaining traction, offering steady rental income and capital appreciation potential.
The rental market in Spokane is evolving, with an increasing demand for rental properties due to a growing population and shifting housing preferences. This demand pushes up rental prices, making it a promising market for landlords and real estate investors.
Right now, the average rent price for a 1-bedroom unit in Spokane is $1,095, according to Zumper.com.
The demand for rental properties is expected to remain strong. Properties near employment centers, educational institutions, and public amenities are particularly appealing. Investors should consider these areas for stable rental income.
First-time homebuyers in Spokane face hurdles like rising home prices and competition from more experienced buyers. The higher mortgage rates also add to the affordability challenge.
Several mortgage programs are available for first-time buyers, like low down payment loans and first-time homebuyer grants. The improving inventory situation also provides more choices and less competition in the coming year.
The adoption of virtual home tours and enhanced online property listings allows buyers to explore homes remotely, a significant advantage amid ongoing health concerns and for those relocating from afar.
Artificial Intelligence (AI) tools are becoming crucial in providing accurate property valuations and market trend analysis, helping buyers and sellers make informed decisions.
The local employment rate and income levels significantly influence the real estate market. A stable job market in Spokane can increase demand for housing, pushing prices upwards.
National economic trends, including inflation rates and federal monetary policies, will also impact the housing market in Spokane, affecting mortgage rates and overall affordability.
The Spokane housing market could become more expensive next year if the recent uptick in home prices continues. But there’s also good news for those planning to buy a home in Spokane in 2024. Inventory levels have risen over the past few months, giving buyers more options.
At the beginning of last year, the Spokane metro area had about a 0.5-month supply of homes for sale. That was miles below normal and well into “seller’s market” territory. Back then, many frustrated home buyers exited the market simply because they couldn’t find a property to purchase.
As of fall 2023, however, the Spokane real estate market was approaching a three-month supply of homes. That’s still a little below normal from a historical standpoint. But it marks a significant improvement from the market conditions over the past few years.
So that’s another prediction for the Spokane real estate market in 2024. Next year, home buyers should have more properties to choose from when compared to those who purchased homes a year or two ago.
As mentioned earlier, mortgage rates have risen substantially over the past few years. Initially, this had a significant cooling effect on the real estate market in Washington and all across the country.
But home buyers and sellers are now adjusting to the higher rate environment and returning to the business of buying and selling homes.
Earlier this year, Spokane Association of Realtors president Tom Hormel told The Spokesman-Review: “In the last 45 days, we’ve seen the pace of sales pick up once people got past the initial shock of the sky is falling. People still need a home.”
Mortgage rates have strongly influenced the real estate market in 2023 and on both sides of the fence. Higher rates have reduced demand among home buyers all across Washington.
They’ve also reduced inventory levels due to what is now referred to as the mortgage rate lock-in effect. In short, a lot of homeowners are hesitant to list their properties because they have mortgage rates that are much lower than today’s averages.
However, many housing market analysts and economists believe that mortgage rates will have less effect in 2024. Home buyers and sellers will begin to accept that this is the new normal regarding borrowing costs. Higher rates could be less of a deterrent going forward.
That said, it’s expected that rates may dip in 2024. Analysts with the Mortgage Bankers Association (MBA) forecast mortgage interest rates to dip to 6.1% by the end of 2024, then decline further by the end of 2025 to 5.5%.
As of mid-November 2023, the average rate for a 30-year fixed-rate mortgage is 7.5%, according to Freddie Mac. So, we could be seeing a noticeable decline in rates, which will make mortgages more affordable.
In summary, the housing market outlook for Spokane, Washington in 2024 is expected to include modest price growth. Home buyers could have an easier time finding a suitable property within their budgets due to the inventory gains of the past year. Mortgage rates are expected to level off or even dip slightly, having less of an impact on the real estate scene.
Disclaimer: This article contains housing market forecasts for the Spokane, WA area extending into 2024. Those predictions are based on current trends and, therefore, subject to error.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.