Housing inventory is slowly growing in Spokane and Coeur d’Alene

More homes have become available in Spokane and Coeur d’Alene, but the sales pace continues to remain muted compared to the chaos of the local economy as it emerged from the coronavirus pandemic.

Mostly gone are the multiple cash offers over asking price that marked the past few years. Sellers are again finding they likely have to add that coat of paint or new floor to get full asking price, said Tom Hormel, immediate past president of Spokane Realtors.

“I call this a soft seller’s market, because interest rates are causing buyers to hesitate,” said Hormel, Realtor and designated broker at RE/MAX of Spokane. “If we had seen this type of market with a lower interest rate, we’d see a much brisker pace of sales.”

The June numbers show that the median price of a home in Spokane held steady at $425,000 compared to the same month in 2023.

However, the biggest rise on the snapshot of sales is the growing number of homes on the market. As of the end of last month, some 1,253 homes were on the market, which is about 31% higher than the 960 homes in the market in 2023.

With that extra inventory, it now would take about 2.4 months to sell all of the available homes on the market, compared to the 1.5-month supply in June 2023.

“I would say you probably have to go back to 2018 or 2017 to see that type of inventory,” Hormel said of the June numbers.

He and Michael Wendland, current president of the Coeur d’Alene Regional Realtors, both said the gold standard is to have about a six-month supply of homes on the market.

As of the end of June, homes in the Lake City were averaging just more than three months, or 94 days, on the market before they sold. The median price of a home in Kootenai County at the end of June was $527,000, which is up 1.8% over 2023.

“It’s busy but not crazy busy,” said Wendland, a Realtor with Century 21 Beutler & Associates. “We’ve seen a slight uptick here, from first of May. It was a slow start coming out of winter.”

Kootenai County had 1,114 homes for sale at the end of June. That compares to only 279 in all of North Idaho when the housing frenzy was at its peak, he said.

“It was insane,” Wendland said. “We are back to our happy-healthy range. The interest rate is still a major factor.”

The national mortgage rate continues to hover around the 7% range as the Federal Reserve has yet to deliver on expected rate cuts.

But that, too, could have unintended consequences for someone trying to get into a new home, Wendland said.

“If the interest rate comes down, and we don’t have enough supply, we are in the same situation,” he said. “Inventory goes down and prices go up.”

Continued stresses from inflation and a volatile presidential election also factor into consumers’ decisions, they said.

“The consumer confidence is not there with what every news station is saying about the state of the world. It’s all crazy,” Wendland said. “We have seen people moving to Idaho for their political beliefs. We expect that to continue.”

As for Hormel, he said the political situation could have a chilling effect in the Spokane area.

Some buyers or sellers may wait to see how the presidential election shakes out, he said.

“They may not be happy, but they will be settled. If the current administration stays or a new administration comes in, people then settle down knowing they have four years under those decisions,” he said. “What we truly need to see is interest rates coming down a little bit.”

Hormel has heard comparisons to much higher interest rates in the 1980s. “But the price of a home was $80,000. People aren’t making five times what they made back then.

“So, the average cost of a house, at $425,000 with 7% interest, leaves people with a $2,000 a month house payment. That, to a lot of people, is untenable,” he said. “But, they are not getting much more of a break in the rental market.”

Both Realtors agreed that sellers have had to adjust to the slower market.

“We have to have those tough conversations with sellers that we weren’t having for a few years,” Hormel said.

During the housing rush, most home buyers did not have to upgrade their homes with new kitchen countertops or flooring before listing them to sell.

“Now it needs to be. If you are going to price at the high end of the market, you better have all your ducks in a row and it better be right,” Hormel said. “The buyers, after they come in with their down payment, don’t have the excess operating cash to do the remodels.”

Wendland said he’s seeing the same things in Coeur d’Alene, even in a housing market that tends to run a bit hotter than the Lilac City’s.

“Something that is priced right and looks nice is going to sell,” he said. “Definitely.”

A home in a neighborhood full of $425,000 competition that is “trashed” is not going to sell for the median price, Hormel said. He relayed the story of a recent cat owner who replaced the carpets in a new home just to make it marketable to sell.

“Some of our clients are looking for that fixer-upper,” he said. “But that’s not the majority of clients. That’s few and far between.”

The Spokane market is still reeling from the devastation wrought by the Oregon Road fire near Elk and the Gray fire near Medical Lake. Those two fires, on the same day last summer, burned a combined 21,000 acres and destroyed 366 homes.

“When you lose 400 homes and you are only building 1,300 in a year, that puts a real strain on that inventory,” Hormel said.

Some fire victims paid to build smaller homes or have been renting as they wait to rebuild.

“That also puts a strain on the rental market,” he said.

The Spokane City Council’s decision in May to put a year hold on development in Latah Valley has stalled what could bring several new homes to the market, he added.

“You take all of that off the table, that’s why you are not seeing price reductions,” Hormel said, “because of the pressure on inventory.”