It’s not just cities seeing sticker shock in the housing market

Retiree Anthony Maggi put his Republic home on the market five years ago and got no takers.

Now, as the home-selling season of spring approaches, he’s trying again, with one big difference: The list price for his four-bedroom, 2,200-square-foot home has more than doubled.

“When we put it on the market in 2017, we put it at $89,000,” Maggi said. “It’s now on the market at $199,900.”

Meanwhile, Realtor Cynda Bragg just closed a deal for a couple selling their home in the woods northwest of town for $224,000, almost three times what it sold for in April 2020.

Bragg said the sellers – who did not want to be interviewed – had initially listed the home at $195,000, before receiving some advice from someone from the West Side.

“This is too cheap,” Bragg said they were told. “You can get more for this.”

As home prices soar in the cities, what’s happening in some of Eastern Washington’s rural counties is just as dramatic: The most affordable real estate markets in Washington are rapidly becoming a lot less affordable.

Nowhere is that more true than Ferry County, which is often ranked as the most affordable county in the state by the University of Washington’s Center for Real Estate Research. According to the center’s most recent report, the median sale price for a home in Ferry County leapt up by 33% in 2021 – the biggest increase last year on the dry side of the state.

Bragg has been selling homes in Ferry County for seven years, and she’s watched prices steadily go up. Since 2013, the median price of a home sold in Ferry County has risen by 71%.

“One problem is our housing shortage,” she said. “In Ferry County, as of this morning, there are 19 houses on the market. With low supply and high demand, it just pushes prices up.”

In some ways, the dynamics are similar to those in the cities: steep price increases, people from cities moving in for the good deals and investors looking to flip properties.

And first-time homebuyers – more and more – are left out of the picture.

“It’s been a bit crazy for the last couple of years,” said Rachel Siracuse, Ferry County assessor and member of the Republic City Council. “I’ve been here a long time, going on 22 years, and we’ve never seen anything like it.”

Stagnant incomes

Last year, prices rose by at least 10% in every Eastern Washington county but one – Lincoln County.

They were up 20.6% in Grant and Douglas counties, and more than 19% in Pend Oreille, Stevens and Columbia counties.

It’s not just happening in rural Washington. Nationwide, according to Redfin, rural home prices rose 16% in January, a steeper rise than either suburban or urban home prices, as scarcity of housing stock is met with a growing number of buyers looking for good deals away from cities.

James Young, director of the research center, said while the home prices and tight markets in the cities have drawn the lion’s share of the attention, smaller counties all over Washington are experiencing the same pattern.

“People are seeking value,” he said. “People who don’t have to live in Seattle or in a bigger city are going to the smaller towns. You’re also getting a lot of older people retiring.”

In Republic, the economy is still shadowed by the 2018 closure of the gold mine that was the county’s largest employer. The population shrunk by several hundred people between 2010 and 2020 to just more than 7,100. The median household income rose by just 17% between 2011 and 2019 – nowhere near the rise in home prices.

“The prices are hard to absorb because people’s incomes don’t go up that quickly,” Young said.

Prices up everywhere

Driven by urban counties in the West Side, the median home sale price statewide in 2021 was $560,400, an increase of 24%.

Spokane County saw another big leap in prices – a median of $390,200 that was 23% higher than last year. Since 2013, prices here have simply exploded, rising more than 120%.

The soaring home prices in Spokane – and other mid-sized cities – have completely reshaped our identity as a housing market. Not long ago, a chief element of our civic identity was our affordable home prices. But as housing crises in cities have rolled downhill to smaller cities like Spokane, some of that pressure is now rolling downhill to rural communities, Young said.

“Year over year, almost every county is in double digits,” Young said.

As prices rise in small towns, it becomes more and more difficult for first-time buyers to find a home – even in the most affordable places. Many rural counties are losing population or growing very little, and economic opportunity is limited. Median incomes have been relatively flat – certainly not following the double-digit patterns of recent home price increases.

Bragg said sellers on the lower-priced end often can’t afford to fix up their homes to make them eligible for financing through programs aimed at first-time home buyers.

Siracuse, the Ferry County assessor, said there have been recent positive signs in the local economy. In the not-too-distant past, businesses would close up on Main Street in Republic – and go onto the market for years at a stretch.

“For decades,” she said. “We couldn’t give ’em away.”

In recent years, though, businesses in the town have sold and opened with new ventures – a coffee shop, restaurants, a hardware store.

At the same time, she said, her daughter and son-in-law can’t afford to break into the housing market.

‘Gone instantly’

Other counties in Eastern Washington have unique circumstances. Whitman County’s market – where prices rose 22% – is driven by the dominating presence of Washington State University. The forces influencing housing prices in the wine country of Walla Walla (up 23%) or recreation-oriented Okanogan (21%) are different than those in Garfield (16%) or Adams (19%).

It’s also true that in the smallest counties, there are few enough home sales that one should be wary of big percentage increases. Over the past decade, Ferry County has posted around 100 sales a year, for example.

Still, sticker shock is the common denominator. Even in Lincoln County, which had the lowest prices increases in the state at 6.7%, home prices tower above those of a few years back.

In August last year, the executive director of the Port of Columbia, Jennie Dickinson, was describing the housing market in Dayton in an interview. She sounded for all the world like she was talking about Seattle or Spokane.

“We are experiencing a housing shortage unlike any we’ve ever had,” Dickinson said. “You can’t find a rental, and if a house is for sale, it’s gone instantly.”

For Maggi, who is looking for another home after his current one sells, the rising prices are a double-edged sword.

“We want to buy,” he said. “We live here. Whatever the market’s doing here, it’s doing everywhere. We’re not going to make some huge profit.”