Spokane tops the nation in real estate bidding wars

Spokane resident Kelli Saunders found the home of her dreams in two months, but it wasn’t easy.

Saunders sold her previous home in February and began looking for a new property.

She encountered eight bidding wars and lost against four cash offers for homes, some of which sold for thousands of dollars over asking price.

Saunders – with some persistence – found a home north of the Garland District.

“I decided I just loved this house and said, ‘Let’s go with everything we have on this one,’ ” she said.

She wrote a letter to the seller describing why she loved the house and ended up paying $70,000 over the asking price of $300,000, beating out another buyer with a cash offer.

“I had a low down payment, but had a lot of cash behind it,” she said.

“I came right in at $370,000. I’m one of the very few lucky ones that beat out a cash offer.”

Saunders is among several buyers in the region competing against multiple offers on homes, a market dynamic that has only accelerated with low interest rates and the pandemic.

Remote workers and out-of-area buyers have been fleeing larger metro areas to what they consider more affordable cities like Spokane and that has fueled fierce bidding wars.

Spokane’s real estate market had the highest bidding war rate of 50 metro areas nationwide in May, according to a Redfin analysis released last month.

The technology-powered real estate brokerage found that 86.7% of offers written by its Spokane agents faced competition in May, followed by Raleigh, North Carolina, at 84.5% and Tucson, Arizona, at 81.8%.

Nationwide, 70.4% of home offers written by Redfin agents faced competition in May, up significantly from 52.7% from the same month in 2020.

Spokane also had the highest bidding-war rate nationwide in April with 83.3% of offers facing competition, according to Redfin.

“It’s a very competitive market right now. It’s been competitive for some time. But around March, it stepped up to another level,” said Brynn Rea, a Spokane-based Redfin agent. “It’s really tough to compete out there for buyers, especially first-time buyers. Sadly, a lot have been pushed out of the market.

“We are seeing a lot of cash right now and a lot of investors. There is a lot of demand plus with rental prices so high and low interest rates, it’s just making a perfect storm for this insane market.”

On average, homes in the Spokane area are getting anywhere from three to eight offers. But there are some homes that have amassed more than 20 offers from buyers.

Homes below $400,000 are generating the highest demand from buyers, Rea said.

“There are a lot of buyers in the $300,000 range that are desperate, trying to get an offer to stick,” she said.

While Spokane’s housing market was brisk prior to the pandemic, sellers were open to negotiating price reductions.

Now, buyers are waiving contingencies and inspections to remain competitive against out-of-area buyers, some of whom have sold their million-dollar properties in larger cities and are using the equity to pay cash for a home in Spokane, Rea said.

Spokane County’s median closing price was a record-breaking $380,000 in June, a 28.8% increase compared to $295,000 in June 2020, according to the Spokane Association of Realtors.

Some 750 single-family homes and condominiums on less than 1-acre sold in June, up 5.2% compared with 713 in June 2020.

The county had an inventory of 284 homes in June, representing a 12-day supply. That means it would take 12 days to sell all available homes on the market. Inventory was at 728 homes in June 2020.

Despite the uptick in bidding wars nationwide, Redfin reported signs that the market could be cooling down and competition is beginning to level off after reaching a peak.

“After months of surging prices and low inventory, some house hunters are moving to the sidelines – either because they’re priced out or burned out,” Daryl Fairweather, Redfin’s chief economist, said in a statement. “Americans are spending more of their money on things like travel and dining out now that pandemic restrictions are being lifted.”

Observers say that might not be the case in Spokane as demand continues to outpace supply.

Eric Johnson, president of Spokane Association of Realtors, said he anticipates multiple offers will persist in the market, unless interest rates rise or the job market changes.

Spokane is seeing about 1-2% population growth per year. The area’s population growth combined with lack of available homes is contributing to the rising demand for more housing, he said.

At the same time, the Growth Management Act and building regulations are roadblocks to constructing more homes.

Rea agrees that the local housing market needs more new construction, but builders are grappling with changes in building codes, rising lumber prices and labor shortages.

“More new construction is going to help level out the market tremendously, but that takes time,” she said.

Despite those challenges, Rea said she expects the market to remain brisk throughout the year.

“We are still going to have a strong summer and fall as long as interest rates don’t go through the roof,” Rea said. “It’s going to be seller’s market for a while here.”

She said buyers may be able to gain a foothold in the market this summer by shopping for homes when people are out at the lake or on vacation.

“It’s great time to swoop in there and, hopefully, not be in such a competitive situation,” she said. “When everyone else is out at the lake – that’s the best time to look.”

Johnson advises buyers to keep trying and be patient, especially if they want to take advantage of the low interest rates.

“We are going to keep supplying the market and help that process as much as we can,” he said.

Saunders said that even though she faced some discouraging moments in her home search, she advised buyers to remain optimistic.

“Hang in there. Keep at it,” she said. “That house – it will happen.”

Source link