Spokane home sales and new listings fell every single month during the first half of 2023, with only January showing a positive year-over-year uptick in new inventory. Despite interest rates fluctuating between 6.5% and 7.5%, year-to-date home prices remained remarkably stable across local neighborhoods. Here is our full six-month review of the local market and our predictions for the second half of 2023.
Pricing and Inventory Trends
Spokane home prices remained remarkably stable throughout the first half of 2023, even as new listings dropped year-over-year in every month except January. Lower sales volume defined the first six months of the year. In fact, both pending and closed home sales fell every single month from January through June on a year-over-year basis. Because single-family new construction continues to lag behind buyer demand, total housing supply remains very tight. That ongoing shortage prevented home values from experiencing major price drops. As we look ahead to the second half of 2023, we expect inventory levels to stay constrained while home prices remain steady. You can compare these figures with our June 2023 Spokane Real Estate Update.
Mortgage Rate and Economic Context
Spokane mortgage rates fluctuated between 6.5% and 7.5% during the first half of 2023, and they are expected to hold near those levels through the rest of the year. High borrowing volatility created significant affordability challenges for first-time buyers, trade-up buyers, and real estate investors alike. We anticipate that the Federal Reserve will implement two more rate hikes before the end of the year. That decision comes because the national labor market and job growth figures remain extremely strong. So the Fed will keep its complete focus on bringing inflation down. While rates might trickle down into the 6.0% to 6.5% range later this year, borrowing costs will likely stay elevated for the foreseeable future.
Advice for Home Sellers
Spokane home sellers should focus heavily on bringing their property to a 10 out of 10 condition to stand out in a market where buyers are taking more time to decide. Homes are spending more days on the market as buyer affordability stays squeezed. To land top dollar, your home must look as close to a 10 out of 10 as possible when it hits the MLS. On top of that, sellers should prepare to negotiate on price or offer seller concessions. In fact, a growing percentage of successful sales now include seller credits for mortgage rate buy-downs. Working with buyers on concessions gets deals done in this environment. To find out what your property is worth right now, check out our Instant Spokane Home Valuation Tool.
Advice for Home Buyers
Spokane home buyers can find strong opportunities in the second half of 2023 by asking sellers for rate buy-down concessions to offset higher interest rates. Finding strong rental cash flow remains tricky for real estate investors, but creative strategies like the BURR method, build-and-hold, or fix-and-flips still offer great upside. Plus, we are launching an upcoming joint investment series with fellow local agents to help you evaluate and manage those projects. For traditional buyers, higher interest rates mean less competition on active listings. So you can use seller concessions to lower your initial monthly payments while securing today’s property prices.
Looking to buy or sell? Visit spokanehomeguy.com or call 509-990-SOLD (7653) to get started!
FAQ
Spokane home prices maintained solid year-to-date stability during the first half of 2023 despite facing monthly year-over-year pricing challenges. Low housing supply prevented sharp price drops even though higher mortgage interest rates caused total pending and closed home sales to fall every month from January through June.
Mortgage interest rates are expected to remain between 6.5% and 7.5% through the second half of 2023, with a potential trickle down toward 6.0% to 6.5%. Because the national labor market remains strong, the Federal Reserve is projected to issue up to two more rate hikes to tackle inflation.
Housing inventory in Spokane is expected to remain tight throughout 2023. Aside from January, every month in the first half of the year saw fewer new listings come onto the market compared to 2022. Single-family new construction starts also continue to lag behind long-term buyer demand.
Spokane buyers can make home purchases more affordable by negotiating seller concessions during contract negotiations. Many sellers are offering credits to temporarily or permanently buy down mortgage interest rates. This lowers your monthly payment without forcing you to wait for overall market interest rates to drop.
