The Market in 2024: Is it all Doom and Gloom?

It’s not surprising to hear clients and those around me complain about the increase in prices that seem to NEVER GO DOWN. Or about how the crazy high interest rates are keeping buyers from purchasing a home. It seems that all we hear right now is a lot of doom and gloom regarding the real estate market. But… how true is this? and will these high rates and high prices continue?

Yesterday, I had a chance to sit in on a Real Estate Market Forum Conference, and here are my takeaways:

1. We are currently seeing VERY low inventory. In the North Idaho and Eastern Washington regions, we are seeing around 2 months of inventory. That means that if no more houses came on the market, it would only take 2 months for everything to sell. To put that into perspective, a healthy level of inventory is around 5 months. Why is this? We are seeing such low inventory because roughly 70% of homeowners have mortgage rates of less than 4%. They want to keep those rates.
2. One more thing regarding low inventory: If our region were to see a balanced level of housing for the size of our population, Spokane county would need 4,400 more housing units, and Kootenai County would need 3,000 more. Mind Blowing.
3. Over the past 7 years, there has been a 12% year-over-year increase in prices. This includes the peak price levels we saw after COVID-19, and the decreases we have seen since then. With the average increase in real estate value being around 5%, these levels are not sustainable. Will we see a dramatic drop though? Probably not. Although I don’t have a crystal ball (that’d be cool).
4. With increasing prices comes lower levels of affordability. The affordability index is 32% below where it should be in Spokane County and 28% below where it should be in Kootenai County.

Its not all bad news though! Although we really liked and started getting used to the next-to-nothing interest rates we had a couple years ago, we are still below the 30 year mortgage rate average of 7.5% (around 7.5%). AND… We are expecting to see a slight drop in interest rates partway through the year. Most likely these won’t be significant changes, but it will help home buyers afford more.

At the end of the day, it’s not a terrible time to buy or sell. Although interest rates of higher than we’d like, they are not crazy high. And if you are seller, you have a slight advantage in the market right now. You won’t be able to jack your price up, but you may see multiple offers come in pretty quickly.

If you have any questions at all, or have thought about buying or selling your home in the Spokane and Coeur d’Alene area, let me know! I would love to help!