High Home Sales Prices in a Tight Housing Market as Economic Activity Resumes in Spokane, Washington
HUD’s Comprehensive Housing Market Analyses provide information on changes in local economies, housing markets, and populations and provide three-year forecasts for demand in the area. This article is part of a series that sheds light on the content of these analyses.
The Spokane Housing Market Area (Spokane HMA) in eastern Washington includes the counties of Pend Oreille, Stevens, and Spokane and is coterminous with the Spokane-Spokane Valley, WA Metropolitan Statistical Area. The Spokane HMA borders Idaho in the east and Canada in the north and is the largest urban area in eastern Washington, with an estimated population of 593,700. A recent comprehensive housing market analysis highlighted economic and housing market activity in the Spokane HMA.
Economic activity resumes to near-prepandemic levels
Economic activity in the Spokane HMA has nearly recovered to prepandemic levels; from May 2020 to May 2021, payrolls increased by 9.2 percent for an additional 21,300 jobs. Although nonfarm payrolls remain below prepandemic levels, economic activity has resumed across all sectors. The unemployment rate in the area was 4.3 percent in July 2021, which was lower than the national unemployment rate of 5.4 percent.
Over the past year, employment growth was fastest in the leisure and hospitality sector, which grew by 37.2 percent for an addition of 6,100 jobs. The leisure and hospitality sector accounts for 8 percent of area payrolls. This fast growth is the result of economic activity resuming in this sector, which was mostly shut down during the first year of the pandemic.
The education and health services sector is the largest employment sector in the Spokane HMA, accounting for 23 percent of area payrolls. The education and health services sector added the most jobs over the past year, growing by 14.1 percent for an additional 7,200 jobs. The report attributes the high rate of growth to the expansion of the healthcare and social assistance subsector.
Employment growth is expected at an average annual rate of 2.9 percent during the next 3 years. Job growth is expected to be strongest in the leisure and hospitality, trade, and transportation and utilities sectors as governments lift public health restrictions and businesses resume full operations.
Tight sales market and high home sales prices
The Spokane HMA sales housing market is tight, with an estimated vacancy rate of 0.7 percent. The vacancy rate has declined because of limited inventory and strong population growth. There were 8,925 total home sales over the past year, a 19 percent decrease from the previous year. During the same period, the average home sales price increased by 18 percent to $333,300. From April 2020 to April 2021, 1,975 homes were permitted for construction, down from the 2,025 homes permitted in the previous year. These homes will help ease the demand for housing in the Spokane HMA, where demand is estimated for 7,300 new homes over the next 3 years.
The rental market in Spokane is balanced, with an estimated vacancy rate of 4.5 percent. Apartment units house 65 percent of renters. Approximately 1,275 rental units were permitted from April 2020 to April 2021, down from 1,500 units permitted in the previous year. An estimated 2,200 apartment units are under construction and will help ease demand for apartments in the Spokane HMA, which is estimated at 4,650 rental units over the next 3 years. For more detailed information on the Spokane HMA, see the recent comprehensive housing market analysis on the area.