(Disclaimer: Elected leadership, builders, and owners – be inspired! This blog is in no way intended to criticize. I’m simply speaking to those who are already thinking in this direction to go ahead and take action. We each have daily opportunities to make our community better. Some of you out there can make great impact by putting a few simple decisions in motion. Let’s do it!)
I was talking with a client today about the coming 12 months in the Spokane housing market. We discussed the real need for inventory and the incredible pressure on Spokane buyers and agents right now. In trying to gain a sense of the need for inventory, I looked at new lots platted in the City of Spokane in 2017 and I found that there were only 141 new lots platted. That is equal to less than 17% of the 837 lots that were platted in the city in 2007. If we’re not able to develop new subdivisions in the city, then infill development and construction should be a 2018 top priority all across our county.
Multiple offers on listings are so common now, we’re not even surprised anymore. Three quick anecdotes from local contacts:
– Agent: I sold a couple a new home they closed in October. They re-listed the house in January due to a work relocation and sold it for $20k more than they bought it for 3 months earlier and they had multiple offers.
– Seller: We listed our house the first part of December (what we thought was the slowest season for buying). This was a 3000sq ft, 4br/2ba, rancher with full basement off 24th just east of Hwy 27 in Spokane Valley. While working with our Realtor in October, we were planning to list for $250-255k. We started at $260k thinking that might be pushing it – but what the heck. We listed on a Thursday evening and stopped taking offers on Saturday at 3PM. By that time we had 6 offers, 5 of which were over asking price. We ended up accepting $285k, which our Realtor said was over the retail price of the house.
– Agent: Last week I wrote an offer for clients on a home that had been on the MLS for 6 hours. Listed at $195k, and we went in at $215k. This was my clients 4th offer on a home. We lost it! There were 7 offers by that night and one other offer was a similar price AND those buyers waived the appraisal contingency! It’s crazy. On a good note, their 5th offer on a home was accepted.
So, with the tight market in mind, let’s discuss 3 key ways to creating more affordable housing in Spokane.
Government leadership needs to be inspired to act. Years ago, the Growth Management Act created development boundaries around every city in the state of Washington, forcing development to only occur inside the city borders. The idea is to cause infill housing to occur; however, often there are enough barriers to development that it just doesn’t happen without an incentive. Perhaps we could consider a statute defining an “infill lot” and then waive permit fees and/or hookup fees for “infill housing”. There are plenty of single, vacant lots around Spokane that will never be developed because it is simply not cost effective to do so.
The Spokane Construction industry needs to be inspired to act. I’m not suggesting homebuilders are the bad guys – not at all. Home construction is absolutely a necessary and critical industry, and is a key driver of the local and national economy. My hats off to those contractors willing to take the financial risks they do to support their communities and their families.
But in every community, there is a real need for contractors who feel it’s also critically important to build entry-level housing, and they are willing to forego the higher income in favor of providing for families in need.
The Wall Street Journal just wrote about this problem last week:
Bob Snowden, a home builder in the Grand Rapids, Mich., area … says he gets calls practically every day from families in the thriving western Michigan city asking him to build them a new home. He ends up turning most of them down.
Demand for housing is stronger than he has ever seen, he says, but land and construction costs have roughly doubled since the end of the last boom a decade ago.
So Mr. Snowden has shifted his focus from starter and mid-price houses to high-end properties, where the profit margins are fatter. His production has dropped from roughly 25 homes a year in the mid-2000s to about a dozen, he says.
Hardly any entry-level homes are going up in town, he says. “If I was a young couple today, unless you’re making really good money, what are your options,” he says, “short of moving into a $1,000 a month apartment”—an expensive proposition in this part of the country.
Mr. Snowden isn’t doing the wrong thing at all, he’s a businessman. I get it. But we also need contractors with a mission in mind – to provide affordable, entry-level housing on vacant lots around the city.
I would love to see a number of Spokane area landlords inspired to act. One of the easily forgotten results of the last housing boom is the fact that rental-investors gobbled up much of the affordable housing stock in the last recession and many or most haven’t yet released it back into the market for sale. Again, I understand that these are business people making a profit. I fully support that. However, our communities need some of that housing offered back into the market for homebuyers. First-time buyers are particularly feeling the pinch. Study after study has shown that home ownership makes for better, healthier communities. If you own single-family rental housing and you put it up for sale, you are helping to improve your community. What a legacy you could leave!
This was recently well articulated from the Santa Clarita Valley Business Journal, as written by their local chairman of the Association of Realtors:
“Home ownership yields greater awareness of the political process, higher membership in voluntary organizations, increased church/synagogue/mosque attendance, lower teen pregnancy, higher student test scores by children living in owned homes, a higher rate of high school graduation (which yields added earning power over a lifetime), children who are more likely to participate in organized activities while viewing less television, and better overall physical and psychological health.”
The current housing stock is obviously not enough to meet our current or future needs. Spokane is growing and is rapidly being discovered as a fantastic place to raise families or to retire. Collectively, we need to be intentional about creating the kind of city we want. Let’s get there together.