Seattle Times February 20, 2022 “The next affordable city is already too expensive” by Conor Dougherty (The New York Times)
Read the Seattle Times or The New York Times for all the detail.
Summary by 2244
Image from tollbrothers.com
“In Spokane, [the largest city on the road from Seattle to Minneapoiis] home prices jumped 60% in two years, pricing out broad swaths of the populace. The increase is fueled by buyers fleeing the boom in other cities. Who will have to flee next?”
What is driving up the prices?
Refugees from high-priced cities driven away by the daily hassles of congestion and or unable to find sufficient housing to buy or even rent.
What are the challenges for a city like Spokane?
According to Steve MacDonald, formerly of Los Angeles and Southern California and now Spokane’s director of community and economic development, “‘I’m realizing more and more how important the future prosperity of this city is about getting housing right…[and] if we don’t, it’s going to track more closely with what happened in Los Angeles.”
Like elsewhere in America, the inventory of housing is too low and the building rate is too low. Too low in part due to neighborhood (NIMBY) and local government resistance to increasing housing density. The demand continues to spiral upward with more work-from-home and as more equity-rich urban dwellers migrate in search of a better lifestyle and lower housing costs. “The sharks fleel New York and Los Angeles and gobble up the housing in Austin and Portland, whose priced-out homebuyers swim to cheaper feeding grounds of places like Spokane.”
The sudden shift in demand has left “the city grappling with the consequences.” True wages have increased, more jobs are available, commercial real estate has boomed-the skyline has been transformed but longtime residents are feeling the pinch of a suddenly less-affordable city. Spokane’s mayor, Nadine Woodward commented “‘I never thought I’d see the day where my adult children couldn’t afford a home in Spokane.’”
What’s happening in response to the high demand?
Building is faster in the suburbs where local builders now find themselves in competition with national builders “like D.R. Horton and Toll Brothers.” Steve Silbar, Spokane residential real estate agent, comments that people are viewing offerings online and making offers without a real walk-through and without any tangible knowledge of the area. A “white house with the red door sits on a quiet block near Gonzaga University. It has two bedrooms, one bathroom and 1,500 square feet of living space.” Silber “has sold it twice in the past three years…November 2019…$168,000 and [a buyer] got it with zero drama…this year…Silber listed it for $250,00…[and got] fourteen offers and a bidding war later, it closed at $300,000.” Silber’s buyers earlier in his career were “‘nurses and teachers’ and now they’re corporate managers, engineers and other professionals, ‘what you can afford in Spokane has completely changed.’”
The prices in Spokane at $411,000 for a typical home are historically high for the area but low compared to the Bay Area at $1.4 million, Los Angeles $878,000 and Portland at $550,000. ‘Five years ago, a little over half the homes in the Spokane area sold for less than $200,000 and about 70% of its employed population could afford to buy a home…” Now only 15% of the employed can afford to buy a home.
Due to the higher competition to buy houses some are delaying buying plans opting to rent instead-an activity that has increased demand and prices on rental units as well. It flows down from there as social agencies housing the poor lose units to price effectively forcing more people into tent cities etc.
The city has created initiatives, to help alleviate the shortage, that include building more shelters, allowing “developers to repurpose commercial buildings.” making it “easier for residents to build backyard units, and is rezoning the city to allow duplexes and other multi unit buildings in single-family neighborhoods.” Not surprisingly some of these measures have drawn the ire of local residents. John Schram (Neighborhood Council of Spokane’s Comstock Neighborhood) commented “‘I have nothing against duplexes and triplexes just not next to my house.”