2025 Spokane Real Estate Predictions

As we look ahead to 2025, the Spokane real estate market presents both opportunities and challenges. The past handful of years have brought a lot of change, and as we move into 2025, many local buyers, sellers, and investors are wondering what to expect. From interest rates and inventory levels to market trends and new regulations, several factors will shape the Spokane housing landscape in the coming year. Whether you're thinking of buying, selling, or simply keeping tabs on the market, this post will give you insight into the predictions and strategies that will define Spokane's real estate market in 2025.

The Spokane real estate market is currently in a phase of calm, a typical prelude to the flurry of activity we usually see starting in February or March. Historically, December and January are slower months in terms of sales and average pricing. However, we often observe an upward trajectory in both metrics starting in February, peaking around June or July.

The statistics below represent the entire Spokane MLS, serving counties like Pend Oreille, Stevens, Spokane, Lincoln and Whitman.

Interest Rates: Stability Amidst Some Uncertainty

In 2024, 30 year fixed mortgage interest rates were relatively stable, hovering between roughly 6.25% to 7% (see below). As we head into 2025, it’s likely that mortgage rates will remain in a similar range. While there were fluctuations throughout 2024, the general consensus is that we’re unlikely to see a significant drop in rates. Economists agree that buyers can expect rates to stay above 6% for the next two years. This is mostly a result of the huge national debt. As long as the debt issues remain, economists expect rates to stay in that 6% range and the broader US economy to slow down during 2025 & 2026.

Mortgage rate graph from Dec. 11, 2023 - Dec. 11, 2024 from Mortgage News Daily.

What does this mean for Spokane’s real estate market? For buyers, it’s crucial to be prepared for relatively high mortgage payments. The reality of higher interest rates will continue to affect affordability, especially for first-time homebuyers. For sellers, the relatively stable interest rate environment presents a good opportunity to sell at competitive prices similar to what we saw in 2024, but it also means that the pace of sales will likely remain slower than in the frenzied years of the pandemic. Notice a small but steady increase from 2020 to 2024 when looking at median days on the market in the graph below.

Regardless, some buyers will continue to see Spokane as an affordable alternative to larger markets like Seattle or Portland. With its lower overall cost of living and relatively competitive home prices, Spokane will still attract out-of-state buyers who are looking for more space and a lower price tag. This influx will help maintain demand for homes, especially in desirable neighborhoods. As of November 2024, pending contracts are up for the third consecutive month. We saw a 20% growth in mortgage origination and economists expect a busy spring real estate market, which is when we see the most significant growth in home prices and home sales. Staring your real estate buying process early is going to be key to getting a good deal in 2025.

Inventory: A Shift Toward Balance

In recent years, Spokane has faced inventory shortages that have driven up home prices. But in 2024, inventory levels showed signs of stabilizing and catching up with demand. In fact, the new listings last year are more similar to what we saw back in 2019, which is encouraging news for buyers who have struggled with limited choices. Builders are becoming much more active and nationally we are expected to see more housing starts in the new year. It also looks like homeowners are having an easing of the ‘lock-in effect’ - a situation where homeowners are discouraged from selling their current property and purchasing a new one due to a low mortgage rate below 5% and often below 3-4% as well as financial, economic, or market conditions. This effect gets weaker as time passes and life events happen (divorce, having children, kids going to college, death, desire to be closer to family, etc..). While inventory levels will likely remain tight in 2025, we are noticing a small trend upward with inventory in November of 2024 up 22% from the same period last year. This will help encourage a more balanced market compared to the extreme seller’s market we saw in 2021 and 2022.

What does this mean for 2025? The market will likely feel a little less competitive than in previous years. Buyers may have more options to choose from as active inventory increases slightly, which could lead to a more relaxed home-buying experience. However, sellers will still need to price their homes realistically and be prepared for homes to stay on the market a little longer than during the pandemic boom. First time home buyers are still going to continue to struggle with affordability but with rates stabilizing and pricing leveling off and an assumed increase in income, it might get a little better. Homes that are well-priced and well-presented will still sell quickly, but expect a longer wait time for properties that are overpriced or need significant work.

Home Prices: Stabilizing with Slow Growth

In 2024, Spokane’s median home price saw a slight uptick. As you can see below, in November the median sales price reached around $430,000, up from around $419,000 in 2023. The average median sales price for 2024 was $431,000 vs $421,000 in 2023. After a significant climb in home prices between 2017 and 2022, prices have stabilized over the last few years. Moving into 2025, it’s expected that Spokane’s home prices will continue to grow slightly, and at this new, slower pace.

Experts predict modest price increases in 2025, with homes continuing to appreciate but not at the rapid pace seen in the pandemic years. This slow and steady growth will be a welcome relief for buyers who felt or feel shut out of the market due to skyrocketing home prices. But, for the average Spokane household income, housing prices still remains high and there are some signs of distress in market affordability. Distressed listings, or properties that are listed in some non-standard condition (i.e. foreclosures, short sales, etc...) are increasing. Though the percentage of distressed listings is still low; .2% in 2024, this is a 41% increase from 2023, and roughly doubled from 2022. Sellers may need to adjust their expectations, as some buyers will likely be cautious with their offers to meet the needs of their personal financial picture.

Negotiation Power: A Small Shift Toward Buyer Leverage

One of the most significant shifts I noticed in the 2024 market was the return of some negotiation power for buyers. With the pace of the market slowing and interest rates remaining high, many buyers have begun to negotiate a little more with sellers. Buyers now seem empowered to ask for things like seller-paid closing costs, repairs, and concessions.

This trend will likely continue into 2025. Sellers who expect to receive offers above asking price may be disappointed, but buyers who are prepared to negotiate will have more room to secure favorable terms. For example, buyers may ask for concessions to cover repairs, or they might negotiate for sellers to cover loan costs or agent commissions. The increased ability to negotiate is something that will shape the market in 2025.

After analyzing my sales from 2024, I found that I have collectively put $77,050 back in client’s pockets over the past year by negotiating items such as a new sewer line, new roof and radon mitigation system be installed on behalf of buyers. Now, more than ever, a quality real estate agent who is hyper-focused on the local real estate landscape can help negotiate fair pricing (and savings!) for buyers and sellers.

Neighborhood Trends: Growth in Suburbs and Smaller Communities

As for neighborhood trends, we’re seeing continued interest in Spokane's suburban areas as well as smaller more rural communities outside the city. More people are looking for homes in areas in Spokane County (outside Spokane city limits) and Spokane Valley, where they can get more space for their money. Additionally, the rise in remote work has led many people to prioritize homes in quieter, more rural areas, where they can enjoy a slower pace of life while still being within commuting distance of Spokane.

In 2025, expect to see more buyers seeking out homes in these less urbanized areas, driven by the desire for larger properties, more affordable prices, and better access to outdoor activities. While Spokane’s city center will continue to have appeal, the demand for homes in smaller, quieter communities will likely remain strong.

Changing Regulations: Expect Moderate Change to the Market

The power of the mortgage industry changes that were implemented after the housing recession are showing their strength. Although the economy is struggling, we are only seeing 90+ day delinquent mortgages at about 2% nationally. Homeowners across the US have a staggering 32 trillion in equity which further supports the idea that we are not in a housing bubble and the market is fairly stable.

With another new regulation impacting the real estate industry, the National Association of Realtors (NAR) settlement, 2025 could be a year where buyers and sellers find themselves navigating a more fluid environment. The changing landscape of real estate commissions and agent representation could make negotiations trickier, as buyers and sellers begin to better understand their rights as well as the benefits of working with a quality real estate professional.

While some consumers may feel empowered to negotiate their own deals, the importance of a skilled real estate agent will become more apparent. Agents will continue to play a crucial role in helping buyers and sellers navigate these new rules, ensuring that they are getting the best deal possible while avoiding pitfalls in an evolving market.

Advice for Buyers and Sellers in 2025

If you're considering buying or selling in Spokane in 2025, here are a few key tips to keep in mind:

For Buyers:

Start preparing financially early: With interest rates remaining steady, it’s important to budget for a higher monthly mortgage payment. Work with a mortgage lender to get pre-approved and understand your options. And, start planning earlier to prepare for higher entry costs.
Consider buying outside of peak season: January, February, July, November and December are all great months to purchase homes and sellers may be more flexible during these months than peak months.
Plan for the long term: Purchase a home that will work for the next 5 years or more. Selling and purchasing a bigger home sooner than that will likely not be advantageous given the estimated slower equity gains.

For Sellers:

Price your home realistically: Homes that are priced too high will sit on the market for longer, so work with your agent to find the right price point.
Prepare your home for showings: Take the time to stage and make small repairs. Homes that are in move-in condition will attract more interest. Start your preparations as early as you can. Starting early can turn a daunting task into a manageable process.
Be open to negotiations: In 2025, your home will have more competition than compared to the past 5 years, so be prepared to work out a deal that benefits both parties.

Final Thoughts

The Spokane real estate market in 2025 is shaping up to be one of stabilization and moderate growth. While high interest rates and inventory challenges will persist, the market will offer more opportunities for buyers and a more balanced playing field for sellers. With the right preparation, negotiation skills, and market knowledge, both buyers and sellers can navigate this new landscape and make smart decisions that work with their financial picture and personal goals.

Whether you’re looking to buy, sell, or simply stay informed, the coming year holds much promise for the Spokane real estate market. It’s a great time to plan ahead and get ready for the opportunities 2025 will bring. I'd love to get the process started with you as soon as you feel ready - it's truly never too early to reach out especially in a market that is not as affordable for locals. Working with a knowledgeable and experienced realtor is so beneficial, so if you’re ready to start your home buying or sell journey, reach out to me here!

2025 Spokane Real Estate Predictions: What to Expect