Greetings Valued Friend,

Wow what a year 2008 has been!  Many would say this has been one of the most challenging periods in our history and/or lifetime.  Despite the challenges and uncertainty we continue to see an active and stable real estate market here in Spokane.  Take a moment to look for yourself and see how the year ended up;

Market Activity

December Activity as reported by the Spokane Association of Realtors reported closed sales of 285 units during the month which is up 33 units from closed sales as reported in November's Activity.  This represents a 13% increase in units sold as compared to November 2008.  In comparison to December 2007 closed sales of 460 units we were down 175 units which is a 38% decrease this year vs. last year.   For December 2008 pending sales reported were 231 units, which is up 6 units as compared to November pending sales of 225 units, this equates to a 2.6% increase.  In comparison to December 2007 pending sales of 276 units we are down 45 units, a 16.3% decrease.

On a year to date basis closed sales through December 2008 were 4,911 units, which is a decrease of 2,024 units as compared to year to date sales through December 2007 of 6,935 units.  This 2,024 unit difference represents a 29.2% decrease in closed sales year over year.   Pending sales year to date through December 2008 of 4,912 units is down 1,673 units compared to pending sales year to date through December 2007 of 6,585 units.   This represents a 25.4% decrease in pending units' year over year.  

The importance of looking at pending units vs. sold units is that pending units are a more recent indicator of market absorption and activity.  When a property goes pending this signals that the property has gone under contract and the contingencies of the purchase and sale agreement have been satisfied.  All parties are now moving towards the agreed upon close date.  A sold units indicates that the property successfully changed owners.   Due to deals having elongated closing dates related to contingent home sales, financing, 1031 exchanges, etc. this metric doesn't provide us the most current market activity and direction.

During the month of December the average sales price in Spokane County was $201,065 and the median sales price was $179,000.  This is in comparison to November's average and median prices of $200,086 and $179,950 respectively.  On a YTD basis through December our average price of $206,291 is down $5,581 dollars per unit or 2.6% compared to December's 2007 YTD average price of $211,872.  From a median price perspective the December 2008 YTD price of $184,000 is only down $1,400 from our December 2007 YTD median price of $185,400, resulting in a .76% decrease.  So despite the slow down in volume for the year you can see that both the average and median sales prices here in Spokane have held their own. 

With overall sales down close to 30% year to year one may assume that our inventory levels are up close to the same percentage.  What I find interesting is that Spokane Inventory at the end of December stood at 2,488 units which is down 437 units (17.2%) compared to Noveber 2008, however it is also down 65 units (2.5%) as compared to year end inventory for 2007. 

While overall inventory continues it's downward trend and with only 231 pending sales during the month of December our  Spokane market absorption rate  moved slightly upward to 9.28% from November's rate of 7.69%.  For the year December and November were the only months that the absorption rate was below double digits.  When looking at Spokane months of inventory on the market December stood at 10.77 months.  This is a decrease of 17.2% compared to November's months of inventory available of 13 months.   Thus at the current absorption rate of 9.28% and assuming no new listings come on the market, it would take us 10.77 months to sell the current inventory of 2,488 units.

As a reminder when months of inventory are above the 6 month supply the market is considered a buyer's market.  Buyers have many properties to choose from and thus have an advantage when negotiating with sellers.  When inventory levels are between 3 to 6 months the market is considered neutral, where neither the buyer nor the seller has an advantage.  Under 3 months is considered a sellers market, where sellers have an edge over buyers.  The combination of less then stellar sales, along with the typical seasonal slowdown during the holidays has definitely put the Spokane market in the buyers favor.

We continue to see sales, pending sales and activity in specific price ranges and areas of Spokane.  With absorption rates below double digits and months of inventory in double digits it is imperative that you understand the market conditions so that you can be successful in your real estate endeavors.   Enclosed is the Spokane December Price Breakdown and Market Analysis which will provide further analysis and activity for various price ranges and area's of Spokane.   A note of encouragement can be see in all area's under the 250K price range where we experienced consistent double digit absorption rates.

Commentary

Saying that the Real Estate market in 2008 was a challenge could be viewed as an understatement.   However, while we continually read, hear and see about all the doom and gloom as you can see here in Spokane while not the heyday of 2005 & 2006 we continue to have a healthy and active market.   While no one could have predicted the past the same goes for the future.  Yet with the current interest rates and incentives offered to jump start the market now may just be that perfect time to expand your real estate portfolio. 

Here at the Spokane Real Estate Advisor our primary goal is to educate, serve and provide value to you my clients.  We would like to thank you for your support and business in 2008 and look forward to our continued relationship and a prosperous 2009!

Regards,

John Creighton
Spokane Real Estate Advisor
(509) 979-2535

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