Spokane Housing Market Slows Noticeably--Values and Sales Slip Along With Real Estates Excise Tax Revenues

Over the last few years, state tax revenues from sales of homes (Real Estate Excise Tax) and on construction and building materials largely have been responsible for much of the surplus tax revenues.  The unprecedented boom in home sales and building appears to be slowing significantly further adding problems for state lawmakers and elected officials who are now faced with at least a $2.5 billion revenue shortfall next year when they put together the 2009-2011 budget.

The Spokesman-Review reported that Spokane, where home buyers found reasonable priced houses and where builders experienced a bonanza since 2004, is finding itself with declining housing sales, sliding house prices and corresponding dropping sales tax revenues from construction materials and the Real Estate Excise Taxes assessed on the sale of homes. 

According to the Spokane Association of Realtors, the numbers are showing big changes.  Since 2004, April building permits averaged more than 1,900 in that month.  In 2008, they fell to just above 1,300, the number from April 2000 when Washington and the nation headed into its economic slump.

Here are some other facts published by The Spokesman-Review  about the slowdown which showed up in April's housing numbers:

• There were 3,218 homes on the market at the beginning of May - 673 more listings than at the same time last year.
• The year-to-date average sales prices was $201,286, down 3 percent over the same time last year.
• Spokane County home sales total $264 million so far this year, down from $440.65 million for the first four months of 2007.

"It's been a long time since we've had a really significant down cycle in real estate markets," Glenn Crellin, director of Washington State University's Washington Center for Real Estate Research, told the Spokesman-Review. "Here in the state of Washington, while there is a softness in the marketplace, and that certainly not to be denied, this is not a market that one should panic in."

While there is no reason to panic, those running for election this year ought to keep a sharp eye on this economic trend and tell voters how they plan to deal with the shortfall when they are in Olympia and Washington, D.C., starting next January.

Don C. Brunell, President (DonB@AWB.org)