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Spokane's housing market is booming, as commercial real estate heads for a rebound

Even in a pandemic year, Spokane's real estate scene is showing signs of optimism, with a strong housing market and the potential for new businesses.

SPOKANE, Wash. — If there's one sector in the American job market that's holding strong during the COVID-19 pandemic, it's the housing market.

"By all rights, it should have put us on our ears," says Tom Clark, President of the Spokane Association of Realtors. "It should have just brought the real estate market to a screeching halt. But it didn't."

Clark says the housing market has been strong so far in 2020, saying home real estate has been "swimming upstream" during the COVID-19 crisis.

As of August 2020, home sales in Spokane are only down by 0.008%, and Clark says cities like Spokane are at a huge advantage right now due to low housing prices, fantastic mortgage rates, and a growing desire for people to live in suburban and rural locations.

"The demand and shortage of inventory is the biggest issue," Clark said after gathering the latest data through August. "Due to a shortage of inventory... gosh, I haven't shown a home in the last two weeks that hasn't had multiple offers on it."

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The boundaries of how far Spokane's housing market can grow are restricted by the "Growth Management Act," a state law that helps manage urban growth rates across Washington.

"Folks are realizing, 'Gee, I don't have to live in downtown Seattle or other downtown metropolises," Clark said. "They think, 'I can live a little bit more rural, I can have a little bit more of my social distancing, and I don't have to go to the office nearly as often because COVID has taught me I can work remotely pretty darn effectively.'"

But the lack of available homes in Spokane has been an issue for years, Clark said, and certainly isn't a new problem created by COVID-19.

The closest sign of a direct impact, according to Clark, would actually come if there was suddenly more land available to build homes.

"We've got a shortage of people working in the trades," Clark said. "Framers and electricians and plumbers and roofers and concrete workers and things like that. There's a shortage of folks in the trades right now, so we've got some catching up to do there."

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As for Spokane's commercial real estate situation, Jeff Johnson, the President of NAI Black Commercial Inc., said the situation surrounding COVID-19 is like looking at two different sides of the same coin.

"We have businesses that are struggling," Johnson says, "but we also have job creation and people moving here."

A surge of new, interested business owners have made their push for a spot in Spokane, Johnson said, with a bevy of new jobs that include everything from medical technology and genetics, to start-up companies and even more craft coffee suppliers.

"On the sales side, I would guess revenues are down about 30%, with some businesses maybe seeing more," Johnson said. "But I think in the 2nd half of the year, based on the deal flow I'm seeing and the number of transactions we have in the pipeline, I think we're going to finish 2020 really strong, which I think is very fortunate for our COVID-19 situation."

But first, Johnson said, we have to see how Spokane's current crop of businesses survive.

And the hardest-hit businesses have been fitness centers, retailers that compete directly with e-commerce and restaurants.

"We know we still have more fallout coming," Johnson says. "There will be some restaurants that are not going to survive COVID, even larger ones — not even with help from a landlord or maybe help from a PPP loan."

Landlords have been helping whenever they can, Johnson said, citing the idea that more often than not it's actually more expensive to replace tenants in the realm of commercial real estate.

As for saving our favorite local businesses, Johnson said it remains to be seen which local spots last through the COVID-19 pandemic, but that it has to be a community-wide effort to save our absolute favorites in whatever ways we are financially able to do so.

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