ISSUE 118
NEWSLETTER
AUGUST 2021
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WITH COLDWELL BANKER TOMLINSON
Spokane opens to the world
I
n 1960, my parents bought a house at 4014 Rogen Dr. in Encino, California for $59,000. One 1960 dollar would buy $9.22 in today's goods and services, thanks simply to inflation, which means that my parents paid the 2021 equivalent of $544,000 for that house. But $544,000 would not buy that house today. A popular online valuation service estimates its current market price at $1,761,000. Why? The reason is that, more than the mere price of the home, its value has increased, driven by the mighty engine of DEMAND. And what caused this increase in demand? The transformation of Los Angeles from the insular community it was to a vast, wealthy, cosmopolitan city with financial connections to every corner of the world. Just such a transformation must have been the goal of the visionaries who, in 1974, tore down Spokane's tangle of partially disused railroad lines and invited the world to join them for a Fair. They jump-started a local economy in the doldrums, but the real transformation had to wait for the deployment of the Internet and, ironically, for the world pandemic of COVID-19. The awareness that one didn't have to be "there" to avoid being square dawned in the first decade of the new millennium, when Microsoft personnel, headquartered in
Redmond, started buying homes in Spokane, where the Cost of Living Index was half of what it was in Seattle Today, that differential is not quite as great, but still 19% lower. Today’s Microsoft employees could save 19% of their salaries by moving to Spokane. Needless to say, with the advent of Zoom, and the spreading awareness that productivity could be actually increased by working from home, the COVID-19 incentive suddenly shone a bright light on our region. Over the past five years, it has become extremely difficult to find an investment property in this region that satisfies basic investment standards. Rates of return considered totally unacceptable in 2016 are today fought over ferociously. According to Dave Black, of NAI Black Commercial Real Estate, rates of return in our market have fallen from 8-10% to below 5%, while vacancy rates, traditionally in the 5-6% range, now hover around 1%. None of these factors, however, has had as profound an impact on our region's real estate market as has the growth of population, which has risen over the past decade by a startling 101,000 residents, according to the 2020 census. ...continued on next page