Spokane might still have a reputation for being an affordable place to buy a home, but for first-time buyers and those with lower incomes, the American dream appears to be getting harder to achieve here these days.


The vibrant Spokane-area real estate market has fueled surging prices for homes, putting smiles on the faces of homeowners who for years saw only modest appreciation in value. The dark side of that boom, however, has been that homes considered to be affordable to lower-income buyers are becoming scarce here, and that has affordable-housing advocates concerned.


The problem might best be illustrated with this comparison: While average home prices here have shot up roughly 30 percent since 2001, median household income has edged up just 4.3 percent.


A price of about $100,000 is what its taking for new families to get into their own home, says Robin Waller, community coordinator for Spokane Neighborhood Action Programs, better known as SNAP.


As of early this month, fewer than 200 homes were available for sale at $100,000 or less through the Multiple Listing Service here. Thats just 14 percent of the about 1,400 homes listed here on the MLS, says Rob Higgins, executive vice president of the Spokane Association of Realtors.


That percentage appears to be dwindling at a fast rate, he says.


In 2001, 44 percent of all single-family home sales in Spokane County were of homes costing less than $100,000, according to the Association of Realtors. During the first four months of this year, that figure is down to 28 percent, it says.


The problem appears even more pronounced in Kootenai County. The average home price there has climbed to $185,000, says Ron Adams, a loan officer at Hometown Lending, of Coeur dAlene.


He claims only a handful of residential real estate listings are currently priced there at under $140,000, let alone below $100,000.


Buying a new home locally for less than $100,000 might be a thing of the past. Condron Construction Inc., of Spokane, for instance, sells its new entry-level, two-bedroom homes for about $147,000.


Even homes bought partially with sweat equity through Community Frameworks, a nonprofit that works arm-in-arm with future home buyers to construct affordable housing, is well over the $100,000 figure. Such two-bedroom houses cost about $118,000, says Chris Venne, director of project development at the nonprofit.


Venne believes escalating land prices and a 25 percent jump in material and subcontracting costs over the past two years have pushed almost all new houses beyond the $100,000 mark.


Overall, rising home prices are being driven principally by dwindling inventories and attractive mortgage rates, real estate observers say.


Also, theres been strong new demand nationally by real estate investors for homes costing less than $100,000, says Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University, in Pullman.


Anecdotal evidence suggests that those investors are active in the Spokane market as well, Crellin says. By investing a reasonable amount of cash and making modest improvements, those buyers who dont intend to live in homes can often realize an appreciable gain in value from their investment.


Affordability index


Spokane County has routinely scored well on a real estate measurement called the affordability index, which measures the ability of a typical family to make payments on a median-priced resale home, assuming a 20 percent down payment. Measured from data supplied to WSU, the affordability index for Spokane County in 2004 was 169.7, far better than the 111.8 rating for the state, but well below its year-earlier figure of 209.8. A figure for 2005 wont be available until after the end of the year.


Spokane also experienced some affordability slippage in another indicator. Called the first-time affordability index, that indicator focuses on less-expensive homes, and accounts for the lower down payment that likely will be made on them and the buyers likely lower income.


Though Spokane County again beat the statewide average of 64.9 on that index, with a 93.3 rating, during the first quarter of this year, that score marked the first time Spokanes index has dipped below 100, says the Association of Realtors Higgins.


WSUs Crellin also employs another real estate measurement he calls months supply of housing available for sale. By that scale, the reduced supply of affordable housing in Spokane County may be even more critical, he suggests.


From these numbers, Spokane County is in jeopardy of seeing substantial increases in prices (for homes up to $160,000) in the short term, he says.


The months-supply index is determined by taking the number of homes available for sale in a particular price range, dividing that by the number of homes in that price range sold in the previous year, and multiplying that number by 12. A result between 5 and 7 indicates a stable housing market in the designated price range, says Crellin, while a number below 5 indicates a shortage of such housing and result of more than 7 indicates a surplus of that price-range home.


WSU did such an analysis in late March of homes here priced at up to $80,000, and also of homes ranging in price between $80,000 and $160,000. It found just a 1.2 month supply of homes in the $80,000-and-under segment, and a 1.4 month supply in the higher level.


Building homes


In recent years, Community Frameworks, formed in 1974 as Northwest Regional Facilitators, has focused its energies on building affordable homes by working with individuals and families who earn 80 percent or less of the median household income.


The nonprofit works on about eight to 10 homes at a time, in each case having qualified families each work about 20 hours a week on the homes as part of their purchase agreement.


It takes about six months from the time a family qualifies for the program until they move into their new home, says Venne.


By that time, theyve typically worked enough to earn the equivalent of a down payment and closing costs, and have worked with a Community Frameworks counselor to pre-qualify for a mortgage loan based on their income.


Community Frameworks has built more than 100 homes here in recent years, and now is building an average of about 30 homes a year, says Venne.


We have from five to seven times more inquiries than slots to fill, he says.


In addition to single-family homes, the program also includes the construction of new condominiums, which end up costing buyers as little as $85,000 for an 800-square-foot, one bedroom unit, to about $104,000 for a 950-square-foot, two-bedroom condo, says Venne.


The organization, which employs 22 people here and six others in Bremerton, Wash., also is embarking on a new joint venture with the U.S. Department of Agriculture to build 10 new homes this year and 10 more next year near the Fairways Golf Course, on the West Plains.


In that venture the buyers will work nearly full time helping to build their respective homes, with Community Frameworks acting in a supportive role, Venne says.


He says eventual homeowners will have about $20,000 to $25,000 in sweat equity in their homes by the time they are built, and will qualify for a USDA-backed mortgage rate as low as 1 percent.


Habitat for Humanity-Spokane is another nonprofit that works with low-income people to help them build homes they will own upon completion. The well-known nonprofit serves families who normally earn between 25 percent and 50 percent of the state of Washington median household income, says executive director Michone Preston.


By June 22, we will have built 149 homes in the Spokane area, Preston says.


She adds, however, that, It is getting increasingly harder to get available land to build on.


She says participants in the program must supply 500 hours of sweat equity; attend seven mandatory workshops on budgeting, energy efficiency, and other topics preparing them for home ownership; meet income criteria; live in substandard housing at the time they apply; have a fairly stable family unit; and undergo a credit check.


Families with children are given priority in the program, says Preston.


Habitat for Humanity buys the land for the homes it builds, and provides the financing for the people who buy the homes.


She says buyers are charged about $65,000 for a two-bedroom home and about $72,000 for a four-bedroom home, and they make their payments, including taxes and insurance, to the nonprofit agency.


We are ministry driven, says Preston. Unlike a bank, we have the freedom to allow families to get a couple months behind on payments and find a way out of their problems.


Another local agency that can help in affordable housing ownership is SNAP, which, among other programs it coordinates, offers a down-payment assistance program for low- and middle-income homebuyers in nine targeted areas in greater Spokane.


Referred to SNAP by the Spokane Housing Authority, participants in that program can qualify for down-payment assistance for homes valued at up to $172,000 in the county and up to $129,000 within the city of Spokane, says Waller.


SNAP and the Spokane Housing Authority also are involved in making rental units affordable for low-income individuals and families.


SNAP manages 262 rental units in the county, targeted toward those who earn 50 percent or less of the median household income.


Of the about 4,500 people in Spokane County who live in Spokane Housing Authority housing, most are situated within the city of Spokane, says Justin Vest, director of assisted housing.


Most of the people we work with are at 30 percent or below the median income level, says Vest, whose agency regularly works with the U.S. Department of Housing and Urban Development to subsidize rents.


In the HUD program, rental homes are located and rented at a fair market priceabout $615 for a two-bedroom homebut the renter pays only about $200 to $250 of that, with HUD paying the remainder, Vest says.