Spokane is below average, and for once, that's a good thing.

While Spokane households might not be feeling it, one measure shows cost of living has dipped below a key benchmark, providing a selling point for economic development advocates.

For the first time since 2018, Spokane’s cost-of-living index, produced by the Council for Community & Economic Research, has dropped below the average of the more than 250 metropolitan areas participating in the research. 

“With the cost-of-living issues that we’ve been having in the region, especially on the housing side, this is early evidence that those pressures are starting to moderate,” says Grant Forsyth, chief economist at Spokane-based Avista Corp. “I think that’s going to be good news in the long run.”

Spokane’s cost-of-living index came in at 99.1 in the first quarter of 2024. If a community’s index is below 100, it is less expensive than average to live there, and if it’s over 100, it’s more expensive.

Spokane’s cost-of-living index was just over 101 in the first quarter of 2023.

For comparison, the Kennewick-Richland, Washington area has a cost-of-living index of 97.2, and Seattle has an index of 144.

“It’s clearly notable news, because it’s the only one that I’ve seen where it’s actually said that Spokane is below the national average,” says Steve Scranton, chief economist for Spokane-based Washington Trust Bank. “Given where it was before, that’s a sign of progress.”

The cost-of-living index measures costs including housing, health care, utilities, grocery items, and miscellaneous goods and services, says Joey Gunning, strategic growth manager at GSI, the Spokane region’s chamber of commerce and economic development organization.

The index doesn't measure inflation, Gunning adds.

“While it’s a minor drop, just dropping beneath that 100, being below average is a major selling point as we go out and talk to companies or try to retain talent in companies,” says Gunning.

GSI uses the cost-of-living data in its economic development outreach efforts, Gunning says.

The cost-of-living index dropping below the average may not be felt by the average Spokane resident, however, due to persistently high housing costs and inflationary pressure, says Scranton. 

“My suspicion is that the average person in any city doesn’t compare themselves to other cities, and they’re just going, ‘Oh my God, my rent prices have gone up so much over the last three years, my food costs have gone up,’” Scranton says. “But they may be happy to hear that we’re not as bad as other cities.”

The new data can be helpful in attracting people and companies to the area, however, Scranton explains.

“It is something that is a very useful tool to try and attract people to come to your city,” he says. “It probably has less relevance once you’re living in the city, unless you’re thinking that you want to move.”

Cost of living is one of the primary factors that people and companies look at when deciding where to relocate or expand, he says. 

Scranton says, “When companies are looking at potentially ... establishing business in the city, or people are looking at moving to a city, there’s really three things that they normally look at on a regular basis: What’s the cost of living? What’s the affordability and availability of housing, and what’s the crime rate?”

Another factor that people consider when deciding where to move is the median household income.

Gary Ballew, vice president of economic development at GSI, says Spokane’s median household income is further below the national average than the cost-of-living is, meaning those considering a move to the Lilac City need to calculate whether the lower cost of living makes up for earning less than they might elsewhere.

GSI targets certain industries in its company recruitment efforts, including life sciences, clean technology, and advanced manufacturing, Ballew says.

“All those ones have wages that are going to be a little bit higher,” Ballew says.

Patrick Jones, the executive director of the Eastern Washington University Institute for Public Policy & Economic Analysis, says housing is the primary factor in measuring the cost of living for an area.

Jones says that currently, both rent and house prices have stabilized in the Spokane area.

“They haven’t gone down much, but they certainly haven’t gone up,” Jones says.

The cost of goods likely isn’t much different in Spokane than in other metropolitan areas, Jones contends, although there could be differences in the cost of services, which are dependent on the labor market.

“If the labor market is really tight, then prices of services are going to go up accordingly,” Jones says. “I think what we’ve seen is a labor market becoming less tight. In other words, the unemployment rate in the area has climbed—we have higher unemployment rates now than the nation.”

Jones notes that he’s hesitant to make a big deal out of a minor drop in the cost-of-living index.

“Time will tell whether Spokane returns to being a little less expensive than most metro areas,” Jones says. “We can’t read too much into one quarter.”

Forsyth agrees that housing is the main determinant in the cost of living from city to city.

He says housing prices moderating is likely the cause of the cost-of-living index falling below 100.

“That’s good news, but in absolute terms, housing is still relatively expensive in the region compared to, say, 10 years ago,” Forsyth says.

The median Spokane home price in June was $426,811, compared with $265,312 in June 2019, before the pandemic, Spokane Association of Realtors data shows.

For the region to get back to being considered a great value, Forsyth says the housing market needs to stabilize for a longer period of time or possibly even decline a little.

“We were always considered affordable, largely because housing was relatively affordable here,” he says. “I think that did, over time, draw people to the region, especially as our job market got stronger and there were more job opportunities here. But what happened is, over time, that did drive up the price of housing.”

The data shared by GSI lets people know that if they’re considering a move to Spokane, while nominal wages may be lower, the cost of living, relatively speaking, is also lower, Forsyth says.

“It’s extremely valuable to understand how the cost of living is different from where you’re thinking about moving, to where you are now,” says Forsyth.

GSI also uses cost-of-living data to retain businesses and people who are already here, Ballew says.

“Business retention and expansion is always our first focus,” says Ballew.

Those retention efforts include graduating students at the university level, Gunning adds.

“We have all these great universities graduating all this great talent, and we lose a lot of it to Seattle and California, especially tech talent,” Gunning says.

Gunning says the recent cost-of-living index needs to be communicated to college students in the area who are starting to receive their first job offers.

“If they have opportunities in Spokane and Seattle and wherever else, they should be comparing those numbers,” Gunning says.

Dropping below the average cost-of-living index may not be the deciding factor in businesses or people deciding to stay in or move to Spokane, but it should be a helpful marketing tool, says Scranton.

“Spokane is right there with the average for the U.S., and that should be a good thing, because there’s plenty of places that are really expensive,” Scranton says.