Regular observers of the real estate market know that housing is a cyclical industry.

Following the Great Recession, we saw a slow initial recovery prior to seeing out-of-area buyers flood our market to access our region’s low home prices and high quality of life. As we all watched the flurry of housing demand in this upward cycle, fueled by low mortgage rates and the inability of the housing industry to provide necessary housing supply, the result was record low housing inventory and a housing crisis that priced a large majority of local citizens out of the housing market.

The upward surge in activity and home prices has finally subsided with the doubling of mortgage rates this past year. Many potential buyers are now on the sideline, waiting to see if rates and home prices have steadied or are potentially headed downward. We see housing inventory levels returning to more sustainable levels and some builders offering concessions and price declines to spur homebuyer interest. It would be reasonable to believe that this is the first sign of a cyclical downturn.

Yet, the fundamentals of our market are different than during past cycles and tell a different story. Spokane County’s population grew by 56,000 people from 2010 to 2021, or around 14 people per day, and the pace shows no sign of slowing. Spokane County’s population growth is expected to grow by nearly 50,000 people over the next decade, according to the state’s Office of Financial Management’s medium growth projections. Data from the U.S. Census Bureau illustrates what many policymakers and homebuilders already know: Spokane is one of the city’s leading the nation for population growth and the need for housing units.

The key issue we are facing is that we don’t have enough homes to meet our community’s needs. It’s simple economics: lack of supply drives up costs, and we’re way behind on supply.

Costs of construction are at the forefront of this challenge and were driven by the lack of available building lots, supply-chain issues due to COVID, and a shortage of skilled workers.

Between 2010 and 2021, Spokane County underbuilt new homes to the tune of hundreds of homes per year. Even now, we’re building around 1,400 fewer single-family units per year than needed by our growing population. Projections show that Spokane will need to add nearly 2,900 housing units per year to meet housing demand, but we’re only building around 1,500.

It will be nearly impossible to hit this threshold with current zoning policies and newly passed development charges on infrastructure. Missing-middle housing types, like duplexes, triplexes, and townhouses, make up only 9% of Spokane’s housing while single-family detached homes account for over 68%. Efforts to modernize zoning codes and policies are underway but can’t happen soon enough. New transportation and water-sewer connection fees will only make housing more expensive and stifle the city’s efforts to promote these housing types.

The demand for housing also drives the demand for skilled workers, and contractors have found themselves in bidding wars for workers. The labor gap is expected to get worse as a large population of construction workers nears retirement age. Twenty-three percent of construction workers in the state are over the age of 55, and 750,000 will be of retirement age by 2030. There are renewed efforts within the building industry to promote careers in construction, but budgets for career and technical education in high schools continue to be cut, and students lack access to career pathways for home building trades.

Through Spokane Home Builders Association’s industry-funded trades exposure program Frame Your Future, we’re collaborating with Spokane-area schools and industry leaders to create a future worker pipeline for residential construction. But we can’t do it alone.

Fortunately, the supply-chain issues are beginning to wane, with lumber prices now at pre-housing-crisis levels and materials being available in more reliable time frames.

So where do we go from here? Industry experts outside of our market identified several decisive actions that our community can take to combat Spokane’s housing crisis. We also need our elected leaders to focus on solving the issues we can control, such as reworking restrictive zoning laws and prioritizing policies that support families being able to live in the same community they work in.

We aren’t helpless in the face of this crisis, but it will take leadership, strategic planning, and cooperation across neighborhoods and councils to ensure Spokane is an affordable place to live—and grow.