September 20, 2023: Surviving the Frozen Middle in Spokane and Cheney

This entry is part of our retrospective market updates tracking the housing cycle. The housing market has entered what I call the frozen middle. On one side, we have homeowners locked into old mortgage rates who refuse to list their properties because they do not want to trade a three percent rate for a seven percent rate. On the other side, we have buyers struggling to fit higher monthly payments into their budgets, which has caused overall transaction volume in Eastern Washington to plunge.

If you are looking to buy right now, the silver lining is that the frantic bidding wars are gone. Sellers who actually have to move are suddenly willing to negotiate. Instead of slashing the listing price, the smartest play right now is negotiating for seller concessions to pay down your interest rate or cover needed property repairs.

The Reality of the Spokane and Cheney Market

Out in the Spokane Area, especially around the college town of Cheney, the market feels very different than the denser parts of Western Washington. We have a mix of historical craftsman homes near the university, newer suburban subdivisions, and rural properties with private wells and septic systems. Because Cheney has a steady demand driven by Eastern Washington University but a limited supply of turn-key homes, the inventory freeze has hit local buyers hard.

When transactions do happen in the broader Spokane region, rural property dynamics complicate things. A house that has been sitting on the market for forty-five days often has deferred maintenance, such as an aging roof or septic issues. In 2021, buyers waived inspections and swallowed those costs themselves, but today, you can demand that the seller fixes these items or credits you the cash at closing.

It is also worth noting how local taxes and utility costs impact your monthly housing expenses here. While Spokane County property taxes are generally lower than King County, rural heating costs and water district fees can add up quickly. If you want to see how these localized expenses affect your overall buying power, you can estimate your monthly payment with this tool by adjusting the home price, down payment, and estimated property tax inputs to match local listings.

How to Structure Seller Concessions

In a high-rate environment, a straight price cut is often the least effective way for a seller to help you. If a seller drops the price of a home by ten thousand dollars, your monthly payment might only go down by sixty dollars. But if that same seller gives you ten thousand dollars in closing cost credits, you can use that money to buy down your interest rate.

Temporary buydowns, like a 2-1 buydown, are incredibly popular right now. The seller pays to lower your interest rate by two percent in the first year and one percent in the second year. This gives you immediate breathing room while you wait for the market to normalize, all paid for by the seller's equity rather than your own pocket.

To protect yourself when structuring these deals, you need to work closely with your agent and your lender to write clean contract language. Here is what you should focus on during negotiations:

• Ask for a lump-sum closing credit instead of specific repair demands when possible to speed up the underwriter's review.
• Ensure the total seller concession does not exceed the maximum contribution limits allowed by your specific loan program.
• Have your home inspector clearly document any structural or safety issues to justify your credit requests to the seller.
• Compare the long-term savings of a permanent rate buy-down versus a temporary two-year structure.
• Confirm with your escrow officer that the credit can be applied directly to your non-recurring closing costs.

Leveraging Creative Programs for Older Homeowners

For older homeowners in the Inland Empire who are looking to downsize or restructure their finances during this freeze, traditional financing can feel like a trap. Selling a home with massive equity just to take on a high-rate traditional mortgage on a smaller place does not always make financial sense. This is where exploring specialty options like reverse mortgages can keep you from draining your hard-earned retirement savings.

A Home Equity Conversion Mortgage for purchase allows buyers aged sixty-two and older to buy a new home with a substantial down payment from their previous home sale, without being required to make monthly mortgage payments. You still have to pay your property taxes, home insurance, and maintenance, but eliminating the mandatory monthly principal and interest payment changes the affordability math completely in a high-rate market.

Questions I get about this

Can I use seller credits to cover both my interest rate buydown and my home repairs?

Yes, you can use seller credits for both, but you have to stay within the underwriting limits of your loan. For example, conventional loans typically cap seller contributions at three percent to nine percent of the purchase price, depending on your down payment. I recommend applying the credit to your rate buydown first, and then addressing repair items through a licensed contractor quote.

What happens if the home appraises for less than the agreed price when using a seller credit?

If the appraisal comes in low, the deal has to be restructured because the lender bases the loan-to-value ratio on the lower of the sales price or the appraised value. You will need to renegotiate the purchase price downward, which might require reducing the seller credit to keep the transaction viable. Your agent will need to draft an addendum to reflect the new terms.

Dom's take, written September 20, 2023

It surprised me how quickly the market turned from a wild sprint into a complete standstill. Grinding is the only word for the daily reality of working with clients right now. Nobody wants to give up the low-rate loan they currently have, inventory is incredibly thin, and every single deal we write takes immense creativity to get across the finish line.

The upside of this slow grind is that sellers who truly have to move for a job, family, or retirement are finally paying attention to what a buyer actually needs. We are no longer begging sellers to accept an offer; we are telling them exactly how they need to structure their credits so my buyers can afford the home. If you are sitting on the fence, deciding whether to jump into this frozen market comes down to whether you can negotiate enough seller help to offset today's rates.

What I'd say now (August 2026)

Looking back at my notes from that fall, I was absolutely right that focusing on seller concessions was the key to opening up the market during the freeze. Over the last couple of years, we saw a slow thaw across Washington, though it happened unevenly by county. Sellers who refused to negotiate back then ended up watching their homes sit on the market for months as inventory slowly rebuilt and buyer leverage returned.

Today, we are in a much more balanced and negotiable market where concessions have become a normal part of the transaction rather than an exception. If I were advising that same 2023 client today, I would tell them that their patience paid off, but the basic strategy has not changed. Financing structure, interest rate points, and program choice still drive your monthly payment far more than the list price ever will, and having the room to inspect and negotiate is a right you should never willingly give up again.

Talk it through with me

Working through the mortgage market requires a process built on speed, clear communication, and transparency. If you want to see what is possible for your own home purchase or refinancing goals, contact me directly to discuss your scenario. We can walk through a five-minute pre-approval over the phone, and my team works to get files cleared to close in an average of fifteen days or less.