Real estate expected to stabilize

Posted: Saturday, Feb 24, 2007 - 07:07:12 pm PST
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By RICK THOMAS
Staff writer 

RICK THOMAS/Press Coeur d'Alene Realtor Kenn Gimbel dressed in period attire to talk about the past and future of the Harrison area at last week's Real Estate Market Forum in Spokane.

The region is still growing, still seen as a bargain compared to many parts of the country

COEUR d'ALENE -- Don't expect too much of a slowdown in the North Idaho real estate market in the coming years.

The region is still growing, and still seen as a bargain compared to many parts of the country. Combined with the wealth of several generations -- retirees, baby boomers and generation X -- the fascination with the outdoor life style and attraction to the area's lakes and rivers is expected to continue to drive growth for about a decade.

Between 2000 to 2004, about 1,400 new homes per year were being built in Kootenai County, Pat Krug, managing broker of Windermere Coeur d'Alene Realty told nearly 700 real estate agents and others involved in the industry Thursday at the 20th Real Estate Market Forum held in Spokane's convention center. Projections for the next eight years are expected to double to about 3,000 per year, she said.

The "stabilizers," who live and work in the area, will require housing in the $130,000 to $300,000 range, she said. They will continue to be the largest segment of the market.

The "baby boomers," recipients of $40 trillion in inheritances, will be looking here for their final homes. They'll be coming from the urban centers of the West Coast and rural areas of the Inland Northwest.

Every 8.5 seconds, another boomer turns 60, she said.

"The will choose Kootenai County for their dream home," Krug said.

"Vacation home collectors," earning $200,000 to $500,000 per year will continue to look to the area for luxury homes, Krug said, and since about half will pay cash, interest rates will have little effect.

"Kootenai County is seen as a great value for what $1 million will buy," she said.

About a third of the new arrivals will be looking for waterfront, Krug predicted, and "they'll come from everywhere."

In total, she said, there will be a need for 25,000 new homes in the next eight years.

The market hasn't slowed as much as many had thought, because much of what happened in 2005 and 2006 was a reaction to a sudden demand and the inflation in values of North Idaho real estate.

In 2005 the average time from the time a single-family residence went on sale to closing was 2.8 months, Krug said. In 2006, that increased by 30 days.

"In 2006, only 38 percent of single family listings actually sold," Krug said. "What happened to the other 62 percent?"

Was that a result of supply exceeding demand, or of overpricing, she asked.

"Data suggest if the home did not sell within four months, there was a high probability that listing expired and probably wasn't sold at all," Krug said. "Many sellers think it's still 2005. They may have been sold if they had been competitively priced."

Of 2,855 current listings, 1,286 have been on the market for more than four months, and that same number are not seriously for sale, she said.

The new home market, in fact, was slow to respond to a slowdown, and that had its own impact on prices, said James Diffley, group managing director of U.S. Regional Services, Global Insight, Inc.

"In 2002, we recognized something significant was happening," he said.

They analyzed how high home prices should go, watching areas such as Las Vegas, San Diego and Florida where double-digit increases continued for several years before beginning to level off.

He said there was a lot of criticism from the industry of media reports of the bubble bursting, because of importance of consumer perception.

"In 2006 the real news came in the spring when there wasn't a price crash," Diffley said. "New starts fell, but the surprise was how long it took for builders to pull back. Builder discounts were the single biggest factor in the price retreat. As they unloaded, soft prices resulted."

That's a temporary cycle, and the housing industry will remain soft for about a year as investors take homes off the market, he said.

Job growth in Kootenai County should be around 4.4 percent, with 1.8 percent to 2.9 percent through 2012 in the mountain region of Nevada, Utah and Arizona, Diffley said.

Though Idaho income is still among the lowest, homes in the state are still relatively affordable, he said.

He said income growth will likely be 5.5 percent to 6.1 percent through 2012.

Population growth is expected to be 1.6 percent to 3 percent. He said to expect net migration rate of about 170,000 in Idaho through 2012.

One part of Kootenai expected to more than double in size is Harrison, said Coeur d'Alene Realtor Kenn Gimbel, who dressed in a fringed leather coat to tell the story of how the little town near the southern end of Lake Coeur d'Alene had once been the largest city in North Idaho.

"It was a real wild west town," he said. "They all wore suits like I have on today."

The present permanent population of 300 will increase with the addition of several planned luxury communities and golf courses, he said.

In all, there is a potential of $1 billion in improvements at communities between Coeur d'Alene and Harrison, Gimbel said.

"It's poised for explosive growth and value appreciation," he said.