Tuesday, January 31, 2023

Economic outlook looking good for some

by David Cole
| December 5, 2010 8:00 PM

COEUR d'ALENE - A bright spot for the Kootenai County economy in 2010 was the strength of the Canadian dollar and the trend of Seattle and Portland residents to stay within the region for vacations.

Those factors, particularly the value of the Canadian dollar to the U.S. dollar, drove tourism this year in North Idaho, and likely will next year.

"We're looking at how we can grow that Canadian market for 2011," said Todd Christensen, Coeur d'Alene Chamber of Commerce president and CEO.

Another bright spot, mostly toward the end of the year, has been the upswing in hiring by manufacturers here, a trend that's also likely to continue in 2011, Christensen said.

LA Aluminum Casting Co., a Hayden permanent mold aluminum foundry and machine shop, is expecting to increase sales 25 percent next year, said Michelle Richter, the company's sales and marketing manager. The company is completing a more than $1 million expansion of its facilities.

Along with the good news in manufacturing here, the health care sector also added jobs this year.

Those monitoring the county's economic condition and following trends within it say employment will be key to all. Unemployment as of October was at 10.8 percent.

Kathryn Tacke, regional economist for the Idaho Department of Labor, said the low value of the U.S. dollar relative to the Canadian dollar has made visits to North Idaho more attractive to Canadians.

That, and expansions at Silverwood Theme Park and the Coeur d'Alene Casino Resort and Hotel have helped offset some of the job losses in tourism employment.

She said the department doesn't make job projections for upcoming years.

Economist Randy Barcus, of Avista Corp., does.

He projects that total employment will reverse its downward trend and grow an anemic 1 percent in 2011. However, the employment level in 2013 will still be below the peak employment level set in 2008, he said.

Barcus said the unemployment rate will remain stubbornly high in 2011, falling from the lofty levels seen in 2010, but still roughly triple the rate observed in both 2006 and 2007.

He expects the unemployment rate to stay above 6 percent through 2015.

The real estate market should remain flat in 2011 if three variables remain steady: Employment, the ability of individuals and businesses to gain financing, and interest rates, said Kim Cooper, spokesman of the Coeur d'Alene Association of Realtors.

"If people get back to work, that should help," said Cooper. "Employment is the thing that continues to haunt the nation and the market locally."

He said commercial real estate continues to be a challenge. Most commercial purchase transactions tend to be aided by Small Business Administration and seller financed loans.

Some normal commercial customers have become SBA customers for banks.

A remaining threat to the real estate market is the growing vacancy rate for commercial properties. As the vacancy rate goes up, commercial building projects fall off.

Lease rates for commercial properties have dramatically declined, he said.

"Owners are willing to discount to attract tenants," said Cooper.

He sees residential real estate being flat next year compared with 2010.

Cooper sees this year ending slightly above 2009 or flat for single-family homes on less than an acre.

Through October, the residential market saw sales volume go up 16 percent and total dollar volume go up about 12 percent, for the association's multiple listing service.

There was a real bright spot in real estate in the county this year, he said.

Demand skyrocketed for homes on acreage, said Cooper. The number of sales went up 47 percent through October of this year compared with the year-earlier period.

Bankers, meanwhile, are expecting a slow recovery in 2011, but there are some big unknowns that could change things, said Russ Porter, president and chief operating officer for Mountain West Bank.

Overall, he said, he expects next year to look much like this one.

The Dodd-Frank Wall Street Reform and Consumer Protection Act carries the biggest threat next year to bankers locally and nationally, he said. The legislation was passed in an attempt to prevent another financial crisis, bring accountability to Wall Street and big banks, protect consumers, end bailouts, big bonuses and "too big to fail."

Porter said, "There's much that's unknown at this time" about the new legislation.

He said, "We don't know exactly what the legislation will entail."

In real estate, Porter said he hopes to see a deceleration of foreclosures, some stabilization in pricing and an uptick in home sales.

He said he would like to see a decrease in inventory of existing homes for sale, which would allow for an increase in new-home construction.

More important, again, might be an improvement in employment, he said.

What the bank has seen this year, and expects more of next, is an increase in custom home construction. People are taking advantage of the low cost of land, materials and labor, Porter said.

Barcus said the overall economy in 2011 will see slower growth in gross metro product than the growth seen in 2010. The local growth rate of 2.7 percent will be faster than the U.S. rate of 2.3 percent, he said.

Barcus expects housing starts in 2011 to be equal to the levels in 2010, but with a larger share in multi-family housing such as apartments.

"Housing begins a slow recovery in 2012, but only returns to half the activity level seen at the peak in 2005," he said. "I do believe housing is at or near the bottom in pricing, but I believe it is going to take several years for the supply and demand to re-balance in the market."

Troy Tymesen, city of Coeur d'Alene finance director, said building permit revenue for the city is projected to be $550,000 next year.

"We'd have to go back a long way to find numbers that low," Tymesen said. "I'd love to shatter right through the top of that" conservative projection.

The more than half million dollars is down from a peak of $1.7 million in 2007, he said. The city will reach nearly $800,000 this year, he said.

Building permit revenue for October was $46,000 and last month was $43,000. That compares with respective year-earlier figures of $65,000 and $52,000, he said.

"We're working hard to get new development," Tymesen. "That is a key area for local government to have income."

Kootenai County is budgeting for an 8 percent decrease in sales-tax distributions from the state for next year, as retail sales in Idaho have been projected to be down next year, said David McDowell, county finance director. The county used sales tax numbers for the state from the end of last year and the beginning of this year to set that budget projection.

McDowell said the number is conservative.

"Things have improved in the last three to four months," he said.

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