Bubble? What bubble?
LOREN BENOIT/Press Windermere Realty agent Jen McGuire and client Ralph Buttermore tour a model home Thursday afternoon on West Thiers Drive in Coeur d’Alene, just north of Skyway Elementary School.
BRIAN WALKER/Press Matthew Gardner, chief economist for Windermere Real Estate, told local Windermere employees on Friday the economy is expected to continue to grow in 2018.
By BRIAN WALKER
Staff Writer
COEUR d’ALENE — Matthew Gardner popped the thought that we’re in a housing bubble.
"Just because some markets are overvalued there doesn’t have to be a bubble," Gardner, Windermere Real Estate’s chief economist, told nearly 200 Windermere Coeur d’Alene Realty employees on Friday during the firm’s annual Agent Award Ceremony and Breakfast at the Best Western Plus Coeur d’Alene Inn.
Gardner cited multiple current market conditions, including high credit quality, borrowers not defaulting, good debt-to-equity ratios and slight mortgage rate increases to perhaps 4.4 percent, to dispel the thought that the economy has entered a housing bubble.
Gardner predicts the economy will expand 2.5 percent in 2018, but foresees a slowdown in 2020.
"It’s the ‘R’ word (recession)," he said. "I’m sorry about that, but recessions do happen. We’ve had about 47 of them in this country. But it will not be very bad — nothing like 2007. It should not affect housing prices, but you should be aware of it."
As for the immediate future, Gardner forecasts that the inflation rate will increase a modest 2.1 percent this year, 2.5 percent gross domestic product (GDP) growth, 2.6 million new jobs will be added nationally and the nation’s unemployment rate will decrease to about 3.9 percent by the end of the year.
"We’re feeling pretty good," he said, referring to consumer confidence.
Gardner said Idaho should add about 14,000 jobs this year, including 1,400 in Coeur d’Alene with construction and health care leading the way.
"You’ve done remarkably well over the course of the past several years creating jobs," he said.
Gardner said there should also be growth in income, which there hasn’t been in a decade, and that should send people "skipping down the street" to shop. He expects the local increase to be about 4.5 percent; 3 percent nationally.
"When we love shopping, our economy thrives," he said.
The economist originally from London described a funky housing situation that includes low inventory both locally and nationally, but sales continuing to rise. He pointed to millennials behind the trend.
"First-time buyers are back," he said. "They’ve been putting (buying homes) off. If you have not found out how to work with that demographic, you’re losing out. The oldest millennials have grown up."
Gardner said there’s not more homes for sale because the Baby Boomers are retiring later and not downsizing, remodeling is on the rise, and because of the lack of construction in some areas due to labor shortages.
People today are living in their homes twice as long as they were in 2000 — on average from four years to eight, he said.
Because labor, land and material costs have increased, home construction has slowed in some regions, although that hasn’t been the case in Kootenai County, Gardner said.
"Builders are more cautious now than they have been in many years," he said.
Gardner said skyrocketing home prices in other areas such as California — the median sales price in San Francisco is $1.18 million — will continue to drive people to North Idaho.
"We are cheap," he said.