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Nowhere to go but up

by BILL BULEY
Staff Writer | March 6, 2020 1:11 AM

Forecast: Housing market expected to stay on track for strong growth, with rising prices

COEUR d’ALENE — With bright lights in his face, Gary Schneidmiller looked out toward the 500 people seated before him in the dark auditorium and joked that he couldn’t see them.

But it didn’t matter. He knew most of them, anyway. So when he took the stage briefly Thursday morning at the Kootenai County commercial market forum, he was pleased.

“As I walk around, so many friends of mine and our company sitting in the audience, so many business associates of ours, and that makes it very special,” he said in the Salvation Army Kroc Center theater. “And we really do appreciate, No. 1, your friendship, and No. 2, your support.”

For the 13th year, Coldwell Banker Schneidmiller Realty put on the popular event featuring several speakers who offered both an economic and housing review and forecast. They looked at the luxury market, industrial, office and retail, multi-family and investments.

The overall theme was, the economy and housing market are strong and should remain that way this year.

According to the executive summary that was distributed, the Coeur d’Alene Multiple Listing Service reports site-built home sales under 2 acres have more than doubled since 2008 and new construction comprises 23% of all home sales, “a market phenomenon.”

Home prices are expected to climb.

“With homes for sale dropping again this year, 16.9% from last year, prices have nowhere to go but up,” according to the summary. “Following the upward trends in new construction, land sales have continued to grow at a steady pace as well.”

Sam Wolkenhauer, an economist with the Idaho Department of Labor, said Kootenai County was the second-fastest growing county in the fastest-growing state. Businesses, jobs and housing have been rising in recent years.

“This has been a phenomenal period of growth for Kootenai County,” he said.

Part of that is because the economy, once driven by manufacturing, is now driven by the service sector, which includes jobs in tourism, health, education and white-collar professionals.

“The more and more these things come to dominate the economy, the more stable the economy becomes, naturally,” he said.

The main barrier to U.S. economic growth has been, and continues to be, labor availability.

In 2009, Wolkenhauer said there were six to seven job seekers for every job. Now, it’s more like one job seeker for every job.

The county’s job growth, from 2013 to 2018, expanded by 11.7%, beating the national job growth average of 8.5%. Idaho’s unemployment rate is 2.9%.

“Most of the people unemployed in Idaho right now have been unemployed for a long time,” Wolkenhauer said. “They’ve been unemployed so long they’ve exhausted their unemployment benefits.”

People’s ability to afford homes is increasingly becoming a problem in this area, he said.

“Home prices have increased far quicker than household income has increased,” he said.

Wolkenhauer said the U.S. economy looks solid, but can be easily rattled.

“The reality we live in is one where the economy can look really good but then, a respiratory virus from a bat in China can cause cascading economic impacts,” he said.

Hayden Anderl of Coldwell Banker Schneidmiller Realty said there has been a 40% increase in resale home prices since 2016, going to $299,000 from $215,000.

Days on the market, meanwhile, declined to 51 from 64.

The price difference in resale homes and new construction last year was about 10 percent, down from 17 percent in 2018 and 16 percent in 2018

“A lot of that is inventory related and the labor shortage driving that gap closer,” he said.

Builders, Anderl said, are busy and need skilled labor to keep up with demand for new homes.

“A drive through Post Falls or Rathdrum will show you the new construction market remains strong and continues to expand to new areas as Coeur d’Alene fills in,” he wrote.

Meantime, buyers are turning more to resale homes.

“Resale homes go quickly and for a price we would not have expected and that it would not have gone for a couple of years ago,” he said.

Areas to watch for growth are the Atlas Mill site, Coeur d’Alene downtown and midtown, downtown Post Falls, Rathdrum, and waterfront second homes.

“Another strong year for the local real estate market is expected, with millennials feeling the biggest squeeze in terms of availability for their budget,” Anderl wrote.

Grey Rowley on the luxury market:

The price of the top 5% of sales in Kootenai County has steadily increased over the past few years, from $552,900 (’16, 214 sales) to $625,000 (’17 223) to $700,000 (’18, 233) to $749,000 (’19, 228).

“Supply of luxury homes will continue to outweigh demand, listings will linger, and in some cases, sellers will make big price cuts to move the inventory.”

“The slowdown can be partially attributed to the country’s demographic shift, as buyers under 40 flood the market.”

Dani Kramer on multi-family:

At the end of 2019, over 14 multifamily projects were/are under construction in Post Falls alone, with 552 multifamily permits issued for the year in the city. This is almost double the number of multifamily permits issued in 2018 for Post Falls.

Danny Davis on investments:

“Industrial remains a strong play as it continues to be fueled by small business expansion and the local construction market.”

Schneidmiller said he remembered when the forum was in the planning stages and he spoke to his friend, Duane Jacklin, and told him what they were trying to accomplish.

“His first four words were, ‘How can we help?’” Schneidmiller said.

They’ve been at it since, with a simple goal, to provide “insightful analysis that allows you to navigate with greater understanding and confidence.

The region, he wrote is in an “unprecedented period of growth.

“This rapid expansion presents both challenges and opportunities for our business community.”

photo

Sam Wolkenhauer, economist with the Idaho Department of Labor, speaks at the Kootenai County commercial market review and forecast on Thursday at the Salvation Army Kroc Center.