Interest rates cause for pause

COEUR d’ALENE — Despite high mortgage interest rates, Kootenai County’s housing market is holding steady.

According to the Coeur d’Alene Regional Realtors, the median price of a single-family home in Kootenai County was $525,000 in September, the same as August but down from $550,000 one year ago.

The number of active residential listings as of Oct. 4 was 1,058, down 4.2% from 1,104 last month, but up from 1,014 at the same time last year.

The number of single-family homes in Kootenai County sold through September totaled 1,660, down nearly 20% from September 2022.

Realtor Lindsay Allen, north district vice president for the Idaho Realtors and past president of Coeur d’Alene Regional Realtors, said mortgage interest rates of around 8% have made both sellers and buyers cautious.

“It pauses a lot of buttons,” she said.

Higher interest rates generally mean sellers need to lower their prices and potential buyers have to consider homes in a lower price range.

“It pulls people down in purchasing power,” Allen said.

According to the updated study, “Next Steps: The Housing Availability and Affordability Study for Kootenai County," for every 1% that mortgage rates increase, the capitalized value of a home that a family can afford will drop by about $50,000 in the long run. A family able to afford a $500,000 home at 3.18% interest is only able to afford a $325,500 home at 6.96% interest.

About 80% of the Kootenai County households are currently priced out of the market, the study found.

The lack of affordable housing has resulted in a loss of 5,340 jobs in the local economy; a reduction of $535.6 million in gross regional product; a loss of $435.4 million in local payroll and $28 million in total lost taxes, according to the study.

Still, home prices aren’t exactly in a free fall.

According to North Idaho Real Estate, new listings include a three-bedroom, two-bathroom, 1,851-square-foot home in Post Falls for $539,900; a three-bedroom, two-bath, 1,738-square-foot home in Spirit Lake for $525,000; and a two-bedroom, two-bath, 1,127-square-foot condominium in Coeur Alene for $625,000.

An older, three-bedroom home at 724 N. Second St. in Coeur d'Alene described as a "great investment opportunity" was listed at $375,000 and had a sold sign in front of it Wednesday.

Demand for homes, especially in entry-level type, remains high. There were fewer than 100 available listings in the local market for homes under $460,000 on less than two acres.

Allen said with interest rates their highest in more than two decades, some are opting to rent instead of buy. But most renters have seen an average increase of about 29% in the past six months, the study found. The average new rent was $1,704 a month, up from $1,317 six months ago, according to the study.

So many are waiting and watching to see what happens with mortgage rates and home prices.

“A lot of people are still in that position,” Allen said.

She said many recent transactions involve people who must move for jobs or other reasons. Also, Allen said she saw more cash sales in September as buyers who could steered clear of higher interest rates.

“If you have the cash, who wants to take out a loan?" Allen asked.

The effect of the high cost of living over the last couple of years has had a significant effect on Idaho family planning among young couples, according to a study by MadeintheUSASurrogacy.com.

It surveyed about 3,000 childless couples and asked how many children they would like to have in the future.

The survey revealed that on average, couples in Idaho would like to have 1.3 children, which is 0.7 lower than the current average of 2.01.

On the flip side, people are still moving to Kootenai County. About 2,000 to 3,000 new housing units will be needed annually to keep up with the region’s projected population growth during the next 20 years, the Next Steps study found.

The Coeur d’Alene Regional Chamber is hosting a forum, “Navigating the Growth of Kootenai County," on Oct. 24 at the Best Western Plus Coeur d’Alene Inn.

It will include presentations by Jennifer Smock with Windermere/Coeur d’Alene Realty; Jimmy McAndrew with Mountain West Bank; Maggie Lyons with the Panhandle Affordable Housing Alliance; Hilary Patterson with the city of Coeur d’Alene and Tyrel Stevenson with the Coeur d’Alene Tribe.