Real Estate Market News Concerning North Idaho – April 2008
US Economic Forecast

What makes a market strong? In an area like ours, with AskMen.com just having named Sandpoint one of the Top 10 US Resort Towns, and Ski Magazine naming Schweitzer Ski Resort to its Top 25 recently, positive press doesn’t hurt. Sandpoint in the last couple years was named the Best Small Town in the West by Sunset Magazine, America’s Best Small Town by Outside Magazine, and one of the nation’s Top 10 Adventure Towns by National Geographic. There has been so many articles in the NY Times, USA Today, and more, that keep on bringing people to our area. Plus, our economy is incredibly strong. How many communities our size have almost a dozen national company headquarters?

Our numbers for real estate are good, too. How is our market?

In 2007, our market sold 936 homes and condos with a median sales price of $252,950 for a total volume of $306,690,877. Average Days on Market: 99

In 2006 we sold 920 homes and condos. Median Sale Price: $235,000. Total Volume:  $261,289,767. Average Days on Market: 90

In 2005 we sold 1190 homes and condos. Median Sale Price: $255,274. Total Volume:  $303,763,761. Average Days on Market: 72

In 2004 we sold 1241 homes and condos. Median Sale Price: $155,000. Total Volume:  $252,344,714. Average Days on Market: 161

In 2003 we sold 987 homes and condos. Median Sale Price: $130,000. Total Volume:  $160,279,718. Average Days on Market: 178

What conclusions can you draw? We are doing better with DOM than 2003 and 2004. Our median sales price is holding its own, and our sales volume is consistent. Add to this that Idaho’s foreclosure rate is among the lowest in the nation, with only .07% of the 264,000 mortgages in some phase of foreclosure.

Our economy is strong. In spite of Coldwater laying off 60 people, most of those were seasonal, and they are going ahead with new facilities that will add about 160 jobs, not counting the construction employment.

Moody’s, which tracks and rates businesses and markets, is now tracking real estate markets. While Kootenai County and Coeur d’Alene has now been given a negative rating, and even Ada County and Boise have also garnered that negative, Bonner and Boundary are still rated positive. We are not immune to what is happening in the rest of the world, and certainly, prices are not rising. Another factor was the big snow winter we had this season. Let’s compare sales from this quarter in 2007 to the quarter that just finished this year.

01/01/2008 to 04/04/2008                 Residential Sale Total: 94
                                                                Median Sales Price: $213,750 

01/01/2007 to 04/04/2007                 Residential Sale Total: 149
                                                                Median Sales Price: $240,000

Residential sales are down 37% compared to 1^st Quarter last year and 1^st Quarter this year

Median sales price is down 12%

Sales Volume 2007: $49,541,148
Sales Volume 2008: $24,819,552

Sales volume is 50% of last year, same quarter

Comparison by Price:

$100,000 to $199,000: 2007 – 42 Sales, 2008 – 35. Sales down 17%
$200,000 to $259,000: 2007 – 34 Sales, 2008 – 16. Sales down 53%
$260,000 to $999,000: 2007 – 69 Sales, 2008 – 32. Sales down 54%

List to Sell Ratio: 94% of Asking Price for both quarters

Currently, there are 99 Pendiing Sales that will be posted in the 2^nd Quarter

What you can infer from these figures is that prices are down, the winter definitely affected sales volume, and things are heating up.

Another conclusion, with 1170 homes and condos on the market, we have one of the best inventories we have had in years. Prices are down, and our market is heating up. What does this mean for the average buyer? This is the best market for buying a home in our area in years. As a seller, we still have a strong market, we have consistent sales, and if your property is priced right for the market, average time to sell is reasonable. Moreover, the national market is improving. February was the best month we have had in 16 months. The banking situation is working out the kinks, and mortgage rates are still low.

Recently, the Coeur d’Alene Association of Realtors sent out a Report showing residential sales for the previous six months. With a total of 1,027 homes sold, they showed a decline from an all-time high of 1,723 for the same period in 2005. In our MLS area north of CdA, we sold 818 homes between 1/1/07 and 12/31/07. Considering that our market is no greater than one third theirs, our numbers are good. In fact, our sales of homes and properties are comparable with 2003, a year most believe was on the upswing and part of the real estate boom years. Further, our median sales price is up for the county, though it is down for Sandpoint. Still, it is considerably higher than 2005, our best year ever. Land is following the same trend. Anecdotally, we perceive that prices are down, and sales are slower, but the figures are objective, and no amount of subjective opinion can change that. Also, people are still moving to our area. Spokane is one of the areas more people are moving to than any other part of the country, according to U-Haul. I know that we had a busy winter, having several closed sales.

Also, while it is paramount if you are selling your property that you price it right, we are not seeing sales that are gigantically lower than the asking price. What is happening is that when sellers price too high, they get no offers, and eventually price at market rates. Then, when offers are made, the offers are close to asking price. Sure, we see the occasional low-ball offer accepted, but this makes up a very small percentage of sales.

Overall, our market is very good, especially compared to other parts of the country. This is much because we are still lower for land and homes than many areas. Our local economy is good. We had recent layoffs at our largest employer, Coldwater Creek. But this was only 65 people, and that was mainly due to seasonal changes. They are actually going forward with expansion plans as you will read about in the next segment.

We are also continuing to grow. While Spokane and Coeur d’Alene are growing more quickly, we are also in that trend. Growth means more jobs, and more home sales. Continue to read and you will find supporting evidence for why our market is doing well, and other articles about the state of the market in North Idaho.

The State of the Real Estate Market in Sandpoint

The Real Estate market has certainly taken a beating in the press lately. It is true, there are areas of the country that are definitely hurting, but Idaho is NOT one of them. In fact, in the study just released from the National Association of Realtors, they found that neighboring Washington State has experienced a 30% REDUCTION in the number of foreclosures occurring in the state. Spokane was 64^th out of the 100 regional metro areas, even better than Seattle’s ranking of 58. In fact, Seattle went up, then began to decline, whereas Spokane (which includes Coeur d’Alene) simply declined. Our area of North Idaho is even better, and sales are actually ahead of last year, while foreclosures have not yet affected our market, and are virtually only marginally more than in 2004. Let’s use Kootenai County as our example:

Idaho has 264,768 mortgage loans. 3.46% are past due and .07% are ‘in foreclosure’. Idaho’s sub-prime numbers show 14.39% are past due and 5.52% are ‘in foreclosure’.

Kootenai County numbers show 228 properties are currently past due (delinquent over 90 days but no foreclosure proceedings currently filed), 307 are “going into” auction (proceedings have been filed giving the home owner 120 days to either sell or bring current their loan) and 90 are bank owned.

Kootenai County ‘notices of default’ are up in 2007 49.60% to a total of 558 from 2006’s total of 373. This is still lower than our peak in 2001 of 781.

So what is really going on? With all of the risky lending that has been happening in the last few years, it has brought buyers into the market that probably were not really in a position to purchase. They often used adjustable rate mortgages to qualify at lower rates and then when the rate increased there had been enough market appreciation that they could refinance into a new loan and start the cycle all over again. Now that market appreciation has slowed and these loans are resetting to higher rates, many of these homeowners do not have enough equity in their homes to refinance again. This means some of them are facing foreclosure because they cannot afford the new, higher mortgage payment.

Also, in many areas of the country there has been a glut of building which has flooded the market with properties. In the Phoenix area alone, they went from 4,400 properties on the market last year to 44,000 properties on the market this year! Consider our areas. The front page of the Sunday Spokesman Review just a couple weeks ago headlined this regional issue. With a metro population of 600,000, Spokane has roughly 3,000 homes listed for sale. Coeur d’Alene metro area, with only 158,000 people has about the same number! Our two county population of less than 60,000 has roughly 1,000, and many of those are in the Coeur d’Alene area south of our region. Another consideration is that a large portion of the homes and condos we have for sale are vacation homes, or will be purchased as second homes, and from January 1 to December 31, 2007, our market had 936 homes and condos sold. Not bad.

So what about the Greater Sandpoint/North Idaho area? Our economy remains incredibly strong with a diversified economic base and strong business growth. For our size, we have an incredible number of companies selling nationally and globally, and with the new University of Idaho breaking ground, and our tourist business adding to the mix, our possibilities are boundless. This corporate base has companies like Coldwater Creek growing in leaps and bounds, and others such as Quest Aircraft manufacturing have so many orders that they are in the process of hiring 200 new workers over the next several months. This combined with our geography (mountain ranges surrounding us, with Schweitzer Ski Resort having just come off a record year, and just named as one of the top 25 ski resorts in the nation, and the West’s second largest lake in the middle), and marginal traffic means that there is only so much room to grow here, and that has kept things under control. In the last few years we have experienced staggering appreciation rates, and that may slow down, but it will remain stable and steady. In fact, there has become an increasingly large gap between growths in home prices versus growth in incomes. Huge appreciation is nice when you are a homeowner for sure, but it is also necessary for things to slow down a bit so that incomes can catch up.

One of our area’s biggest employers is Coldwater Creek. Coldwater Creek laid off 65 employees at several of its facilities recently due to lagging sales, but said the action was intended to “position us for sustainable growth,” and the company remains committed to continuing its operations in the Sandpoint and Coeur d’Alene areas.

Despite recent layoffs and a downturn in its sales, Coldwater Creek Inc. is proceeding with an expansion project that includes a $9 million, four-floor office building and a $2 million addition to its call center in northwest Coeur d’Alene.

According to the Office of Federal Housing Enterprise and Oversight which lists appreciation rates for the last five years, our rate of appreciation is 8.42% over last year, and our five year appreciation is 64.43%.

While our region is not a large enough metro area to register on the radar of the Office of Federal Housing Enterprise and Oversight, the Selkirk Association of Realtors shows that homes in the Sandpoint/North Idaho MLS area are still doing well.

Looking at the data below, while the average sales price from 2005 to 2006 went up astronomically, we have drawn back considerably in 2007. Still, homes bought in 2005 have appreciated nicely through October of 2007. The median sales price is in a dead heat with last year’s, and is considerably more than 2005. Add to that that, overall, the numbers of homes sold in 2007 is only down only 16% from our best year ever, and virtually equal to last year. Certainly our most recent numbers are way ahead of 2002. All in all, sales are good, Idaho is one of the top appreciating states, and if homes are priced in keeping with our current market, days on market are also very good.

So where do we go from here? FHA loans will make a comeback for borrowers with low and/or gifted funds for down payments, rents will rise as more renters come back into the market, there may be a short term slow down in home sales, however, there will be a long term gain will be fewer defaults.

If you are a seller? Now more than ever a full service agent is what you need. The days of slapping a price on something and having it sell instantly are gone. Make sure that you have done your home work. That means pre-inspecting your home so that there are not any surprises, staging it to capture buyers the moment they walk in the door, use professional pictures to entice buyers on the internet, and most importantly —PRICE IT RIGHT!

If you are a buyer? Now, more than ever, is the time to buy. There are more choices on the market which means that you may actually be able to negotiate well, and you will be gaining on long term market appreciation.

Bonner/Boundary County Real Estate Trends, October 2006 to October 2007