Real estate prices dropping slower in North Idaho

Posted: Saturday, Dec 08, 2007 - 07:51:53 pm PST
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By RICK THOMAS
Staff writer 

RICK THOMAS/Press Even with more home sales of more than $1 million than ever in Kootenai County, the average and median prices of existing homes is creeping down slowly.

Coeur d'Alene not doing badly in overall sales

COEUR d'ALENE -- Real estate prices in North Idaho appear to be defying gravity, dropping far slower than they rose in recent years.

With more homes for sale, tighter credit and concerns that the region's market may have become overpriced, it's now taking an average of four months to sell a house.

"People are looking for good price deals," said Luke Wild, an agent at Coldwell Banker Schneidmiller Realty, checking out a home for sale near downtown on Friday afternoon for a client in Boise. "They have to be well priced to make sense."

Yet there is competition among buyers, he said. The home he was looking at has a sale pending, but a closing date well in the future. It also includes a clause that would allow his client to up the bid, and offer to close sooner.

A better-qualified buyer might have the edge, Wild said, as lenders look more closely at income-to-debt ratios and demand proof of stated earnings and liabilities.

"They were lending way over people's heads," he said. "Now, they can't pull out any equity if they need it."

The city is still not doing badly in overall sales, however, Wild said.

"Houses are selling, but with 4,000 on the market, buyers are picky."

The Coeur d'Alene Multiple Listing Service reported there were 3,530 residential listings in October, up nearly 20 percent from 3,108 a year ago, but down 5 percent from 3,893 the previous month.

For the six months from May 1 to Oct. 31, the number of single-family homes with less than an acre of property sold in the county was 1,136, off 11 percent from the same time frame last year.

The average sales price was $240,469, down .5 percent from the same time frame last year.

The median price of $203,295 was off 4 percent.

That was in spite of a record number of homes that sold for more than $1 million, said Rick Vernon, executive officer of the Coeur d'Alene Association of Realtors.

"We had more million-dollar properties sell this last quarter than ever before," he said, with 12 residential pieces that sold above that benchmark, the highest for $5.3 million.

Membership in the association grew to more than 1,000 agents during the boom of the past few years. About 30 dropped out this year, and when renewals are due at the beginning of 2008 Vernon expects to lose about another 100.

"To survive you have to sell one a month, unless it happens to be a big one," Vernon said.

He said it's typical that a small number of agents make most of the deals anyway.

"We used to say 20 percent did 80 percent," he said. "It's more even here."

Idaho has some things going for it that other regions don't, Vernon says. One is a lower rate of foreclosures than most states, largely due to more conservative lending practices. Another is strong growth in the commercial sector.

"Real estate depends on commercial growth," Vernon said.

Helping that is Idaho's business-friendly climate, which lures companies such as Cabela's with incentives that will pay off for many years to come, he said.

"I think it's all good," Vernon said. "I'm not getting any negative vibrations from the real estate community."

He points out that there were 200 listings for homes less than $180,000, their threshold for affordability. But he also recognizes that even at $150,000, a 6 percent fixed-rate mortgage is out of the reach of many.

"We have people in our office who can't afford it," he said. "People in the $12 an hour to $13 an hour category can't afford it."

While sales of existing homes have slowed, new home sales are off by even more.

"Our overall market versus last year is down about 15 percent," said Wendell Olson, president of Viking Construction. "It's been soft the past three or four months."

Kootenai County is a little slower than Spokane, Olson said, and he expects another 20 percent decline next year.

"2008 will probably be the worst year before it returns," he said. "It won't go back to 2004, but I don't think anybody wants that."

Viking will build 217 houses this year, off from 252 in 2006, but prices won't likely fall because costs are rising in spite of lower lumber prices, Olson said.

"In the past 10 days or so everybody has been raising their price," he said.

The cost of fuel is causing subcontractors to ad as little as $20 per house, but when it's multiplied over all the contractors involved, it adds $500 to $750 per unit, Olson said.

The silver lining for him is that with fewer homes under construction, there are more framers available and homes are going up faster, in about 90 days compared to 120 days just a year ago. Also, fewer buyers are canceling than were a couple of years ago, though some deals go sour because of changing loan programs.

"The programs are tougher and tougher," Olson said. "A lender at the beginning might approve a loan, then three of four months later, there are tighter restrictions, or the program is gone."

Olson says he's not worried, and that he expects sales to stabilize.

"The market in general is at a crest," he said. "It will start turning around."