Affluent advantage

Posted: Saturday, Jul 12, 2008 - 08:28:17 pm PDT
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By RYAN SHELTON
Staff writer 

SHAWN GUST/Press Real estate sales of homes in the $1 million range and above, like the Mica Bay home pictured, show no signs of slowing.

High-end housing market remains strong

COEUR d'ALENE -- With words like "crisis" and "crunch" used to describe the U.S. housing market, it can sometimes sound as if the residential sky were falling.

But thanks to low unemployment rates, a stable local economy and relatively modest lending habits, the North Idaho housing market -- especially on the higher end -- has managed to avoid most of the sharp downturns that have left several western markets gasping for air.

"We don't experience the peaks and valleys that a lot of other markets do," said Coeur d'Alene real estate agent Randy Oetken as he toured through a $1.65 million home that he and wife Christi are selling.

As Lake Coeur d'Alene becomes lined with million-dollar condominiums and vacation homes, a new breed of homebuyer has begun to shift its gaze from once-popular vacation destinations to clear waters and pine forests that surround Coeur d'Alene.

"They started out in Sun Valley, Jackson Hole, Tahoe and then moved to Montana," Oeteken said. "But now this seems to be the hot spot."

Often immune to the economic oscillations, rising gas prices and tight lending restrictions that have limited Middle America's home buying ability, wealthy buyers have created a new, more consistent market.

"A lot of the people who are buying luxury homes have more money than they do time," said Windemere Realty sales manager, Jamie Ziegler. "They typically have more money, they're coming in with jobs and they're less impacted by changes in financing ... they're not as worried by it."

Homes priced at $1 million and over averaged 69 days on the market before selling during the first half of 2008 -- just 3 days more than homes under $300,000.

The Coeur d'Alene Multiple Listing Service reported that 11 homes priced at $1 million and above sold in the six months between Dec. 1, 2007 and May 31.

Still, a recent study by the MLS shows that overall home sales have slowed since 2005, which was one of the busiest years for real estate agents in state history.

At the end of May 2005 there were 1,154 homes on the market in Kootenai County, but at the same time in 2008, there were more than 4,000 homes on the market -- an 225 percent increase.

Sales of higher-end homes were down, according to the latest Coeur d'Alene MLS report.

For the six months from Dec. 1, 2007 to May 31, 53 homes sold that were priced $500,000 and above. In comparison, for the same six months the previous year, 95 homes beyond the $500,000 mark were sold, the MLS reported.

The average sales price in Kootenai County from Dec. 1, 2007 through May 31, 2008 was around $227,000 -- 5 percent less than the previous year.

The total number of home sales in the same six-month period was down 27 percent from the 2007 mark, but Coeur d'Alene Realtors Association spokesman Kim Cooper said all the indicators suggest the market is stabilizing from the "feeding frenzy" that took place as a result of lax lending standards in 2005 and 2006.

"Activity is picking up," Cooper said. "Prices are beginning to fall from their 2005 marks, which will increase the number of sales over time ... The market in Southern California has affected our own because there's a lot of people who want to move up here, but they're waiting for their homes to sell. When their market rebounds we'll see a jump in ours."

The U.S. Senate moved one step closer on Thursday to approve a housing rescue bill that would allow the Federal Housing Administration to back $300 billion in new loans, which could help loosen the tight home loans market.

But Federal Reserve chairman Ben Bernanke said on Tuesday that he believes the troubles plaguing the U.S. housing market will continue late into 2009 and suggested that Congress grant the Fed greater authority to supervise the lending industry to assure more stability in the future.

As the number of millionaires in North America surpassed 3 million in 2007, the demand for high-end, luxury housing has never been higher. In fact, mother nature may be the only thing that can stem the tide of wealthy Americans buying property in North Idaho.

Marshall Chesrown, owner of Black Rock Development, said the unseasonably long winter cut into his business.

"Total sales are off about 30 percent from where they were last year because the golf course opened so late," Chesrown said. "But finished products have been pretty lively -- right on course with last year's sales.

Black Rock is a premiere developer in the Inland Northwest with several high-end residential developments in North Idaho and Spokane.

"When times are tough, wealthy people get conservative like everyone else," Chesrown said. "The deals are aren't as easy as they used to be, but we're sitting in pretty good shape."