Sandpoint Starter Home Prices (Boise, Idaho Falls: real estate, 2014, rental)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
With starter homes inside the City of Sandpoint selling at or just below 300K for a 3/2/2 1400 sq ft home, no air conditioning, small yard, where is this going? With Coldwater Creek shooting itself in the head a few years back, Thorne decamping for a new location and the downtown core starting to look like a ghost town, where will the average work-a-day wage earner work to pay for these homes. Rental inventory is very very tight as I would expect but with rents for 3/2 home in the $1400 range where is the income coming from?
Thoughts on home values for these types of homes? Are the topping out? Just getting started? Getting ready to pull back? I can’t see Californians moving and buying these homes - they want something different. So who are the buyers?
My crystal ball is out for repairs, so I can't comment on the future direction of the Sandpoint housing market.
Some perspective may be useful though. First, I'm not sure Coldwater should be brought into the discussion. They filed for bankruptcy in 2014, so fully five years ago. That impact is done and dealt with. For the most part I suspect their ex-employees have either moved on to find other jobs in the area, or have moved on to other places. I do note that the local economy seemed to take that event in stride, but a reasonably strong overall economy no doubt was a help there.
There are currently round about 12,000 jobs in the Bonner county economy. For reference, Coldwater employed 339 here in 2014, so about 2.8% of the total jobs. Thorne employed 270 here, so about 2.2% of the total jobs. Both were sort of in the 4th-5th-6th largest employers in the county, in the same general range as Bonner county, Litehouse and Wal Mart.
The largest 3 employers are LPOSD, Bonner General Health, and the county itself. This is a quite common list for most rural counties in the country - i.e. the local schools, the local hospital, and the county will be the top 3 employers in some order or another. BTW, the West Bonner school district is the 7th largest employer.
Will Thorne leaving have an impact? Sure. But I suspect it will mainly be felt by those who are directly impacted. The total number of jobs is small enough in comparison to the overall economy that I don't think it will have a large impact on the local housing market. There may be a temporary increase in homes on the market if some of those employees decide to move elsewhere, but I doubt it will be a long lasting trend.
As for what's happening downtown, I'm not sure whether the current state is indicative of a long term trend. It certainly looks worse now because of the fire that took out the building in a very prominent location on 1st, and because of the condemnation of a building at the corner of 1st & Cedar. Some of those affected businesses have relocated, either permanently or temporarily. I know the building on 1st will be rebuilt, which might create some construction jobs for a while. I have not heard about what plans there may be for the old Arlo's location. We also have the owners of the Best Western preparing to make a major investment in a new hotel at their location. So in a year or three when those projects are completed, and assuming something happens at the old Arlo's location downtown may have a completely different feel.
Yes, there are more vacant storefronts than just these two locations. But, that's pretty much been the normal situation in recent years. I think that's typical of small town tourist driven economies. The seasonal nature of those businesses makes it challenging for many to survive, and it seems there is always a certain background level of turnover. It may be that it's the combination of the two fairly prominent vacancies with the normal turnover is making it seem worse than it really is.
The future? All I can say is that Boise housing prices drove up pretty hard just before the recession, then collapsed back to where they were, and then recovered at a fairly average rate, and have been driving up hard in the last few years. The same can be seen for Idaho Falls, and Bonner County is similar to those 2. So, based on this pattern alone, and with no obvious influx of new wealth, I personally think Bonner County is in the situation to see a price drop.
Looking at eastern areas, the same boom-bust price character has not generally been there for the same time period. You can look at historical median housing prices here at the St. Louis Federal Reserve site: https://fred.stlouisfed.org/release?rid=171
The rest of this is FWIW....... On the house price side of the equation....... I've been trying to figure out exactly why houses out west are substantially more expensive than in the middle and eastern part of the US. Look at this for an interesting graphic presentation of home prices across the US. What jumps out at me is that the cost / sq foot in the DC suburbs is the highest in VA, but is just average for an area like Idaho Falls. That does not make sense on the surface.
- Land price is a bit higher nowhere near enough to drive this difference.
- Materials prices are not that much different. (I have personally checked.)
- Transport prices may be a bit higher
- Construction labor is in the 10-15% range higher
- Regulatory is hard to call. Suburban DC is actually more than Idaho Falls so that ought to drive the relative cost the other way.
IMHO, nothing above, or even all of them together, fully explains the difference between much of the west including the small cities, and say the midwest.
A couple of things that drive new house cost is amenities and design. It looks to me like there are limited new homes being built out there along the lines of the cracker box style referred to above as starter housing. It is somewhat the same out here (VA) but not to the same degree, and I don't see as much manufactured housing out there in the suburbs. So the drive to higher level amenities in new housing there is IMHO an important factor.
The other is revealed in the graph linked above. Getting near the western big cities REALLY spikes up hosing prices, much more so than around the eastern big cities. This has been true for a t least a generation now, and the investment in housing has been higher and the expectation of that of the pricing along those lines continues. So, I think that folks just 'expect' higher pricing out there now.
Having said all that, the new house prices drive the used house prices. So if there is some new construction going on at a certain price range nearby, then used housing prices are going to follow. Nothing new about that.
To anyone from elsewhere in a state that borders on the Pacific, 1400 square feet for under $300,000 looks like a really nice bargain. Which is a problem all over Idaho, not just in Sandpoint.
I absolutely love the Sandpoint area. What a great place to live. Except that it is too far to commute to work, so I don't live there.
So, I don't know where all the incomers are getting their income. Retired? Working online from home? Won a lottery?
I don't know why you think a Californian wouldn't buy in Sandpoint. Sometimes they over-compensate. Tired of the crowding? Move to where there are few people and limited services. Generally, that type will tough it out for a couple of years and then sell and move back to a city.
But Sandpoint is an excellent recreation area and there are Californians who enjoy recreation. And Californians who enjoy scenic beauty. Why wouldn't they like Sandlpoint (except for the source of income issue)
I think most of those who move here from CA are looking for more rural properties in the county, and are not looking to live in the Sandpoint. There are exceptions to be sure, but I think that's what is typical of folks who move here from there.
Many Californians are moving at least in part to escape the crowds of California's suburbs. They often have plenty of home equity at their disposal, particularly in relation to property values here. Most can afford to by some acreage in a rural area of north Idaho, and that is the type of environment that fits their desire to get away from suburbia (or at least they think it does).
As far as income goes, I think a lot of those moving from CA are retired. I'm on a citizen's committee that is working on updating the Comprehensive Plan for Sagle, and we've been looking at recent demographic trends. The population growth in the 55+ age groups is notable. That's mostly due to retirees relocating to our area.
There are younger folks moving here from CA. I know a few of them, and many of them are able to work remotely or from home.
I have owned both income and personal property in Bonner and Kootenai counties since 2002. My interest is in how or if the local economy can provide sufficient wages to either support a tenant paying $1400 or so for rent or $1300 or so for mortgage, taxes and insurance on a $300K home (assuming 80% LTV 3.75% or so rate, property taxes of $150 month and insurance at $80 month). I look at things like the monstrosity that Panhandle Bank built (a monument to its insecure CEO) that still sit with large amounts of vacant space, the empty downtown business spaces, some employers moving out etc and wonder if the rise in property values will continue or is it plateauing. Given that historically, recessions hit towns like Sandpoint earlier, go deeper and last longer, I wonder where the market will be going forward if/when recession hits.
I am not concerned about properties on large parcels, ski condos, lake homes, condos at the Seasons, etc. I am strictly interested in workforce housing and where those values go. I just don’t see CA buyers moving in and buying workforce starter homes .. at the least the ones that I am familiar with.
The question that I am ultimately trying to answer is if now is the time to unload the last properties I have in Sandpoint and deploy capital elsewhere. I have this nagging feeling that values are unsustainable there for much longer and maybe its time to take the money and run.
OP, your crystal ball is as good as anyone's! I am just reminded about the thinking to set a return goal and then move on once that goal is met, and not try to hang on for every last bit of return. I personally have decided to wait a bit on purchasing on the belief that things have peaked up a bit this year and supply is catching up in many areas; I can see the pressures on some property types and in certain areas going down. That's MY crystal ball.... it is worth to you what I paid for it ..... 0 cents!
........The question that I am ultimately trying to answer is if now is the time to unload the last properties I have in Sandpoint and deploy capital elsewhere. I have this nagging feeling that values are unsustainable there for much longer and maybe its time to take the money and run.
Rule of thumb is to sell high. Right now prices are high.
Real estate runs in cycles. So there will be a downturn in prices at some point. Recreation areas with no other big income sources get hit hard in real estate down turns.
I'd say yes. If your strategy is not to buy and hold, now is a good time to move on. There is lots of workforce housing in Spokane and those tenants will probably still be there if real estate goes down.
OP, your crystal ball is as good as anyone's! I am just reminded about the thinking to set a return goal and then move on once that goal is met, and not try to hang on for every last bit of return. I personally have decided to wait a bit on purchasing on the belief that things have peaked up a bit this year and supply is catching up in many areas; I can see the pressures on some property types and in certain areas going down. That's MY crystal ball.... it is worth to you what I paid for it ..... 0 cents!
I am in your camp on peaking and possibly declining values. I have been liquidating income properties in Sandpoint over the past 12 months for that reason mostly. The other mitigating factor is that the only real property manger in Sandpoint is pretty much incompetent so the Sandpoint properties take too much time to manage even with a property manager in place. I will say Sandpoint has been good to me with roughly 1.7 multiplier to my purchase price for today’s market value in gross terms since 2013 plus rental income since the properties were cash flow positive from day one. I am inclined to liquidate this last property to take the gain and bank it plus to get rid of the last outlier property I have in Idaho.
Doesn’t hurt that I have a California buyer that wants to own their first income property in Sandpoint and is willing to pay an above market price, finance it and is willing to accept negative cash flow on it. Where would Sandpoint (and North Idaho in general) be without the Californians coming in with money and buying quickly instead of doing a bit of market research. In the almost 18 years I have owned property in North Idaho, I have seen this happen over and over again. PT Barnum was right.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
