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Does the North Idaho economy show signs of life? By Gary Lirette Host of North Idaho Business on KSPT and Realtor for Windermere Real Estate/Resort Lifestyles As host of the radio show North Idaho Business I am often asked, “Is it a good time to start a business in the area,” or “is it a good time to buy a home here?” There is often the codicil, “…or should I wait ‘til the fall/winter/summer/spring?” In fact, last May 14, 2007, in a forum hosted by CityData.com, a couple asked that very question. Looking back, was it a good decision to wait until the fall to buy? Here is the easy answer: prices are now lower on many properties and businesses than last year. Also, if buyers overpaid in May of 2007, then the chance is they would be upside down now. There are other considerations. Did they plan on selling in less than one year? Two? Five? The more important answer is if the ‘right’ property or business isn’t found, and you overpaid, then purchasers of businesses and homes would need several years to absolutely know the answer. However, last year in the month of May, there were some definitive good bargains available. If opening a business or buying homes in North Idaho, the argument could be made that the right time is always ‘now!’ Why? Because, if a business is run well, with the bottom line always the constant goal, and customers are treated with kindness, professionalism, good products are offered, then the chances of success are good. If a home is bought today with a good negotiated price, then even if it suffers some depreciation in the next months or year, over the course of two, three, or five years, values historically increase. To have a clearer picture it is more important to understand the dynamics of Sandpoint, Schweitzer Mountain, and Lake Pend Oreille. Anecdotal evidence of a good economy in Sandpoint is strong. While many new offices and buildings are coming on the market, the number of empty buildings and storefronts is historically low. Many developers and business owners are banking on continued growth. On Fifth Avenue several new buildings are being constructed, and similar projects are nearing completion on Highway 2/Pine. The businesses that were built last year are thriving, such as the new North Idaho Animal Hospital and Starbucks in Ponderay. Slate’s new digs are impressive, and in a telephone interview Steve Coffman confirmed that this will be the restaurant front to a new hotel. Certainly the decision to build by Panhandle State Bank and Mountain West were based on a stronger economy, but the addition of their buildings created jobs as well as beautiful new structures gracing the Sandpoint skyline. Over the last two years over 90 businesses have changed hands at a value approaching $60,000,000, and dozens of new businesses have sprung up all over the two county area. Following the national trend, some local businesses have seen a decline in profits. Locally based national apparel retailer Coldwater Creek’s stock price has tumbled from a high near $30 to around $6. Part of Coldwater’s strategy in recent years has been the addition of hundreds of brick and mortar stores to compliment its online and catalog sales. A comparison of the first quarter of 2007 to this year showed a 9.4 percent decline in sales. Yet after passing the milestone of a billion dollars in sales in 2006, this is not the worst news of the day. Nationally, retailers are having one of the worst years of the decade, and several national stores are filing for bankruptcy protection. Other companies such as Encoder, Thorne Research, and Unicep Packaging are continuing with business as usual, though with slower sales and numbers than recent years. Some local companies are increasing their presence both in national sales, and local employment, such as Litehouse Foods. Paul Schaller’s Quest Aircraft is hiring new employees and has plans for robust sales in the coming months. Not all areas adjacent to the vibrant communities of Sandpoint or Coeur d’Alene are having the same success. Bonners Ferry, Naples, Priest River, Newport, and other communities have higher unemployment and lower occupancy rates. One only has to take a few minute walk in downtown Priest River to see many, many buildings with ‘For Rent’ signs, and closed businesses are the norm. The news is also not good for two of our best employment opportunities. JD Lumber will be closing its doors in the fall. The lumber industry, which enjoyed resurgence during the housing boom of recent years is now suffering one of its greatest downturns. While Idaho created different industries over the last several years to buffer the decline of lumber, states more dependent on the lumber industry, such as Oregon, are in real trouble. A slowdown in the building of new homes has also affected higher-paying jobs in the construction industry. Thus far, there have still been jobs available, but without some recovery, those jobs may soon be in danger. Other new businesses have begun, and closed their doors quickly. The Craggy Range restaurant took over the space formerly occupied by the Powerhouse Bar and Grill, only to close last winter. The signs on the door said they would open again in spring, but as yet have remained closed. Others have opened and thrived. When Swan’s Landing sang its swan song, Len Golding reopened it as the Landing, and their parking lot is filled on a regular basis. John and Darcy Peters opened the much-acclaimed Three Glasses to some limited success, but their Loading Dock café is booming. Many local small businesses are thriving in spite of the downturn in our national economy. Our unemployment rate is low compared to the rest of the nation. With the national estimates approaching 6 percent, Idaho’s 3.8 percent is impressive. Bonner County matches that state figure with unemployment in June at 4 percent. According to the Idaho Department of Labor, Coeur d’Alene area also has a rate of unemployed at 3.8 percent, while Boundary County to the north matches the national number at 5.8 percent. This has to be compared to historical unemployment rates. In the past, the unemployed in North Idaho often was in double figures. Certainly, compared to the nation and our past, our current figures are outstanding. Looking at the jobs available in the Sunday newspapers confirms that there are jobs available, though we still lag behind the rest of the U.S. in rate of pay. At the beginning of 2008, bankruptcy filings in North Idaho were again on the rise following historic drops in 2006. According to filings in the Northern Division of the U.S. Courts, District of Idaho bankruptcies nearly doubled to 414 cases last year, up from 219 cases the prior year. The Northern Division handles cases from Kootenai, Benewah, Bonner, Boundary, and Shoshone counties. In 2006, filings in the division had dropped 87 percent, down from more than 1,600 cases, following enactment of the Bankruptcy Abuse Prevention & Consumer Protection Act, which took effect October 17, 2005. The new law created additional requirements to be met by debtors before they could become eligible for protection from creditors. While the figure is almost double the previous year, it is still in the lower tier of states. Idaho’s most vibrant city, Boise in Ada County, has also had meager increases in quality of job life in recent months with a 0.4% increase in job numbers, and a 0.5% increase in the average weekly wage. There the technology boom has long been the envy of other cities, yet with the recent closing of HP operations, and Micron on the verge of bankruptcy, the outlook is not as gleaming as even 2007. Idaho has also prevailed with its foreclosure rate. According to the National Delinquency Survey by the Mortgage Bankers Association only nine other states have a lower rate of foreclosure than Idaho. This may be bad news for the intrepid investor looking to pick up property a bargain prices, but it speaks to our economy. A higher percentage of Idahoans are making their payments compared 80 percent of the rest of the nation. If home appreciation and sales are the benchmark for judging how our economy is doing, then we are in a slowdown. Many pundits believed that 2005 or even 2006 were our best years ever for home sales. While 2005 was impressive with over $303,000,000 in homes sales, our best year ever was in 2007, with over $306,000,000 in sales. Many people in the real estate industry felt 2007 was a terrible year for their industry, but statistics show otherwise. Taking numbers from the Selkirk Association of Realtors, the median sales price for homes in Bonner and Boundary Counties has declined roughly 12 percent for the first half of 2008 from 2007, and total closed sales for homes is down to 60 percent of last year’s sales. However, taken in perspective, this is comparing to the record year of 2007. Compared to 2003 or 2004, our current home values are much higher, and sales are average. Few viewed those years as bad economic times for the Idaho Panhandle. Even compared to 2006, our present values are close, though they are roughly 8 percent lower for the first half of 2008. Again, perspective is gained from realizing that a 50 percent increase was enjoyed in home values from the previous two years to 2005 figures. Many saw increases of 30-40 percent a year during boom years. Sales for 2008 are on target to be as good as 2003, though will probably fall short of 2004 and 2006. Forecasts are for the market to stay at this level for the foreseeable future, then to rise again in a couple of years. High gas prices and the airline industry woes have affected North Idaho’s tourism. Area merchants are feeling the pinch from fewer tourists this summer season. While it may be nice to cross the Long Bridge with no traffic jams, it is a sure sign fewer people are coming to visit. Schweitzer Mountain Ski Resort enjoyed a record year in the 2006-2007 ski season, yet last year’s numbers were also respectable. The additional accolades of being named to Skiing Magazine’s Top 25 Resorts, and as the Northwest’s Favorite Resort by OntheSnow.com were welcome points of recognition. In fact, the national credit that Sandpoint and Schweitzer continually receive increased in the spring with AskMen.com naming the area one of the nation’s Top 10 Resort Towns. So, how is the economy in North Idaho? Unemployment is low, jobs are available; new businesses are coming to our area, and new construction dots the region; tourism is soft, but with the great reports still coming from the national press, that looks to be a temporary condition; housing values and sales are soft, but foreclosures are low, and compared to previous years, all indicators are that we are in a normal market; bankruptcies are up, but are comparatively low to national figures; prices for staples are high, but that has more to do with international and national conditions rather than local; some of our industries such as lumber and construction are suffering, and that does not look to change soon. Overall, it is a mixed bag. However, the outlook is marginally good. Our benefits are in our strong businesses, many of which have good national presence, our strong reputation with our tourist draws, the incredible beauty of North Idaho, and our great resource in the people that live here. As Doug Hawkins, the Bonner County Economic Development Corporation’s Director in an editorial last May wrote, “Sandpoint is the eclectic mix of uniquely talented people in our area. It is the awe inspiring geography and neighbors acting like friends. It is the fantastic restaurants, the Festival and high school sports. It is small town America and it is something charming that is hard to find.”
Is it a good time to buy a home or business? You betcha. |
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Tomlinson Sandpoint Sotheby's International Realty
200 Main Street |
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