Buying a House? Get in Line. Massive growth forecasted
By Colin Anderson
Anyone who has called Kootenai County home since the internet and cell phones started becoming “a thing” can recall when the Rathdrum Prairie was pretty much that—prairie land. The drive into Spokane along I-90 was mostly open space and farmland around the state line, and Liberty Lake was a relatively small blip before the Spokane area began to appear around the valley mall. It was the same as you left I-90 to go northbound on Highway 41 and into Rathdrum. That once sleepy two-lane highway is now being massively overhauled, and as you turn your head both left and right, open spaces are quickly turning into planned communities, townhomes and apartment complexes.
“Currently we are experiencing record-low inventory. As of this morning, we have more vacant land listings available than homes for sale,” explained Jennifer Smock, who is managing Broker and co-owner of Windermere Coeur d’Alene Realty.
While everyone is aware of the continued growth in the area, recently released projections might still come as a shock. In 2019, the population of Kootenai County was just over 165,000 residents. The Kootenai Metropolitan Planning Organization estimates Kootenai County’s population will swell to some 307,000 people by 2040. Smock believes there is a consensus among local Realtors of three key elements driving the influx of new residents. First, the pandemic opened companies’ eyes to the idea that much of their workforce is able to work remotely. “They can continue to earn income at their higher paying jobs in large cities and take that income and come to a place like ours where it goes a bit further,” she said. Another factor that is brought up often is the consistency of the local political environment and beliefs of the area. Finally, people are moving from metropolitan areas of more than 1 million people to enjoy the space and recreation North Idaho has to offer. “While our town is growing quickly, almost overnight, we still have a wonderful small-town feel. There is still space to spread out; mountains to hike, ski and snowmobile through; rivers, lakes and streams to fish; and just good clean living all around us,” said Smock.
With active listings at near record lows, buyers would typically turn to new construction as an alternative, but therein lies another issue as most subdivisions are sold out—including those that are just beginning to be built. “As you would expect, this lack of inventory and high demand has driven our home values up to a level that is making it difficult for those first-time home buyers or entry-level buyers to qualify for a home,” said Smock.
Regional developers have never been busier. There are plans underway for several very large new neighborhoods including 1,050 acres of farmland along Huetter and Mullan roads between Coeur d’Alene and Post Falls. Kootenai County Land Company acquired the land, and the master plan calls for an estimated 4,500 housing units ranging from large custom view sites to “quainter footprint homes offering affordability and urban-style living,” according to the company website. Approximately 11,000 people will eventually call this area home.
The immense challenge for builders is not only meeting the demand but also keeping the small community appeal that drives new residents to the area. Jason Kindred is chief operating officer of Architerra Homes, a business partner of Kootenai Land Company. He believes thoughtful real estate development takes time, partnership with local agencies, and shared ideas and collaboration in order to create places people will want to live. “We take a phased approach to the build out of our developments,” he said. “Each phase is designed, sized and constructed based on market demands, community needs and agency feedback.”
While some projects might take a relatively short time, others will take decades to fully complete. Builders like Architerra recognize the reasons people are moving to the area and make sure to include the Pacific Northwest lifestyle in their development designs and implementations, incorporating walking and biking trails, expansive parks and open spaces. “We are focused on creating close-knit neighborhoods and communities,” said Kindred. “With shared ideas and collaboration, we are able to strategically allocate land for schools, parks and open gathering spaces—all with the goal of creating communities where we would all like to live.”
As with existing home sales, the new home sales market is extremely competitive. Kindred acknowledges most builders are currently struggling to keep up with demand, and those who are lucky enough to land one can often expect an eight- to 10-month build time. A sign of the times, Kindred is seeing a noticeable shift in what amenities buyers want in their new build. “It has been interesting to see how quickly buyers want to see upgraded office spaces and other work-from-home amenities. The ability to do home-school functions for children has been high on buyers’ lists as well,” he said.
As of late 2020, the residential average sale price in Kootenai County was a whopping $443,000 with a median price of $358,000. While this can be a great opportunity for sellers to cash in, there is also the challenge of finding new and affordable upgrades for current homeowners.
Across state lines growth is also happening in the greater Spokane area. Realtor.com put Spokane’s median home sale price at $180,000 in October of 2017. Three years later that number has jumped to $290,000, with a forecasted increase of more than 12 percent in 2021. Data from real estate service Redfin has the Spokane market at a rate of 92/100 on the Redfin Compete Score. The company puts Spokane into the “most competitive” category in which most homes get multiple offers, often with waived contingencies, and go pending within three to five days.
With all the amenities of a large metropolitan area and homes costing less than half as much as Seattle and Portland, young families, empty nesters and even retirees are also flocking to Spokane. Young professionals working from home are a driving force, but the continued presence of Fairchild Air Force Base, the opening of the Amazon fulfillment center (with plans for another in the Spokane Valley now in the works,) new schools, and large companies relocating to Spokane or setting up bigger operations have helped drive additional employment opportunities to the region—and therefore more home buyers.
With such competition in both markets, buyers can no longer be too picky about the amenities they desire or often the neighborhood they seek. “Unfortunately, they do not always get to choose based on location to a school district or an area they love. They are making concessions on their wants in a home more so now than ever. If a buyer is looking for a four-bedroom, two-bath home in Kootenai County, they can be prepared to compete with multiple offers and pay well over asking price,” said Smock.
Growth can be exciting and also painful. Large swaths of downtown Spokane have gone from dilapidated to reenergized in the past decade. Recreation-driven businesses and downtown Coeur d’Alene shops, restaurants and bars are seeing more visitors than ever before. The challenge for all communities of the Inland Northwest will be to accept and manage the growth while keeping the important reasons of why most choose to live here at the forefront. Some would like to see long-term master plans drawn up, while others would prefer to let the market do what it will. Either way, growth is not slowing, and it will be up to each community to adapt.
“It is going to be difficult on our infrastructure, schools, medical, and our transportation departments,” said Smock. “Growth is inevitable; our hope would be that it is planned growth and that we can be progressive with it instead of reactionary.”
Kootenai County and Spokane aren’t the only areas to see rapid growth in the last several years. With the continuing growth of Kootenai County, many people, both locals and transplants, are shifting their gaze north toward Hayden and Athol, and into Bonner County.
“Due to many factors, including low interest rates, baby boomers retiring and people looking for more rural environments and small towns, 2020 brought more demand to our market than we can supply,” said Jackie Suarez, Associate Broker for Century 21 in Sandpoint.
Just like in Kootenai County, increased remote work capabilities, coupled with the COVID-19 trend of relocating out of cities, has led to a market where there is more demand than supply, resulting in higher prices for sellers—and buyers. At the beginning of December 2020, the Bonner County median sales price year to date increased 15 percent over homes sold in 2019.
It’s a seller’s market, even more so with the onset of winter. “Typically, there are less homes on the market in the winter season. This, coupled with demand that already stripped supply, has resulted in an increase in prices and a very competitive environment for buyers,” added Suarez.
In Sandpoint, the median price for residential units sold in the past three months was $429,900, but the median price for residential units currently on the market as of print time is $791,950—a hefty increase. Affordable housing is increasingly difficult to find in the area, particularly as low- to mid-range homes fly off the market before buyers have a chance to make a move.
Over the next five years, growth is only expected to continue. The city of Sandpoint estimates a 3.4 percent growth rate through 2025 and anticipates the addition of over 400 new housing units in the next few years.
For those currently looking to relocate, low interest rates allow for interested buyers to take advantage of lending options, said Suarez. “While it’s more difficult to move in winter conditions, people in the winter market are typically serious about buying and selling,” she explained. “Sellers are taking advantage of their captive market, with very little competition.”
For many, a rural area like Bonner County and Sandpoint is a new experience. People relocate for the exceptional lifestyle and outdoor opportunities, but there are many unknowns when it comes to buying your first home or relocating to an unknown area. Suarez recommends doing your research and reaching out to the right experts for help with your purchase.
$429,900: Median price for residential units sold in the Sandpoint area for the last three to four months of 2020 was $429,000.
$425,000: Median price for residential units sold in Bonner County during the final quarter of 2020 was $425,000.
26.9: According to Redfin, 26.9 percent of homes in Sandpoint sold above list price.
22: Homes go pending in about 22 days, according to Redfin.
15: The Bonner County median sales price year to date increased 15 percent over homes sold in 2019, as of December 2020.