Broker: Housing market ‘won’t plummet’
COEUR d’ALENE — Jennifer Smock said she and her team at Windermere/Coeur d’Alene Realty are often asked the same questions these days:
What’s going to happen with the housing market?
What can we expect?
What should we do?
While she said she can’t answer those questions with absolute certainty, she did offer this:
“We’re not going to see values plummet,” she said. “But we are seeing a leveling off of values, for sure. The market has pivoted.”
Smock, co-owner and managing broker, gave a 30-minute presentation to the Hayden Chamber of Commerce on Thursday morning at the Best Western Plus Coeur d’Alene Inn.
As everyone knows, the scorching real estate market in the Coeur d’Alene area of late 2020 and most of 2021, when it seemed everyone in the world wanted to move here and many did, has cooled off.
The days of multiple offers and buying homes without inspections are over.
Inflation, recession fears, a wobbly stock market and rising mortgage interest rates have slowed sales.
Inventory is increasing and home price reductions are becoming common.
“Things are starting to shift big time,” Smock said. “Pivot is what I like to call it.”
Still, prices are way up from just a few years ago.
Smock said that in 2019, most Kootenai County homes sold in the $200,000 to $300,000 range; 34% were in the $300,000 to $400,000 range, and 12% were in the $400,000 to $500,000 range. Only 1% were in the $750,000 to $900,000 range.
This year most homes sold, 51%, were between $500,000 to $750,000, while 25% are in the $400,000 to $500,000 range and 10% were between $750,000 to $900,000. Only 4% were in the $300,000 to $400,000 range.
Smock said the home in the $200,000 to $300,000 range only exists today as a mobile on leased land.
The average sales price last year for a residential home on less than 2 acres in Kootenai County was $514,000. This year, $601,000.
Residential property with more than 2 acres last year was $775,000. This year, it’s $923,000.
Construction has slowed, too.
Last year in Kootenai County, there were 1,305 building permits issued for single-family homes, 500 for remodels and 47 for apartments.
This year in the county, there are 439 building permits for single-family homes, 249 for remodels and 16 for apartments.
Building isn’t the answer, anyway, because land is not only hard to find, it’s expensive.
Smock said land has appreciated more than any other segment of real estate. It is getting to a point where it’s “completely untouchable unless a developer has the ability to hold the land for years.”
A .13-acre vacant lot in Coeur d’Alene recently sold for $350,000. A .22-acre lot in the Sanders Beach area recently went for more than $450,000.
Five years ago, 5-10-acre parcels were about $5,000 to $6,000 per acre.
“You want to guess what it is now?” she said.
Today, they range between $40,000 to $60,000.
She said regulatory costs associated with new construction account for about a quarter of a home’s cost.
“It’s tough for the builders, I feel the pain for them because we need them to build, right? We need new construction,” she said.
The rising interest rates — about 5.79% today, nearly double from 3% a year ago — have had a huge impact as each 1% of higher interest decreases buying power by 12%.
“The buyer who could afford the $600,000 house now can afford $500,000. And it takes some time to mentally adjust to that, right?” Smock said. “Because there’s a big difference between a $500,000 and a $600,000 house.”
Still, Smock said this isn’t the recession of 2007 and 2008 and people should not overreact. Those selling homes shouldn’t panic if it doesn’t have multiple offers right away.
“This is nothing like it was last time. The last time was a whole different animal,” she said.
There was far more inventory on the market 15 years ago, and people were “leveraged to the hilt” by bad lending practices.
She believes while the market is slow now, homes will appreciate in the 5 to 15% range in the next year.