W. Washington, N. Idaho Anticipate Cooler Housing Market This Year

Spokane, Wash., and North Idaho home buyers may get a much-deserved breather from runaway real estate prices this year, according to the Spokeman-Review.

Local experts predict that the pace of price increases will slow in 2007. During the last two years, residential real estate values rose at double-digit rates, outpacing most income gains and dampening the hopes of many home buyers.

Dan Flanagan, past-president of the Coeur d’Alene multiple listing service, said the influx of out-of-town home buyers should slow. That in-migration fueled property-value increases of nearly 30 percent in 2005 and 13.3 percent last year.

“We still have a tremendous amount of people who want to come up here, but they’re having trouble selling homes in other places,” said Flanagan, who predicts that this segment of the Idaho housing market will increase by about 5 percent this year.

In Spokane County, Rob Higgins of the Spokane Association of Realtors said the residential real estate market is stabilizing and Washington mortgage demand returning.

He forecasts that Spokane will return to a more normal rate of appreciation in 2007 — about 4-6 percent, compared with the 14.5 percent rate seen in 2006.

In the past few years, Kootenai and Spokane county markets have taken a twist: While low-to-middle income buyers have struggled to find reasonably priced houses, an emerging population of affluent residents - who don’t depend on Washington or Idaho mortgage financing - are spending half a million dollars and up to live in condos and upscale developments.

Old mill sites in North Idaho are currently being revamped into mixed-use developments and historic buildings in Spokane converted to condos.

Last year, Spokane issued building permits for 79 condos in a half-dozen complexes. Spokane is starting off 2007 with permits pending on about 200 units — including projects in the former home of Joel Inc. and the City Place condos, going into the Ridpath Hotel’s former Executive Court.

“I think 2007 is going to be a defining year in terms of how deep that market is,” said Dave Black, CEO of Tomlinson Black Commercial, speaking about the higher-end downtown condo market.

Although national home loan trends don’t necessarily apply to Spokane and Kootenai counties, financial experts predict less activity from short-term investors, who some blame for the rampant price increases in North Idaho and Western Washington in 2005.

With the stock market rebounding, mortgage rates expected to rise and some property values already dropping, experts say that speculative investing isn’t quite as attractive.

Local developer Jim Frank, owner of Greenstone Corp., explained the impact of speculative investing.

“When the market slows — as is the case right now — the speculators become sellers depressing the market. The result is that the speculative activity distorts the markets in both directions, helping to cause a boom and then bust cycle,” Frank said.

A number of communities in the Western Washington market are grappling with issues related to affordability, said Chris Venne of Community Frameworks.

The Spokane-based nonprofit, which plans, finances and builds affordable housing, held workshops on the creation of affordable housing in high-priced markets for audiences in Kellogg, Boise and Sun Valley, Idaho. Attendees ranged from city and county officials to developers, he said.

SOURCE: Spokane Spokesman-Review