Data paints Catch 22 for local economy
Each report — taken individually — indicates what we already know.
The real estate market in Kootenai County right now is a seller’s goldmine. Rising rent prices are driving people away from Coeur d’Alene. Two of the county’s biggest private industries are service industries and call centers, neither of which pays well.
Woven together, the data paints a troubling picture for low-income workers, starting with anyone trying scrape together enough for a home.
The Multiple Listing Network’s October report, featuring year-to-date figures through September, noted a stark increase in the average cost of a home countywide.
“It’s simple supply and demand,” Loretta Hartman of North Idaho Real Estate said. “There’s less supply than there is demand. That’s nothing new. The rate it went up doesn’t surprise me, either.”
The number of homes sold in Kootenai County so far this year — 2,615 — is in keeping with the number of sales this time last year. The median price, however, was $305,000, a 9% jump from this point in 2018. The already-skyrocketing prices aren’t deterring affluent buyers from making a more-than-competitive bid.
“If it’s a nice-enough house, and buyers are out looking, they’ll pay over the listed price,” Hartman said. “If they find a special house they want, they don’t want to get bumped by another bid. They’ll put in a good bid.”
Unsurprisingly, those bids are accepted with dispatch. More expensive homes — anything more than $1 million — can stay on the market for upward of six months, Hartman said. Anything below $300,000 goes in a flash.
“Right now,” she said, “it’s the beginner homes where supply is the most needed. If you have a 1,400 to 1,700-square-foot rancher — maybe a three-bed, two bath with a two-plus-car garage — it’ll go a lot quicker.”
What’s driving the boom? It’s not some national desire to pull up stakes and relocate to the Gem State. Idaho as a destination isn’t necessarily causing the boom.
“I’ve been doing this 18 years,” Realtor Katie Stolebarger said. “I’ve seen the ups and downs here in the area. The people who are coming here aren’t coming toward Idaho; they’re coming away from somewhere else.”
Conditions in more populated areas are driving people to seek refuge in Idaho, Stolebarger said.
“I have a client in California,” she said. “He wants out of law enforcement. He deals with the worst of the worst. If you’re a police officer, you can’t shoot a suspect unless they’re shooting at you. This is the law down there. They have a mandatory vaccine program [in California]. People are looking to get out of there for health-freedom reasons. They have power supply issues down there. They’re handing out needles to people in Seattle. When you’ve got people like that looking to move their families out of that insane environment, the prices are always going to up.”
She said the real estate market is pricing local native Idahoans out of the market — and that’s not likely to change.
“It’s such a beautiful area up here,” Stolebarger said. “This is kind of a special pocket market. That’s why people want to come here, and that’s why they’re coming here as fast as they can.”
Low-income
renters tossing more income away
That influx is good news for homeowners looking to sell, but renters — specifically low-income renters in Coeur d’Alene — might see another report’s numbers in a dimmer light. An October report released with American Community Survey data shows the rate of Coeur d’Alene renters paying too much for rent skyrocketed from 42.4% in 2017 to 57.4 percent lat year — and prices haven’t abated so far in 2019.
The report, released by the home-finder Apartment List, defines “cost-burdened renters” as those spending more than 30% of their incomes on rent. Mortgage bankers like to see that figure at 28% or less. The nationwide average of cost-burdened renters is 49.5%.
Bonnie Allan, managing partner at Compass Property Management in Coeur d’Alene, and Jodie Smith, account manager at Compass, say the rise in rent could be attributed to an exploding influx of people emigrating to Coeur d’Alene.
“It’s really because of a large number of people coming in from other states,” Allan said. “You look at people coming in from California, and I use California because that’s where a lot of the people are coming from. People in California are used to paying $1,600 [a month] for a two-bedroom, one-bath. That’s the norm for them.”
Smith added the California standard can’t help but naturally reset the local market.
“I notice a lot of renters, particularly those coming in from elsewhere, get comfortable paying [rent] in the $1,400 range,” she said. “That’s a big reason why the market has taken the leap that it has.”
Allan said the ability of new Idaho residents to pay more than native Idahoans puts the financial strain on local renters accustomed to lower wages. The secret for all renters, she said, is to know what you can afford.
While the numbers indicate a potential tipping point of no return, she added a possible pause in the exploding rent increases.
“Maybe a lot of it is the time of year,” Allan said, noting the slowdown in interested renters that comes with the drop in temperatures, “but I’m noticing a ceiling. Over the spring and summer, our properties’ vacancy rate is around 1%. Right now, it’s around 3%.”
The average vacancy rate nationwide as of the end of 2018 was 7%.
Low-wage jobs leave struggling Kootenai County residents between rock and a hard place
The numbers are statistically grim for Kootenai County. In its yearly October ritual, the U.S. Bureau of Labor Statistics report released Thursday shows a disparity in the wage gap between Kootenai County and the rest of the country during the first quarter of 2019. While nationwide numbers dictate an average income of $1,164 per week, Kootenai County reported an average weekly wage of $762, a full 35 percent less than the rest of the American workforce. Two factors play roles in the wage gap, according to local representatives for the Idaho Department of Labor.
“Do we have a growing economy? Yes,” Dave Darrow, manager of the Idaho Department of Labor’s Post Falls office, answered. “Kootenai County is definitely experiencing growth…Does that statistic specifically dictate that correlation? No. We also have a growing population base. The job market is growing. That’s obviously going to mean more of a working population.”
As much as an influx of workers might naturally drop the average wage, Department of Labor economist Sam Wolkenhauer said the real key to unlocking the wage gap equation lies in how the math is calculated.
“The thing about the weekly wage,” Wolkenhauer said, “is that it doesn’t include hours. We don’t calculate hours. We get this data from the unemployment system, where they calculate an hourly rate but don’t actually calculate hours, which is why we go by a weekly wage.”
As a result, according to Wolkenhauer, the U.S. Bureau’s report doesn’t suggest that drop indicates lower earning for Idaho workers working comparable jobs to, say, Oregon or Nebraska.
“Just because it’s 30% lower [statewide], that doesn’t mean our wages are 30% lower,” he said. “In other words, an electrician in Idaho doesn’t make 30% less than an electrician in Washington. What it means is, the aggregate wage of the workforce is lower.”
Wolkenhauer said the wage imbalance in Kootenai County has far more to do with the types of jobs available locally.
“It’s really about the number of lower-paying jobs in the area,” he said. “We have a lot of jobs here in the service sector. We have a lot of local call center jobs. That’s going to lower the overall spectrum of wages.”
There might be a glimmer of hope:
“We usually notice a slight a slight drop in our vacancy rate because fewer people are moving toward the colder months,” Allan said, “but I have noticed that drop. There’s a ceiling for this. There’s a ceiling for renters, and not all property owners are realizing that. If we’ve got an owner who listens to our price recommendations, the property usually gets snatched up right away. But if we’ve got an owner that wants to go $200 over our recommendation because he thinks someone will come along, that property will sit: not forever, but it will sit longer than it should. That gives me hope.”
