Sandpoint and the North Idaho Economy
-
12/22/2008
I host the radio show North Idaho Business. In that capacity I am often asked the questions, “Is it a good time to start a business in the area?” As a Realtor for Windermere Real Estate/Resort Lifestyles, I am asked the similar question, “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, on 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. Also, if you overpaid in May of 2007, then you would be upside down now. There are other considerations. Did you plan on selling in under one year? Two? Five? Truth is, the real answer is if you don’t find the ‘right’ property and you overpaid, then you would need several years to absolutely know the answer. However, last year in the month of May, there were some seriously good bargains available. I should know. I bought a bank repo on 10 acres in Priest River. We gutted the home, fixed it pretty, and just closed on it at a profit. Big profit? No. Worth it? You betcha. If you are going to open a business or buy a home in North Idaho, the time is always ‘now!’ Why? Because, if you run your business well, do so with the bottom line always the constant goal, and treat your customers with kindness, professionalism, and offer a good product, then the chances of success are good. If you buy a home today with a good negotiated price, then even if it suffers some depreciation next year, over the course of two, three, or five years, you will see increases in value. This is historically accurate. However, 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 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. Following the national trend, some local businesses have seen a decline in profits. 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 supplement 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. The multi-million dollar Sand Creek Byway project has begun, and soon scores of new hires with high-paying jobs will add to the local economy. Don’t think that every area adjacent to the vibrant communities of Sandpoint or Coeur d’Alene will appreciate similarly. This just cannot happen. Bonners Ferry, Naples, Priest River, Newport, and other communities just are not doing as well as Sandpoint or Coeur d’Alene. The old axiom of location, location, location, applies, even if your location is near the ‘in’ place. 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 and other mills have closed their doors. 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. The lack of building 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 be in danger. Still, our unemployment rate is low compared to the rest of the nation. With the national rate approaching 7 percent, Idaho’s 5.8 percent is impressive, and among the lowest in the nation. Still, it is at a 15-year high. Bonner County matches the national figure with unemployment November at 6.9 percent. According to the Idaho Department of Labor, Coeur d’Alene area has a similar rate of unemployed, while Boundary County to the north is in the double digits. This has to be compared to historical unemployment rates. In the past, the unemployed in North Idaho often was in double figures. Reviewing the unemployment rate for Bonner County since 1990, this figure is the absolute norm at the beginning of winter. So, while we have enjoyed unprecedented job growth over the last few years, what we are experiencing now is normal for our area. Certainly, compared to the nation and our past, our current figures are good. 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. As of the beginning of 2008, bankruptcy filings in North Idaho are again on the rise following historic drops in 2006. According to Filings in the Northern Division of the U.S. Courts, District of Idaho 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 which had 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 had meager increases in quality of job life 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. Another area that Idaho shows strength in is foreclosures. 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 than 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 hom
Gary | Sandpoint, ID