COEUR D'ALENE, Idaho — A slowdown in the local real estate market is being credited with creating home-ownership opportunities that have not been available for years, reports our partners from the Coeur d'Alene Press.
“Buyers now have the ability to take some time in the decision-making process, they have a bit more negotiating power as well,” said Jennifer Smock, co-owner and managing broker of Windermere Coeur d’Alene Realty/Post Falls. “Sellers are seeing that there is no real rush to market. They have time to prepare their homes.”
According to the Coeur d’Alene Regional Realtors, the number of single-family homes sold in Kootenai County through September was 2,056, down 22.1% from the same time last year.
The median home price of $550,462 was up 16% compared to September 2021, but down slightly from $555,500 in August, according to the Realtors group.
There are far more homes on the market compared to a year ago.
Active residential listings as of Oct. 5 totaled 1,014, nearly double the 544 Oct. 13, 2021.
The days of homes receiving multiple offers over listing price are gone. And with winter around the corner, it’s a slower time of the year when inventory naturally drops off.
“Home sellers now need to prepare homes, have them show ready and set realistic pricing if they would like to get their home sold in less than 90 days,” Smock said.
Lindsay Allen, president of the Coeur d'Alene Regional Realtors, said the local real estate market "is on the leading edge of the market cool down. Most of the cities that saw a big boom during COVID are seeing the cool down first. Cd'A has been on this trajectory for a few months now."
She said price reductions, cancellations and terminated transactions are up.
But Allen said, "Homes that are priced aggressively and are well-maintained are still selling in a traditionally small amount of time. Sellers and agents must be really careful to not overprice things now or you’ll be chasing the market."
Rising mortgage rates, which passed 7% for the first time in 20 years Thursday, have changed the picture, too.
With each 1% increase in the interest rate a buyer's purchasing power decreases by roughly 12%.
“The spike in interest rates is one of the main factors that led to the slowdown of our market,” Smock said. “Once we realized that first big bump in the market it disqualified many first-time buyers and reduced the amount that a borrower could afford significantly.”
Allen also said interest rates have had a huge effect. There was a bump in June, August and October. The Federal Reserve is supposed to be meeting in November and December, and two more rate hikes are expected.
A year ago a buyer might have a budget of $600,000 and a 3% interest rate, but today's 7% interest rate affords that same buyer $460,000.
"That’s a 30% hit to affordability," Allen said.
So she expects housing prices will continue to decline.
"We can’t have high rates and high prices," Allen said.
Smock expects home prices to continue to fall, but not return to pre-pandemic values.
“We still do not have the necessary supply needed to create a balanced market," she said. "This balanced market in turn will stabilize pricing."
While Coeur d’Alene is a big draw, so are other North Idaho towns. There isn’t a strong demand for a certain area, Smock said, but rather, home buyers want quality.
“As our area continues to grow, each city grows closer to the next. Living in outlying areas does not seem so far away from all the usual amenities as it did just 10 years ago,” she said.
Allen said buyers have more to choose from and more leverage than a year ago. Even with higher mortgage rates, many are finding deals, Allen said.
"There are still a healthy number of buyers, both locally and out of state, in the market and coming to Coeur d’Alene," Allen said.
Smock doesn’t see anything drastic happening with the real estate market in the months and year ahead.
“What 2023 will bring will be very dependent on what interest rates do," she said.
Allen also expects to see more of the same: Elevated rates, softening in prices and increasing inventory.
"If inflation stays high that will also affect consumers and may keep more buyers out of the market," she said.
The Coeur d'Alene Press is a KREM 2 news partner. For more from our partners, click here.
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