Housing Slowdown Felt in Boundary County

Once powered by cheap mortgage rates that fueled record-setting levels of home sales since 2001, demand for real estate triggered home prices to jump at rates not seen since the 1980s.

Even in rural counties across Idaho like Boundary County, in many cases it generated 10 percent gains each year for scores of homeowners, many of whom used home-equity loans or refinancing to transfer some of the windfall into cash.

But the housing market has drastically changed in the last seven years, when housing starts rose to a yearly pace of 2.2 million in February 2005, a level not seen consistently since the 1970s. Before national average mortgage rates declined to 6.52 per cent in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on July 31, rates had been at their highest levels since August 2007.

New U.S. Census Bureau figures released Aug. 21 show that the slowdown in home construction was already being felt across Idaho in late 2006 and early 2007.

The estimates found that while new housing construction in Idaho still grew at the third fastest rate in the nation between mid-2006 and mid-2007, the rate of growth at 2.5 percent was nine-tenths of a percentage point below the rate from mid-2005 to mid-2006.

In Boundary County, housing units fell from 4,629 in 2007 to 4,433 in 2006, a 4.4 percent drop. Since 2000, however, Census Bureau statistics show a 13 percent decline in housing units for Idaho's northernmost county.

The news is hardly a surprise to Realtors and others plugged into Boundary County's housing market.

"It's kind of like pulling teeth right now," said Donna Capurso, who owns Selkirk Mountain Real Estate in Moyie Springs. "The lending crisis, the mortgage meltdown and the sub-prime collapse are some big issues affecting today's real estate market. Loan requirements for potential home buyers have also changed dramatically. Everything has tightened up. It's a terrible, vicious circle on all fronts right now in the housing market."

The Census Bureau estimated the number of housing units in Idaho at just over 631,000. Statewide, Idaho added 15,500 new housing units from mid-2006 to mid-2007, but that was 4,500 fewer new units than were added the year before and the first time since the 2000 that the annual growth declined from the previous year.

The numbers are expected fall off even more in the 2007-2008 report, reflecting dramatic decline in both construction employment and new housing construction permits during the last half of 2007 and the first six months of this year.

"I wish I could say that Idaho's real estate market has been immune from these nationwide trends, but it hasn't," said Capurso. "Between January 2007 and January 2008, statewide foreclosure filings in Idaho increased by a whopping 92 percent. Ada County alone recorded 270 foreclosure filings in January of this year, a 44 percent spike over last January, and Canyon County's foreclosure filings in January represented a 240 percent increase over the same month just one year earlier."

The new report does not include an estimate of the number of vacant units on July 1, 2007, but both the 2000 census and the 2006 Community Survey conducted by the Census Bureau put the vacancy rate right around 11 percent in Idaho. That would be just under 70,000 units in 2007. Typically, about 45 percent of those would be seasonal or recreational homes.

Although Capurso and others - including many national economists - do not see a turnaround in the housing market until at least next spring, she says real estate is cyclical and when it bounces back, it often does so with a vengeance.

"Valuations in Boundary County real estate have not skyrocketed and therefore are now holding their values, which make for good real estate investing," she said. "I tend to be an optimist. I know that the current housing recession, sub-prime mess and the foreclosure explosion won't last forever. The years 2006 - 2009 will unquestionably leave a scar, but the American dream of owning your own home will return. We may have to wait another year or more, but real estate will once again create wealth and fuel the economy."