June 22, 2007 in Idaho

Home sellers play waiting game

By The Spokesman-Review
 

Two years ago, patience wasn’t a requirement for selling a house in Kootenai County. Within days of the “For Sale” sign appearing on the lawn, sellers typically had their pick of multiple offers.

But with more homes for sale – chased by fewer and pickier buyers – Roxana Dunteman is learning that “For Sale” signs can linger for months.

Since listing her Coeur d’Alene home last October, Dunteman has dropped the price twice and repainted the interior in rich shades of Tuscan gold. Now, she’s steeling herself for the possibility that the four-bedroom, three-bath house – advertised at $389,000 – could still be on the market this fall, when the apple tree drops fruit on the front lawn.

“A lot of people have looked at it, but we haven’t had any offers,” Dunteman said. “I think I’m realistic in saying it could take a year to sell.”

Kootenai County’s residential real estate market hit its peak in June 2005, when the inventory of unsold homes shrank to less than two months’ supply, according to statistics from the Coeur d’Alene Multiple Listing Service. Since then, the number of homes for sale has tripled, while demand has dropped.

Homes priced from $300,000 to $750,000 have been particularly hard-hit.

In the past, many of those properties sold to Californians, flush with cash from the sale of their houses in that state’s fast-appreciating market, Realtors said. In 2005, Los Angeles County alone exported 119 families to Kootenai County, according to real estate statistics. Investors were also extremely active that year, generating about one in three local home purchases.

But the California market has slowed, and so has investment activity. With fewer outside buyers, Kootenai County’s higher-end homes take longer to sell.

“The job market here is not strong enough to support a $300,000, $400,000 or a $500,000 purchase for most people,” said Polly Evans, an agent with Keller Williams Realty, who listed Dunteman’s house.

The slowdown affects new-home construction as well as sales of existing homes.

In 2005, “we’d start the homes and they’d sell before the framing was completed,” said Art Elliott, president of Shelter Associates in Coeur d’Alene, which builds a handful of spec homes each year in the $400,000 to $600,000 price range. “That product’s on the market longer, no question about it.”

Buyers are benefiting from the larger selection of homes for sale, which has led to marked-down prices, said Glenn Crellin, director of the Washington Center for Real Estate Research in Pullman. But even with price reductions, most sellers are still profiting on sales, he said.

“Unless the seller is someone who bought at the peak of the market and was forced to sell quickly, they’re losing money only on paper,” Crellin said.

When Realtors look at Kootenai County, they actually see two distinct markets.

For homes priced at $225,000 and less, “it’s a nicely balanced market, favoring neither the buyer nor the seller,” said Jamie Ziegler, sales manager for Windermere Coeur d’Alene Realty. “But as we start going up in price, it becomes a buyers’ market.”

According to analysts, zero to five months of unsold inventory is a sellers’ market, while six to nine months of inventory indicates a balanced market. When the inventory of unsold homes surpasses 10 months, the market favors buyers.

In May, Kootenai County had a seven-month supply of homes priced at $225,000 or less, Ziegler said. For $500,000 to $750,000 homes, however, inventory levels shot up to 29 months.

Here’s another way to look at the data, Ziegler said: Kootenai County had nearly 400 active listings in the $500,000 to $750,000 price range during May. If demand remained static, it would take 2 1/2 years to find buyers for all those homes.

“If the house is priced correctly, we still find that it typically sells within 120 days,” Ziegler added. “If it’s not correctly priced, it can hang on forever. … Some sellers still think it’s 2005.”

The outlook for sellers is brightening, however. Kootenai County’s real estate market may have bottomed out in January, when the overall inventory of unsold homes hit 16 months. By May, inventory levels had dropped slightly to 13 months.

Evans, the Realtor, said she’s noticing a hopeful sign: Her cell phone’s beginning to ring with calls from out-of-town buyers.

Dunteman’s feeling cautiously optimistic, too. She bought the home on Front Avenue last year with the intention of living there, but her plans changed.

“The neighborhood reminded me of Chicago, where everything originates from the lake,” Dunteman said. “It was livable and modern, but it still had the front porch, the balcony and the fruit trees.”

With downtown’s cachet rising, several people looked at the property for investment.

“I don’t think you can lose in Coeur d’Alene,” Dunteman said. “It’s still a relatively fledgling market.”

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