Region feels the economy’s pain
Spokane, N. Idaho not immune to economy’s massive downturn
Recession, layoffs, falling real estate prices, failing banks, unprecedented federal bailouts, plunging stock values and a roller coaster ride for gasoline prices made front-page news nationally and across the Inland Northwest in 2008.
The real estate market in the Spokane and Coeur d’Alene areas was brighter than in many parts of the West hammered by the housing crisis. Still, the slowdown in sales, increase in foreclosures and decrease in property values were felt locally as well.
The worsening economy loomed large over the year’s top business stories. They include rising unemployment that’s expected to continue well into 2009; uncertainty in commodities markets, including oil prices that have fallen sharply from historic highs last summer; huge drops in stock prices that have eroded investment funds and retirement savings; one of the worst retail climates in decades, including dismal December sales; and steep losses for local and regional banks.
Here are the top 10 area business stories of 2008 as selected by The Spokesman-Review news staff:
1. Real estate market
Real estate values in Spokane County held up well compared with those in most other areas of the country, but that does not mean home sellers did not have to settle for a little less than they might have received a year earlier.
Condominiums and single-family homes on less than one acre sold for an average price of $206,607 during the first 11 months of the year, according to the Spokane Association of Realtors. That price was off 2.2 percent compared with 2007. The median price eroded less than 1 percent to $184,370.
Unit sales were down almost 29 percent to 4,619, and new home sales tumbled almost 35 percent to 741 from 1,137.
There were 2,925 homes on the market as of Dec. 1, up from 2,864 on the same date a year ago.
In Kootenai County, where the Realtors association reports sales information on a six-month basis, the average sales price for single-family homes on less than an acre was 32 percent higher for June-November compared to the same period in 2007. The average price was $226,384 this year.
Median price, however, declined 6 percent – $189,950 in June-November, compared to $201,994 for those same months in 2007.
Sales volume totaled 816 homes during the period this year, down about 24 percent in June-November 2007. Inventory is up this year: 3,577 homes were listed for sale on Nov. 30, up from 3,353 homes in Nov. 30, 2007.
The credit squeeze slowed some major developments, notably Kendall Yards in downtown Spokane, and claimed at least one major contractor, Sullivan Homes.
2. Jobs disappear
Spokane County employment edged downward in 2008, reversing two years of strong growth in which payrolls increased by about 10,000 jobs.
The net job loss at the end of November was only 720 compared with November 2007, but an influx of workers from outlying counties where employment was harder to come by lifted the workforce to 243,510 from 239,730 a year earlier. The result was an unemployment rate of 6.4 percent compared with 4.6 percent on Nov. 30, 2007.
The county’s economic diversification helped soften the impact of a year-long recession, with most of the job losses occurring in retailing and financial services.
Manufacturing remained solid, thanks in part to a growing aerospace sector that will get a boost in 2009 from the opening of a Cascade Aerospace aircraft maintenance center at Spokane International Airport that eventually will employ as many as 500.
In North Idaho, the closures of several sawmills and the Sunshine Mine added to construction sector miseries, more than doubling the unemployment rate, to double figures in some counties.
Seasonally adjusted unemployment in Idaho hit a 15-year high of 5.8 percent in November, in stark contrast to a low rate of 2.8 percent in January.
November’s unemployment rate rose to 6.9 percent in Kootenai County, 12.1 percent in Shoshone County and 15.6 percent in Benewah County.
3. Gas prices up and down
Gasoline and energy costs hit the roof. The cost of driving to and from work, or across the state cost much more in 2008. In the busy-driving period of the year, May-September, gas climbed to $4.20 per gallon in most areas of the Inland Northwest.
Prices fell in the fourth quarter, allowing drivers to fill up tanks for less than $40. Drivers are ending the year with gas available for $1.40 to $1.50 a gallon.
The cost of heating one’s home also cost more. Washington residents of Avista Utilities paid 8.8 percent more in 2008 for electricity and 2.5 percent for gas. In Idaho it cost more: 13.5 percent more for electricity and 9.2 percent for gas.
4. Hospitals sold
Community Health Systems acquired Empire Health Services this year. After months of regulatory review, public hearings and a last-minute lawsuit that threatened to derail the transaction, the deal hailed as the last chance to save a struggling hospital system finished in the fall.
Community Health Systems Inc., headquartered in a suburb south of Nashville, Tenn., is paying $156 million to buy Deaconess Medical Center and Valley Hospital and Medical Center. It plans to spend another $100 million on upgrades.
5. Stocks tumble
There is no sugar-coating the 2008 performance of Spokane-area company stocks, which suffered across-the-board reversals even worse than those registered by major stock indices.
The damage was due mainly to the concentration of shares in two sectors, mining and banking, that experienced particularly severe downturns.
As of mid-December, many stocks were worth less than half their value as of Dec. 30, 2007.
6. Retail suffers
Retail spending slows when the economy tanks. Just ask area car dealers, who found themselves staring at empty showrooms and struggling to move vehicles.
Other mainstream retailers, such as Coldwater Creek, also saw shoppers pulling back. The Sandpoint apparel maker needed a strong holiday season to get over the hump, but shoppers tended to remain cautious.
7. Banks struggle
Despite the relative health of the Spokane economy, local banks suffered much the same fate as those elsewhere, except that all remained open and independent.
The largest, Sterling Financial, received $303 million in federal investment, and other applications were pending. Loan losses were all but universal, with construction lending in Utah, Boise and other outside markets more hurtful than those due to the slowdown in Spokane-area building activity.
8. Some good news
Good news at last: Riding the rush of the 2006-07 housing surge and strong job growth, the Spokane metro area scored ninth place in the 2008 Forbes List of Best Places to Do Business.
Why this is big: In 1999, the magazine ranked Spokane 161st out of 162 metro areas. One year ago Spokane was ranked No. 20.
If snowfall hurts the city’s ranking, we’ll barely be in the top 20 next time.
9. Downtown changes
Development in Spokane’s downtown took something of a breather in 2008 after completion of two cornerstone projects: the Convention Center expansion in 2006, and the Fox Theater in 2007.
Condominium conversations slowed in response to the overall downturn in real estate activity. One project that was progressing – redevelopment of the former Joel Building – stopped when a fire led to the razing of the Dorian Studios portion of the structure.
Construction of a new YMCA/YWCA center on North Monroe progressed toward an early 2009 opening, while the fate of the YMCA’s current site in Riverfront Park remained unresolved.
10. Wheat prices up
Wheat prices shattered records in early 2008. It was a heady time across Eastern Washington, and farmers who had grain to sell made money.
But they also spent plenty of money on fertilizer and diesel – the fossil fuels that drive the farm economy. When the weather didn’t cooperate this summer and prices began a rapid retreat in the fall, the many farmers who hadn’t signed future contracts were stuck holding grain that had cost more to grow than what buyers were willing to pay.
Price volatility and weather uncertainties position 2009 as a big unknown for regional farmers.
Staff writers Bert Caldwell, Tom Sowa and John Stucke contributed to this report.