Real estate forecast dim locally and nationally

Real estate values may be nearing or at the bottom, but recovery to pre-recession prices is years away, national and local industry officials said in Coeur d’Alene Wednesday.

Job losses, lower household incomes, limited credit and an uncertain economic outlook continue to restrain investment in all but the best properties, said Dean Schwanke, senior vice president for the Urban Land Institute, a nonprofit that focuses on land-use and real estate issues.

Midmarket apartment buildings are the only investment viewed positively by those surveyed for the institute’s 2011 real estate forecast, he told the Coeur d’Alene forum.

The most attractive markets are global gateways, mostly on the East and West coasts, where there is 24-hour activity, concentrations of highly educated residents and a limited supply of properties, Schwanke said.

Washington, D.C., ranked highest – “The federal government doesn’t lay anyone off”’ – followed by New York, San Francisco, Boston and Seattle. Portland ranked sixth among smaller cities.

The pre-recession era of “more, more, more” will have to give way to a period when less becomes more, Schwanke said.

Coeur d’Alene developer John Stone said real estate is only three years into a seven-year recovery that will be based on job growth and sounder banks still taking losses on real estate loans.

Idaho could be an attractive alternative to California companies ready to flee dysfunctional state government, he said, but schools must be improved.

Questions about schools are among the first asked by individuals and companies considering relocation, agreed John Beutler, owner of Coeur d’Alene-based real estate company Century 21 Beutler and Associates.

Buyers are starting to re-enter the home market, he said, but until interest rates turn up there will be little urgency to make a deal.

Beutler also predicted renewed demand as those who lost homes in foreclosure rebuild their credit ratings and look for a second chance.

Beutler and Jim Lemieux, who manages recreational land sales for Potlatch Corp., said the lakefront home and raw-land markets have tanked, with purchases limited to those who can bring a substantial amount of cash to the table.

“We’re in the business of selling something nobody needs,” Lemieux said.

Avista economist Randy Barcus said migration into the Inland Northwest, which generated between one-half and three-quarters of population growth before the recession, has become a trickle because few can sell their homes elsewhere and move.

Eventually, he said, that will improve the job prospects for local residents.

Barcus, who would not rule out the possibility of a double-dip recession, said he expects the arrival of more national retail chains that have access to capital and do not have a presence in the region.

“We’re much better off than a lot of the West,” he said.