Sandpoint’s secret is out

SANDPOINT — When Tony Hayes and his wife moved here seven years ago, Sandpoint was a tranquil community of 6,700 people with a bankrupt ski resort and a sleepy housing market.

Hayes found a construction job. His wife developed a consulting business. Neither expected to return to real estate sales, which had been their livelihood in Kirkland, Wash.

A year later, Seattle-based Harbor Properties bought Schweitzer Mountain Resort, unveiling plans for a major expansion of the town’s home-grown ski hill.

“For us, it was the tipping point,” Hayes said. “Harbor had the money to advertise. We knew that people from outside this community would start to be exposed to Sandpoint.”

The couple opened the first of three Windermere franchises in town. They’ve been busy ever since.

Sandpoint is in the midst of a real estate boom, fueled by out-of-town investors.

The trend began modestly, with Puget Sound residents buying up vacant ski condos on Schweitzer Mountain. Then Smart Money Magazine named Sandpoint as one of the best places to invest in resort property. The 2002 article was the first in a wave of flattering national publicity, including a Sunset Magazine piece proclaiming Sandpoint “the best small town in the West.”

The city’s cachet rose. People beyond the Northwest suddenly knew about Sandpoint’s art festivals, its lake-and-mountain recreation, and its laid-back culture of loggers, hippies and professionals. Many wanted to buy in.

Hayes and his wife, Merry Brown-Hayes, followed the trends. They sold their first Windermere office to a partner, and opened another on Schweitzer Mountain to sell ski condos. Last year, they opened a third Windermere office near the Long Bridge crossing Lake Pend Oreille. It specializes in waterfront homes and property.

Homes on lakes and rivers have seen some of the fastest appreciation in Bonner County. In two years, the median list price for waterfront properties shot from $295,000 to nearly $500,000. All facets of the residential market are strong, however.

More than $93 million worth of residential real estate was sold in Bonner County and neighboring Boundary County during the first six months of 2004. In 2002, sales for the entire year were $123 million.

“People coming here are buying vacation homes, second homes, retirement homes and investment property,” said Jim Watkins, president of the Selkirk Association of Realtors in Sandpoint. “We still have people who are relocating here, but they are a smaller part of the market.”

About 15 percent of Watkins’ clients plan to move to Sandpoint. The rest are looking for an affordable getaway. The buyers are Seattleites escaping the rain; California and Nevada residents escaping the heat; and Florida investors betting that Sandpoint will become the next break-through ski town, with real estate values mirroring Aspen or Breckenridge.

Most have second-home budgets between $250,000 and $450,000 – modest by other communities’ standards. In Seattle, recreation property on Lake Washington sells for millions of dollars.

Hayes refers to the buyers as user/investors: “One of their first questions is, ‘Will (the rent) subsidize my purchase?’”

Vacation property booming

Nationally, interest in recreation property is on the upswing. After years of turbulence in the stock market, Baby Boomers want to invest in hard assets, such as real estate, Hayes said. The idea of owning a vacation home appeals to them, too. Many of Hayes’ clients plan to rent out their properties at least part of the year.

Nicole Mangina’s investment portfolio contains both ski and golf properties: a Schweitzer condo and a lot at Hidden Lakes Golf Resort.

“It’s mostly vacation property,” said Mangina, a Kirkland resident, “though we do rent out the condo a little bit.”

Her first visit to Sandpoint was a business trip. When she and her husband made friends in town, they decided to invest in local real estate. The couple makes the six-hour trip to Sandpoint about a half-dozen times each year.

“We just love it over there,” Mangina said. “It’s so pretty and private, and it’s an easy drive from Seattle.”

Adrian Willanger takes the investment idea a bit further. In April, he and his wife, Linda, bought a $350,000 home at the base of Schweitzer Mountain. Willanger calls the purchase a “lifestyle investment.”

The couple first visited Sandpoint last summer, stopping on their way to Banff. Soon, they were looking for property.

Willanger, a Seattle Realtor, is so taken with Sandpoint that he recently got his Idaho real estate license. It’s a good way to mix work and fun, he said. During twice-monthly visits to Sandpoint, he hikes, kayaks and shows property to prospective buyers. Next time, he’ll bring his fly-fishing pole.

“I’ve wanted to be near a ski resort for 40 years,” said Willanger, who is 55. “We looked at Bend, but it just got too big too fast. They’re building hundreds of new houses over there. It was too much like the big city we were leaving.”

Sandpoint reminds him of the Seattle neighborhoods of his youth. Kids still ride their bikes down the middle of street. People pause to talk to each other.

“It’s just kind of a homey, friendly atmosphere,” Willanger said. “I’m calling to get homeowners’ insurance, and the agent is my neighbor.”

The flip side of Sandpoint’s real estate boom is escalating prices and shrinking inventory.

Lauren Bisbee groaned when she heard that Outside Magazine included Sandpoint on its list of “Dream Towns.”

“Oh, my gosh! Not again!” said Bisbee, who works for Sandpoint’s Tomlinson Black office. The city received a two-page spread in the magazine’s September edition, which recently hit newsstands.

“Don’t get me wrong, I’m all for growth in the area,” Bisbee hastens to say. “The sad part is we still have the illusion that it’s inexpensive to live here. In town, right now, I could not find you a house under $200,000.”

The last she can recall was an older, two-bedroom house that sold for $150,000. The home was on the market just two hours, she said. The owners received three offers.

Bisbee now steers some homebuyers west to Priest River, or north to Bonners Ferry. Prices are cheaper in the less touristy areas. If you’re looking for a starter home, you get more for your money, she said.

Other Realtors say $120,000 to $150,000 will still buy a family home in Sandpoint. But the lower-priced properties do move quickly, they said. And they’re further from the sought-after neighborhoods near downtown and Lake Pend Oreille.

‘Aspenization’ a fear

“Aspenization” is a term starting to creep up in Sandpoint conversations.

In resort towns, there’s always a fear that property values will grow faster than incomes, pricing regular folks out of the housing market, said Mark Williams, director of the Bonner County Economic Development Association. “You don’t want the people working in service jobs to have to live in a trailer somewhere, way out in the country.”

He sees only one solution: better jobs for a county with a high proportion of seasonal work.

“I look at it as a race between our ability to grow companies and attract new companies, and (the influence) of all these affluent people moving to town,” Williams said.

To its credit, Bonner County has added nearly 500 new manufacturing jobs over the last five years. But the county’s median household income of $33,000 lags below the state average. Fifteen percent of the population lives in poverty.

“There’s a definite need for affordable housing,” said Curt Hagan, a board member of Habitat for Humanity’s Sandpoint chapter. “For each new Habitat house we build, we have many, many applicants.”

Most of the new housing coming on line, however, is high end. Construction begins this summer on “Seasons at Sandpoint,” a 105-unit luxury condo development on the lake. The project is the city’s largest new housing development in recent memory. Units start at $390,000 and range up to $990,000 in price.

Interest in the condos is so high that Florida developer Jae Heinberg indicated he might build 60 units this year, instead of the 30 initially planned.

“Prices have pushed up pretty hard in the last two years,” acknowledged Gary Williams, a builder from the San Diego area.

Williams started buying investment property in Sandpoint in 2002. At the time, some of the parcels he looked at had languished on the market for four years.

But Williams noticed a change this spring, after he persuaded his wife to move to Sandpoint. Finding a building lot with acreage for their horses within 10 to 15 minutes of town proved impossible. “Stuff’s moving so fast,” he said. “I checked on properties about 30 times, only to find that they were already in escrow.”

Williams ended up with the last lot in a 21-parcel rural subdivision. “We have to board our horses, but it was the best thing we could find,” he said.

Despite rising prices, Sandpoint remains affordable for many, Williams believes. Through June, the median list price for Bonner and Boundary county homes was $145,000. That’s pretty darn cheap, given what’s happened to housing prices across the West, he said.