Housing prices rise by almost 30 percent

Buying a home in Kootenai County cost about $40,000 more in 2005 than it did the previous year, according to figures from the Coeur d’Alene Association of Realtors.

In a year characterized by scarce inventories and bidding wars, home values shot up nearly 30 percent. The average sales price for a Kootenai County home rose to $210,913.

For the first time, Century 21 agent Pat Hartman saw sellers listing their homes with provisos: They would sell only if they could find a suitable replacement.

The caution came from rapidly inflating prices. Some families made a nice profit off the sale of their homes but found that the price of their dream homes had escalated as well, said Hartman, board president for the Coeur d’Alene Association of Realtors.

“They didn’t realize that they would have such a hard time finding a replacement home,” she said.

In June, Kootenai County ranked in the top 10 percent of metro areas for fastest-appreciating home prices. By late August, however, the number of homes for sale had nearly doubled, and the market had begun to cool.

Realtors don’t expect a repeat of 2005 conditions. According to the National Association of Realtors, much of the nation’s pent-up demand for housing was met over the last five years. Housing prices should return to more normal rates of appreciation, according to association predictions. Traditionally, that’s been the rate of inflation, plus 1 or 2 percentage points.

In Kootenai County, the population continues to grow, which creates new demand for housing, Hartman said.

“My big forecast is that prices will stay up,” she said, “but I don’t think that we’ll see the price increase 30 percent like we did last year.”

As a result, fewer speculators will be “flipping” homes, she said. Last year, some investors bought real estate with the goal of reselling it a short time later for a $50,000 or $70,000 profit, Hartman said.

Local market conditions are closely tied to national events. How much interest rates rise, how the stock market performs and demand for second homes will shape what happens in Kootenai County’s market over the next year, Hartman noted.

The strength of California’s housing market is also key. If retirees can’t sell their homes in San Diego, they won’t be moving to North Idaho, Hartman said.