There are many causes of the sharp increase in housing prices in Kootenai County, Idaho, and the U.S. The biggest single factor is the collapse of the construction industry arising from the subprime mortgage bubble and financial crisis of 2007-2009. Construction of new homes from 2008 to 2018 were at a very low level. Only in the last few years have the construction of new homes returned to normal (pre- recession) levels. This lack of construction lead to a large cumulative deficit in available housing.
Lack of supply was the biggest factor in the housing price increases. Other factors cited in the report include rapid population growth (mostly out-of-state), COVID-19 related shutdowns, federal government stimulus payments, low mortgage interest rates, etc. This is made worse in Kootenai County because it is a resort and tourism region. The phenomenon of non-residents purchasing second homes (i.e., vacation homes), and term rentals exacerbates all of this.
While second home purchases is an important factor in the Kootenai County housing price increases, other factors are important as well. According to the Spokane Study CRE Report, they cite increases in the median housing price from about $250,000 in 2016 to about $450,000 in 2021. Spokane does not have the tourism pressures of Kootenai County and their housing prices still rose substantially.
Evidence shows that cities and counties that have restricted housing supply have sharply higher housing prices than communities that allowed the market to work. Creative local policies can be designed that will allow the market to facilitate an increase in housing supply, while preserving the character of the communities in Kootenai County.
Read the Housing Availability & Affordability Study for Kootenai County at www.rhgip.com and learn more about what we’re doing to change the trajectory!