daho Real Estate and Economy-December 2008

By Gary Lirette   December 12, 2008

Host of North Idaho Business on KSPT and Realtor for Tomilinson Sandpoint International Realty.

(This article has a correction and has been reposted. To see the corrected data, see the notes at the end of the article.)

Click this link to see more current data about the Sandpoint Economy.

Click this link to learn more about Sandpoint Area Employment.

How are things here in North Idaho? Besides being named to Sunset Magazine’s Top 10 Resort Towns this year, Idaho was just named the nation’s 8^th healthiest state. In Sandpoint, several new businesses just opened, including a Jack in the Box, Big 5 Sporting Goods, and Zip’s. The new Mountain West Bank building now graces Highway 2, and the Panhandle State Bank is a monument downtown. Quest Aircraft just hired 60 new employees, and the dredging will be finished by Friday for the start of the Sand Creek Byway. This three-year project to circumvent Sandpoint will provide dozens of high-paying jobs for the next three years. When the CEO of Quest was on my radio show, he also pledged to hire up to 200 more over the next several months to meet the demand for his first-rate aircraft.

A lot of noise has been made over the unemployment rate going up a couple of points since summer quarter. Looking back on historic figures since 1990, there has not been one year in which the rate did not increase during winter months. The facts are, in that eighteen year period, Bonner County had 47 months of unemployment over ten percent;  the highest rate was 15.1% (Thank God for our current low rate); 40 times the rate swung more than two percent; several times the monthly or quarterly change was 4%, 5%, or even up to 8.4%. Why such volatile swings? In a county with under 50,000 full-time residents, seasonal changes because of weather and tourism make great changes the norm. Alarmists sound the bell, but don’t actually look at what our area is all about. Compared to the national rates, we are still ahead, and our future does not look bad. Click here to view the Unemployment Rates 1990-2008

Since 1997, the biggest gain we have had in employment is in manufacturing. With companies such as Quest Aircraft, Airtow, Encoder Products, Litehouse Foods, Coldwater Creek, and Thorne Research, we have better than average big company representation. In ten years over 1,000 new jobs have been created in Bonner County. Many think tourism is king. While important, it is only a fraction of our base.

One of our shining tourist draws is Schweitzer Mountain Resort. The ski resort is not fully up and running, but once ski season begins, this will help our economy greatly. Tom Chasse is coming on my show, North Idaho Arts and Adventure on Tuesday, December 17, 2008 to talk about the upcoming season, as well as the very slick and new Schweitzer Magazine. Schweitzer was named last year to Skiing Magazine’s Top 25 Ski Resorts, and is coming off a record two years.

According to Jeff Bond, owner of Tomlinson Sandpoint Sotheby’s International Realty, the company had its best September ever this year. Certainly we have seen a decline in prices. Some estimates for our area are declines of 4%, 6%, and 6% for the last three years. However, we saw increases of 30%, 40%, and 40% the previous three. All in all, we are not doing so bad in real estate. Most values are maintaining, and sales, while not robust, are certainly better than other parts of the country.

Across the country the banking issue has been disconcerting to say the least. Home loans are tougher to get. Borrowers need to have sparkling credit, and according to news reports, 20% downpayments are also becoming the norm. For those looking for loans in North Idaho though, the best resources appear not to be national companies, but local sources. Mountain West Bank did not take on the kind of bad loans that bigger banks took on, and recently, a story was sent out by Judy Delucchi about a loan that was falling apart right before closing. Jason Hauck of MetLife (that’s right, they make home loans, too!) put together a loan at a decent rate in just one week.  The changes with USDA loans are generous. Joseph Cool of USDA in Post Falls says that a family of three can buy a home anywhere in Bonner County, and they can make in excess of $70,000, and even get assistance. There is money out there for loans in the Inland Northwest. Just look down the street rather than around the globe.

Another alarming trend people have noted in Sandpoint is the closing of several area restaurants. Sandpoint has had some trouble keeping fine dining restaurants open. After the Power House Bar & Grill closed, Montana Pizza opened one of their Craggy Range franchises at the Power House. It lasted one season. After Alex Verhoogen, a Spokane MD, lost Swan's Landing, Glen Harvey picked up the property, developing it into the successful and beautiful Lodge at Sandpoint. Part of the property was the venerable Swans Landing restaurant, and is now on its fourth restaurateur in five years. The new owner, Claudia Dick, who also owns the Crossings at Willow Bay and Cafe Trinity, will start another restaurant venture there this December. The old Passtime, a staple of downtown Sandpoint, was renovated at great cost to the Chicago transplants that hoped that Sandpoint was ready for a nightclub and cool eatery, but also closed after a couple of years. Three Glasses opened with Chef Luigi from Alba, Italy and fantastic reviews. John and Darcy Peters hoped that the incredible wine list, live piano music, and very, very good food would attract enough business to warrant gutting the building at considerable cost. Result? Closed doors. Upstairs, the Loading Dock has found limited success as a deli and pizzaria. They have since made the restaurant into a kind of concert hall with some success. Out in Hope, Barney Ballard hoped the Dock of the Bay, with its fine menu and wine selection, would make it, but when rents were raised, he gave it up and opened the new Tango Cafe in the Panhandle Bank building in Sandpoint. Now Gloria Waterhouse is looking to sell the Sand Creek Grill. Fine dining just doesn't seem to be able to survive here, and many miss restaurants like the Garden. The one constant in many of these closings is the high rent or mortgage or cost to renovate. From personal knowledge I know. Having owned, not rented, my own restaurant in Sandpoint, even my small $1,000 a month mortgage was tough to pay. High-end restaurants have the smallest margins of all eateries. Truth is, while we seem to have enough people to support these dining rooms, we actually don't. Plus, though we appear to be a prosperous community with so many wealthy people finding homes here, many are not full-time residents. Our wages are still low compared to the rest of the nation. Still, we do have some pretty good places to catch a bite. Yesterday I interviewed Tom Guscott of Arlo's Ristorante, and by all accounts, they are doing well, employing twelve employees even in winter months. After a fire there last year, the worry was they wouldn't reopen. The moral of the story is when a business is run well, Sandpoint entrepreneurs find success.

I have used restauranst to illustrate what all business owners have concerns about in Sandpoint. How to pay the bills when business is slower. The lessors here seemed to universally raise rents as the area's reputation glowed in the national press. Tourism was on the rise, housing values were going up, unemployment was remarkably low. Without viewing economic data, using anecdotal evidence, building owners made business decisions that seemed based on Seattle rates. The lesson is to keep good and steady renters, lower or at least more affordable rents allow businesses to have the time to become more successful. As their success turns to long-term customers and clientele, the business can continue to pay the rent, allowing the lessor to have his spaces stay rented. Empty storefronts are not good for any part of our community.

Every month I interview new businesses and pour over economic information. Like the rest of the country, we are having difficult times. However, from these interviews, what I garner is optimism and 24/7 commitment to excellence and success. The people here are amazing and friendly, plus hard-working to a fault. We all love the beauty of the area, and are inspired by the lakes and mountains.

So, any way you look at it, whether from the numbers or by the anecdotal conversations with people who work here and run stores, shops, and businesses, we are doing well.

Take a breath, be grateful for what you have, and work towards your goals. This is Sandpoint. You’ll get there.

(Notes: Originally in the article I wrote that Glen Harvey rented Swans Landing to his nephew, based on the chef relating this incorrect info in a conversation I had with him. The chef was the instructor for our local culinary program, of which I was a part. In a conversation I had with Glen Harvey on December 24th, 2008, he asked me why I had written an article "about me," and really believed I had done very wrong to mention him in the article. The original article stated my belief that during that time, the lessee of Swans had done much to ruin the reputation of the restaurant, and that the rents were high. I based this on conversations I had with two of the owners, as well as a conversation I had with Glen Harvey four years ago, when he was quoting me how much he was asking for in lease payments at that time. During my Christmas Eve conversation with Mr. Harvey, I asked if he had read the article. He admitted he hadn't at that time. I stand by what I have written, am willing to prove my sources, and will admit that what I was told was that the owner was married to Mr. Harvey's niece. I retract the familial affiliation. Merry Christmas.)