Unraveling the real culprits By Ben Geanetta, REALTOR®, Team Lead Welcome back to the second part of our journey into Sandpoint's housing market puzzle. In Part I, we covered the rise of short-term rentals and their impact on the community. Now, let's explore the deeper layers of this issue and uncover the real reasons behind the soaring home prices in this beautiful lakeside town.
The Basics: Supply and Demand Before we jump into the nitty-gritty, let's revisit the fundamentals of economics—supply and demand. It's like the bread and butter of understanding how goods are valued, and it's at the heart of the housing situation in Sandpoint.
Demand for housing in this picturesque town remains strong; not at the levels we saw in 2020 or 2021, but Sandpoint is still a destination for many to call home. As the natural beauty, political freedom and vibrant community continue to draw people in, demand of homes to relocate to Sandpoint will be strong. However, here's the twist in our tale—the supply of available homes for sale is about as scarce as a Yeti sighting in the summer. I know what you're thinking right now, but there are more homes for sale than years past. Well, that is true, sort of. Yes, there are more homes for sale in Bonner County than there were in 2021 and 2022, but those were crazy times. If you look pre-pandemic, the number of homes for sale and sold homes are still down.
The Mortgage Conundrum Now, let's talk about another fascinating aspect of this housing market riddle—the mortgage rates. Many homeowners in the Sandpoint area have locked in some seriously envy-worthy mortgage rates, often around a mere 3 percent. It's like catching a rare glimpse of the Paddler in Lake Pend Oreille in the world of homeownership.
Here's the catch though—not many folks are willing to trade in these golden 3 percent rates for the not-so-enticing 8 percent rate. So, what are they doing instead? They are either staying put, mortgage rate handcuffed, or they're getting creative. Some homeowners are choosing to rent out their current homes, which is now an investment, and buying another home as their primary property. It's like a high-stakes game of Monopoly, Sandpoint edition. While this strategy might make sense for them individually, it's adding to the scarcity of homes available for sale.
The COVID Aftermath Now, let's talk about the pandemic-shaped elephant in the room—COVID-19. The pandemic caused a seismic shift in the way we work. Many businesses suddenly realized that their employees could work from home, opening a revolutionary door for a massive remote work scenario.
What does this have to do with Sandpoint's housing market, you ask? Well, quite a bit. You see, this newfound flexibility allowed people from big cities to pack up their laptops and high-paying jobs, head to a place like Sandpoint, and continue working as if they were still in the big city.
Local businesses in Sandpoint, while wonderful in their own right, often cannot compete with the salaries these remote workers are getting paid. So, you've got folks moving in with their big-city salaries, which brings with it the capacity to pay higher prices for homes, further driving up the costs.
Putting It All Together So, there you have it—the pieces of the puzzle. A limited supply of homes for sale, the rise of short-term rentals and an influx of high-paying remote jobs have all come together to create the perfect storm for skyrocketing home prices in Sandpoint. But remember, it's not all doom and gloom. Short-term rentals offer economic opportunities, and the remote work trend brings fresh faces and diverse experiences to this charming town. The challenge lies in finding that delicate balance between reaping the benefits and mitigating the consequences.
Solution Going Forward Now, you might be expecting me to pull a rabbit out of the hat and reveal the ultimate solution to make homes in Sandpoint as affordable as they were a decade ago. Sadly, I hate to burst your bubble, but this isn’t a magic show, and I don’t have a wand. In reality, achieving that level of affordability would require a significant donation of land, building materials, a builder working for free, or perhaps a blend of all three—an unlikely scenario.
But don’t despair just yet because, while I can’t conjure a miraculous magic trick, I can certainly offer some advice to help you navigate to becoming a homeowner.
1. Secure a steady income and manage debt. First and foremost, establish a stable job. Limit your debt as much as possible, which will increase your credit score.
2. Budget wisely and cut the unnecessary expenses. Trim the excess fat, so to speak. Do you really need that daily latte from Starbucks? Or could you limit it to once a week? Consider the TV channels—do you truly need 200 of them? Savings like this can amount to huge savings.
3. Prioritize homeownership over luxuries. Ask yourself what’s more important, the UTV, newest smart phone/watch or the long-term security and wealth-building potential that comes with owning a home? It’s tempting to indulge in luxuries, but prioritizing homeownership for a more secure and prosperous future might be the smarter choice. There isn’t a quick-fix solution to the affordability challenge in Sandpoint, but there is a path forward. It will require discipline, sacrifices and hard work—but in the end the dream will come true.