Apr

10

Multi-Family - Kootenai County Commercial Real Estate (4 of 5)

Filed Under Kootenai County, Local Market 

Review

Sales volume of multi-family product in Kootenai County was off 57% as compared to 2006 ($35 million in 2007 vs. $15 million in 2006). Values declined approximately 11% from 2006 levels as the average sale price fell from $345,000 to $306,000 in the multi-family arena. Unsold stock remains higher than previous years, especially in the condo market.

The good news is Kootenai County apartments achieved an average rent of $0.77 per net square foot in 2007. Overall, apartment vacancy decreased to 4.3% from 5.7 % the previous year. Remarkably, studio apartments (a small segment in our market) recorded no vacancies in the final 2007 apartment survey conducted. Some newer units with exceptional amenities or superior locations are achieving rent of over $1.00 per net square foot.

Affordability remains a key concern for Kootenai County. A household is considered cost-burdened if annual rental rates exceed 30% of a household’s yearly gross income. Presently, one in seven US households is severely housing cost-burdened. Kootenai County’s affordability has declined over the past decade and is now less affordable than neighboring Spokane County. The growing low-income rental population is driving an increase in demand for affordable housing.

Forecast

Values will continue to be soft, presenting opportunities for liquid buyers. Vacancy rates will decline to levels not seen in years as prospective homeowners sit on the sidelines waiting for the housing market to hit bottom. Additionally, the recent melt-down in the “sub-prime” mortgage arena has caused tightening of underwriting standards for new home loans, thereby closing the door on many first time home buyers who are currently renting. The result is lower vacancy rates and increased rents for apartment housing.

Apartment Market Survey - September 2007
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Historical Apartment Vacancies
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