A housing disconnect

Aug. 28—The cost of homes in Clearwater County rose by 55% in the decade ending in 2020 while median income in that jurisdiction increased by less than 1.5%.

Those statistics are an illustration of how extreme the housing shortage is in north central Idaho, said Brian Points, president of Points Consulting, a Moscow firm that completed a housing assessment study for the Clearwater Economic Development Association this summer.

The increase in the gap in earnings and housing prices was the most acute in Clearwater County, but the pattern (see accompanying graphic, Page 4A) repeated itself throughout north central Idaho, Points said.

During part of the same decade, more than 30% of the population in north central Idaho was considered cost burdened or severely cost burdened because of how much they were spending to keep a roof over their head, according to the housing assessment.

Those labels come from the U.S. Housing and Urban Development's definition of affordable housing.

Families should be spending no more than a third of their gross income on rent or a mortgage, plus utilities and property taxes, according to the agency.

Since 2020, the housing market has gotten even tighter, with the price of a home in north central Idaho that cost $250,000 in 2020 climbing to more than $313,000 by this summer, according to the housing assessment.

The numbers add up to a housing crisis with no easy or immediate solution that's affecting families throughout the Northwest, said Steven Peterson, a clinical associate professor of economics at the University of Idaho.

"It's making people poor," said Peterson, who has studied the economy of the region since 1995 after 10 years as a Realtor.

"(If) a greater portion of your income is going for housing expenses, that is basically reducing the standard of living for a significant portion of the population," he said.

Almost every inch of Idaho, Oregon and Washington is feeling the pinch, including places that are remote or not scenic. It used to be that people might work in Lewiston and commute from a nearby town where houses were less expensive, but now even that flawed option is less likely to be a possibility, he said.

"The scary thing about the current crisis in Idaho is it's every place and everywhere," Peterson said. "... There's no place to escape."

Young families and new arrivals to the area are among those struggling more financially than their parents or grandparents even if they're renting, Points said.

"Housing has increased by so much that it's very difficult for even middle-income households to be able to keep up with those changes," he said.

In Pullman, new coaches and administrators at Washington State University are leasing apartments in private student complexes while they spend a year or more looking for a house or wait for one to be constructed, said Duane Brelsford, president and CEO of Corporate Pointe Developers.

Brelsford's companies have constructed more than 2,500 apartment units in Pullman, Moscow and Spokane.

Anecdotes about two-income families being priced out of the housing market, particularly if their children are young enough to be in day care, are so common in Pullman that Megan Guido, a Pullman city councilor, has formed a committee on the issue.

"You don't want it to be all just a commuter town because there's no sense of community that way," she said.

Not everyone is hurt by the housing shortage.

Many homeowners, Points said, are seeing incredible appreciation in their investment.

"This can be great news for some people," Points said. "(They've) got a tremendous amount of home equity (they) can tap into."

The trends that are trapping some in poverty and generating wealth for others started more than a decade ago when the pace of housing construction fell below demand, Points said. The annual number of building permits issued for houses and apartment units peaked at 552 in 2005 in north central Idaho.

It dropped to a low of 169 in 2011 after the recession and as of 2020 had generally stayed below 300 with the exception of 2017 when a large complex of apartments for college students was constructed in Moscow, he said.

At those levels, the housing supply was low and not just because of individuals moving into the area, Points said.

New families form. A three-story house in a rural area that might have once been where a family of 12 lived turns into a residence for one where the children grow up, leave the area and a spouse dies.

Some of them fall into disrepair and might eventually be abandoned because they no longer conform to tastes and preferences, he said.

"You just need to have some level of production just to serve your local residents and we haven't been keeping up with that," Points said, adding the Great Recession prompted developers and carpenters to leave the industry.

"It deterred more people from going into it," he said. "And we've yet to really get back to the level of people working in trades (and) construction in order to get anywhere close to the levels of production (before the recession)."

The present economic environment is stifling housing projects even in places like Pullman where demand is robust, Brelsford said.

The price of labor, materials, transportation for materials, borrowing money and staff to manage and maintain apartment units is so big that a developer might not be able to set rents high enough to make a modest profit, Brelsford said.

"You're taking the risk of (being) well above the market, by the time you're done with your construction and all your costs, to even survive," Brelsford said. "Who wants to take those risks when the markets (are) not there yet?"

One of the only ways to meet that challenge is to make your product stand out in some way, he said.

University Crossing, a housing complex he is constructing in the 1400 block of Northeast Fairway Road, should do well because it's in a prime location on campus, Brelsford said.

The first phase with 207 units and 36,000 square feet of retail space is expected to be ready for the start of the 2023-24 WSU academic year.

Given those conditions, putting housing within a more reasonable reach of a greater number of people is likely going to involve a variety of approaches and take years.

The housing assessment Points completed is a first step, said Dodd Snodgrass, executive director of CEDA.

It's possible that developers will study the assessment, see potential and start building more homes, he said.

Like Snodgrass, Guido believes a study will help identify answers. The city of Pullman just received money from the Washington Department of Commerce to complete a study that is expected to be done by next June.

"I want to set the expectations appropriately," she said. "This has been a growing problem that started 20 years ago. It has been exacerbated by COVID, by inflation, (and by the economy). So it's not going to happen overnight."

One small possibility in Pullman could involve loosening rules on accessory dwellings so they could be available to anyone who met an owner's criteria, Guido said.

Right now such units on the same lot as a main house can only be rented to other family members, she said.

Peterson also sees potential in relaxing municipal rules, particularly in ways that encourage infill housing in low-density residential zones.

With careful planning, such developments can feel welcoming even if apartments, duplexes and townhouses are added, he said.

wwwThat option as well as any that lead to more housing and a greater variety of housing should be considered, Peterson and Points said.

What won't help, they said, is adding new barriers aimed at discouraging newcomers.

"That actually has the unintended consequence of increasing prices," Points said. "Honestly, the people who really want to be (here) have enough money that they'll find a way to get (here). They'll just end up building their own houses out in the country."

Williams may be contacted at ewilliam@lmtribune.com or (208) 848-2261