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Can You Afford to Live Here?

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There’s buyers markets and sellers markets when it comes to real estate and every area seems to cycle back and forth between the two. In the local area, however, an unprecedented seller’s market has been steadily growing since last year, resulting in bidding wars for certain, favored properties and leading some long time residents to wonder if they can still afford to live here.

A lot of credit—or blame—is given to recent favorable publicity in national magazines like Sunset and Outside for the hot selling market taking place but two other factors likely play a much greater role in making this an attractive place to buy—relatively low prices, and low interest rates, both of which translate into affordable monthly payments.

In the first quarter of 2004, the average sales price of a home in Bonner County was $169,389— well under the national average of $183,600. The friendly people and breathtaking scenery are icing on the cake for those weary of big-city life, looking for a place to retire or even a place where they can bring their family and focus on a different lifestyle.

Interest rates make those numbers even more attractive, as lower rates mean people can afford to buy a higher-priced home. And despite recent rises in those rates, mortgage rates are still at historic lows—hovering around 6 percent nationwide, with most economists predicting a gradual increase to 6.5 percent on a 30-year, fixed mortgage. 

The one thing that hasn’t changed much in this area, however, is the historic difficulty in finding a job that pays a decent wage. For 2003, Idaho’s per capita income was just $25,911, while Montana was only slightly ahead at $25,920. With home prices seven times that of the average household income, it’s not hard to see how, if you actually need to make a living here, owning a home might be a luxury you cannot afford, especially if you didn’t arrive here with a pocket full of money from the sale of a previous home.

At the average sales price, with 20 percent down and a six percent mortgage, monthly payments would come out to $815.39, or almost 40 percent of that average worker’s gross monthly income. The industry standard is that no more than 28 percent of gross monthly income should go toward total housing expenses.

Not that the news is all bad. While Sunset and Outside might be singing our praises, there are still outlying areas where prices are affordable for people living in the local wage market. It hasn’t all been “discovered” yet, though the area does seem to be on its way. If you don’t yet own a home in the Pacific Northwest, there’s probably not going to be a better time to consider buying one, and there’s a lot of professionals able to help you in the job, from real estate agents to mortgage brokers to the banker where you’ve deposited your checks week after week.

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Landon Otis

Tagged as:

Sandpoint, Bonner County, real estate, income

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