Tightest Ever
Strong Idaho job creation of the past three years has contributed to the tightest labor market ever experienced in the state. The Idaho unemployment rate averaged 2.9% in 2007’s first two months, the lowest on record and one of the lowest rates in the 48 contiguous states. In addition, the average Idaho jobless rate of 3.4% during 2006 was the lowest average annual rate on record. Such tight labor availability has occurred even as the flow of new residents to the state rose sharply in 2005 and 2006.

The Idaho economy continues to rank as one of the nation’s top four states as measured by percentage gain in total employment. Idaho added roughly 25,000 net new jobs over the most recent 12-month period, a powerful 4.0% growth rate. Net employment gains have occurred in nearly all employment sectors.

Strong Idaho employment growth is consistent with that of its neighbors, where Nevada, Utah, and Wyoming currently rank among the nation’s top six job growth states. Neighboring Montana, Oregon, and Washington also rank among the top 20 states (see chart below).

Wage Gains
Extremely tight labor availability has led to expanded employment opportunities for thousands of Idaho residents. Limited worker availability has also led Idaho wage levels higher. The largest gains have been in manufacturing, where the average weekly manufacturing wage rose more than 16.0% in 2006 alone (Idaho Employment).

Many Idaho companies note their frustrations in filling open positions and pressures in retaining key employees. Such concerns are most prominent in the small business sector, where many firms cannot offer wage levels and benefit packages to match those of larger employers. However, those firms willing to pay higher wages, as well as firms that enjoy solid reputations as employers, are having many fewer labor availability problems.

From 40 to 3
Idaho’s residential real estate market has been on quite a roller coaster ride in recent years. Calendar year 2003 saw Idaho homes rank 40th of the 50 states in average price appreciation, with a modest 4.19% rise.

Move forward three years. Idaho’s average home price appreciation of 13.99% during 2006 ranked #3 in the nation. Utah led the states with an average rise of 17.55% in 2006 after ranking dead last in 2003. By comparison, the average U.S. home value rose 5.87% during 2006, with dozens of housing markets around the nation seeing modest price declines.

The source of the data, the Office of Federal Housing Enterprise Oversight (OFHEO), is viewed as an accurate indicator of home prices. The data measures repeat sales and refinancings of millions of homes since 1975 in more than 375 communities.

While many homeowners and the media focus on the latest 12-month data, a five-year measure of price changes is also of value. The average U.S. home value rose 55.21% from 2001 to 2006. By comparison, the average Idaho home rose 61.54%.

Various Idaho communities saw solid home price gains in 2006 with Boise-Nampa ranking fifth (one-year and five-year appreciation rates of 17.94% and 67.66%, respectively). Coeur d’Alene recorded average home price increases of 10.47% and a steamy 90.49%. Idaho Falls saw home prices rise 11.21% and 42.27%, respectively. Lewiston?…up 12.60% and 56.55%. Pocatello?…up 12.10% and 40.10%.

Idaho home values are likely to rise at lesser rates through 2007 and into 2008. A housing bubble? It appears to be deflating on both coasts and in the Southwest (see U.S. Economic Outlook for more housing detail).

Idaho View
One of the nation’s tightest labor markets is forcing wages higher, good news for Idaho workers. The Idaho real estate sector is healthy, with more moderate price appreciation expected this year and next. The Idaho economy continues to rank with the best in the nation, a position likely to be maintained over the next 18 months.

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