Written by Jeff Thredgold, President, Thredgold Economic Associates
Economic Consultant to Zions Bank

Top Ranked
Idaho home price appreciation was ranked as the nation’s strongest for the most recent 12-month period (ending September 30, 2006), a by-product of the strong job creation and impressive economic growth that has characterized Idaho over the past few years. The latest data from the Office of Federal Housing Enterprise Oversight (OFHEO, arguably the most accurate housing data available) noted the average Idaho home value rose 17.52% during the 12-month period.

Neighbors Utah and Oregon ranked second and third, with slightly smaller increases. By comparison, the average U.S. home value rose 7.73% over the most recent 12-month period, but was essentially flat during 2006’s third quarter. Numerous coastal and Southwestern communities had declines in average home values during the most recent quarter.

The combination of strong income gains tied to rising employment and more potential homebuyers tied to solid net in-migration helped push Idaho home values higher. In addition, a large differential between Idaho home values and those in nearby states had developed during 2001 to 2004. This relationship led to a rising perception in 2005 and 2006 that Idaho home values were attractive compared to other states.

Employment Gains
Strong home price gains are solid evidence that the Idaho economy has performed impressively during the past 24 months, with strong growth in employment. All major Idaho employment sectors added jobs during the most recent 12-month period, led by large gains in construction, leisure & hospitality, professional & business services, and financial activities.

Powerful job gains have “soaked up” many Idaho workers who were previously unemployed. The Idaho unemployment rate averaged 3.3% in recent months, the lowest level in the state’s history. At the same time, the high level of net in-migration of new residents to Idaho has found the majority of these people finding employment.

“Oldies”
The “retirement” of 78 million Baby Boomers over the next 20-25 years will have a major impact on Idaho and its neighbors. More options will be available for Boomers and older retirees to live close to downtown areas in larger cities as a means of having close access to museums, shopping, the theater, and restaurants. Boomers will take advantage of such close proximity, while leaving the yard work and snow shoveling to someone else.

Universities, community colleges, and other sources will offer a wider array of classes and learning experiences than ever before, with many Boomers exploring interests and passions formerly displaced by the needs of generating incomes and raising families. Boomers will discover and develop talents never before considered.

Enticing Communities
More communities will entice retiring Boomers to live in their locales, recognizing the value they can bring to a community. The Boomer or Boomer parent in or approaching retirement age typically buys a local residence, shifts their financial resources to a local financial institution or brokerage firm, supports local retailers and restaurateurs, and creates little in the way of headaches for law enforcement personnel. One other major positive? They don’t bring children that need to be educated.

Boomers will follow a path formerly explored by many of their parents. A rising share of senior housing and assisted living centers for older people will have a wider array of recreational and learning opportunities than ever before. Limited medical care will also routinely be on site or close by.

The Idaho View
A constraint to continued strong Idaho economic performance is the incredibly tight labor market. Such tight labor availability should lead the Idaho economy to slow modestly in 2007.

Even so, we expect Idaho to remain among the top ten states in job growth. Idaho real estate should see positive, but lesser, price appreciation in 2007. The longer-term Idaho view remains upbeat.

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