SANDPOINT, Idaho — It seemed like a no-brainer: build swanky homes around a Jack Nicklaus-designed golf course above scenic Lake Pend Oreille, all in the shadow of the Schweitzer Mountain ski area.
But it turned into a nightmare for Sullivan Homes Idaho. The luxury builder recently went out of business after going an entire year without selling a single home despite being the "preferred builder" at The Idaho Club.
In a bear market, even the Golden Bear is no guarantee of success.
The economic meltdown is having a special impact in the remote Idaho Panhandle, where construction of vacation and luxury retirement homes amid the lakes and mountains had made this one of the fastest growing regions in the country for the past decade.
"In the last few weeks, the world’s changed quite a bit," said Mike Meldman of Gozzer Ranch, a 395-home development on nearby Lake Coeur d’Alene.
Similar problems are reported at golf and ski resorts across the West.
Among major developments suddenly in severe financial distress are the Promontory development near Park City, Utah; Nevada’s Lake Las Vegas golf resort; Idaho’s Tamarack Resort; and Montana’s Yellowstone Club.
Despite lacking big factories or high-tech businesses — and often floundering with the fickle timber and mining industries — the Idaho Panhandle remade itself as a tourist destination and boomed in the past two decades. Population and incomes soared, thanks to an explosion of golf courses, ski areas, marinas and upscale developments.
Backwater communities such as Sandpoint and Coeur d’Alene suddenly became chic locations for retirees and wealthy urbanites looking for a getaway.
Construction jobs in Bonner County, which includes Sandpoint, doubled from 712 in 1997 to 1,422 by 2007. Just south in Kootenai County, construction jobs rose from 3,085 in 1997 to 5,903 last year. That drove the unemployment rate in Bonner County from 9.5 percent in 1996 to 3.4 percent last year. In Kootenai County it fell from 8 percent in 1996 to 2.9 percent last year.
The boom is over. Unemployment rates have more than doubled in the past year. The big culprit is the drop in the housing market.
Kathryn Tacke, an analyst for the state Department of Labor, said the housing slowdown also hurts building material suppliers, banks, title insurance and landscaping companies. About 200 real estate agents have recently left the business in the Coeur d’Alene area alone, she said.
In the Sun Valley area, the 421-unit Sweetwater Community has been suspended after 49 town homes were built and none was sold.
The news is not all bad in northern Idaho. In its latest issue, Robb Report’s Vacation Homes magazine said Aspen, Colo., and Coeur D’Alene, were two of the top five places in the United States to buy a second home, citing strong prices and steady economies. The other selections were Las Vegas, Miami, and Maui, the magazine said.
Also, sales of luxury homes chugged along for much of 2008, before falling off sharply in the past couple of months.
Much of the construction vitality in northern Idaho was driven by huge developments like The Idaho Club near Sandpoint, Gozzer Ranch and the Club at Black Rock around Lake Coeur d’Alene, and the Silver Mountain development near Kellogg. They were building posh second and third homes for buyers who were generally thought to be immune to normal blips in the economy.
Sullivan Homes Idaho focused on building homes within The Idaho Club, a community of million-dollar houses and condos along an 18-hole course designed by Nicklaus.
But the company, which built a home for "Extreme Makeover Home Edition" in 2005, went a full year without selling a home and announced in September that it was liquidating.
The Idaho Club, which is a separate entity, remains in business. Developers have sold 135 of the approximately 450 homes and condos planned for the site. But co-owner Chuck Reeves expects sales to slow down now.
"There is no question that the urgency in the marketplace is less," he said.
Meldman of Gozzer Ranch, which has sold more than two-thirds of its 385 units, said they sold about $50 million worth of properties this year. But that was down from $80 million the year before.
It’s hard to know how hard the financial meltdown will hurt future sales, because the arrival of winter would have slowed sales anyway, he said.
Sales at Black Rock, a golf and lakeside development south of Coeur d’Alene, are down 40 percent from last year, developer Marshall Chesrown said.
In some ways, the drop in stock prices is good for developers, because it drives investors into looking for harder assets like homes, Meldman said.
"You are investing in family and able to enjoy it and use it and have a hard asset," Meldman said. "As long as you don’t have to sell the house, you are not going to lose value and it is not going to disappear on you."
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