While doing missionary work with the Nez Perce Tribe, the Rev. Henry Spalding planted the first potatoes in the 1830s in what would later become the state of Idaho. Tribal members helped Spalding plow the fields.
Spalding later fled the area after a separate tribe killed a group of missionaries in what is now Eastern Washington. Still, Spalding discovered what future farmers would learn: the rich volcanic-ash soil and cool climate of Idaho makes for ideal growing conditions.
Today, the Gem State is the leading producer of potatoes in the U.S., growing 14.7 billion pounds annually, or about a third of what is produced nationally. Potatoes account for about 15% of all vegetables sold in the U.S. and Idaho farmers produce $1.2 billion of the crop each year.
Agriculture remains an important part of the state’s economy. Besides potatoes, Idaho is one of the nation’s top producers of yellow onions, hay, barley and other crops. In 2016, about 20% of the state’s total economic output came from agriculture and food processing. That year, agriculture cash receipts totaled $7.1 billion, while processed food and beverages accounted for $8.5 billion.
The tech industry has emerged as an important piece of Idaho’s economy, bolstered by companies such as Hewlett-Packard and homegrown Micron Technology. The tech sector is responsible for $6.1 billion of Idaho’s economy, and an estimated 51,900 workers are employed in tech, or about 6.5% of the state’s overall workforce.
Idaho’s education system has come under fire, in part, because it’s not producing enough skilled workers for the emerging tech sector. In 2010, the state implemented a goal to convince 60% of its young adults to obtain a college degree or professional certificate, but the completion rate is now at 42%. The Brookings Institution, a nonprofit think tank, noted that Micron opened a $3 billion plant with 1,000 jobs in Virginia, rather than in the company’s home state. Micron has reportedly been shedding jobs in Idaho over the past year.
The Gem State ranks 43rd in the U.S. with a per capita personal income of $42,155. That’s about 80% of the national average of $53,712. Idaho has a population of 1.75 million with about 12.8% of residents living in poverty.
Home sales and prices
Idaho’s real estate market has been on a torrid pace. Prices for Idaho homes rose from $155,300 in 2012 to $238,000 last year, or a 53% increase. Idaho ranked No. 1 in the nation for fastest year-over-year growth when prices rose 17.2% from March 2018 to March 2019 — 10 percentage points higher than the national average.
There are concerns that quickly rising prices are creating a housing- affordability gap with home prices growing far faster than wages. Idaho is fortunate that it is still more affordable than other high-priced markets in the West, including San Francisco and Seattle. Home sales had been rising steadily since the recession, but leveled off last year. Zillow reported that 32,882 homes sold in Idaho last year, or only 60 more closed sales than in 2017 when 32,822 homes were sold.
Unemployment
Idaho was tied for fifth among all states for the lowest unemployment rate in the nation as of this past April. The state had an unemployment rate of 2.8% that month and has been under 3% for more than a year.
Why the state has such a low unemployment rate has led to speculation among local economists. One believes that retirees are moving to the state due to its natural beauty and low housing costs which, in turn, has boosted service-sector jobs. Another speculates that booming business sectors, including the health care industry, are keeping the jobless rate low.
Delinquencies and foreclosures
Idaho suffered more than most states during the Great Recession. In fact, the Gem State ranked sixth in the nation for states that experienced the greatest housing-market declines, according to a CoreLogic report.
This showed in the numbers of foreclosure filings as measured by defaults, auctions and real estate owned (REO) properties. In 2010, Idaho had more than 25,600 of these filings, according to Attom Data Solutions. In 2018, the state had only 1,395.
As of this past March, Idaho had one of the lowest shares of mortgages that were at least 30 days past due, with a rate of about 2%, according to CoreLogic. That’s about half the national rate of 4%, which reached a 20-year low in March 2019.
What the locals say
“We have housing that’s affordable relative to where people are coming from, along the [Interstate 5] corridor, which is Seattle to San Diego. There are a lot of people who are selling their home on Capitol Hill in Seattle — 1,800 square feet for $2.5 million — and looking at what they can buy in Boise for a fraction of that price, and [are] just losing their minds. … Given where the average price of a home is, this market is dependent upon in-migration to support it. And the second that in-migration stops, we have a problem.”
Lee Gientke
Managing partner, Pontifex Capital
3 Cities to Watch
Twin Falls
This city with nearly 50,000 residents increased its population by 25% from 2000 to 2015, or a rate of growth about twice as fast the rest of the nation. Yogurt maker Chobani built the world’s largest yogurt factory in Twin Falls in 2012, making a $750 million investment in the community. The plant employs more than 1,000 workers and is one of a series of food manufacturers to locate or expand in the community. Twin Falls is named after two parallel falls on the Snake River. A power plant has permanently diverted the flow of the river, however, leaving a single waterfall.
Boise
The state capital is booming. Boise, with a metro-area population of 700,000, is becoming an attractive landing spot for many people fleeing higher-priced cities in other parts of the West. The city has upped its cultural and food scene with the recent growth. While the median home price of $299,300 reported by Zillow this past April is reasonable compared to Seattle, San Francisco and Los Angeles, there are concerns that home prices are outpacing wage growth. Another concern is Boise has more people living in poverty in the city and surrounding area today than prior to the recession, 12% versus 10%. Boise’s name comes from the French word for “wooded,” given by French Canadian fur trappers in the early 1800s.
Coeur d’Alene
The city located on the northern edge of Lake Coeur d’Alene is one of the fastest-growing metro areas in the fastest-growing state. With a population of 51,000, Coeur d’Alene is forecast to add 30,000 people by 2035. The area is a popular tourist destination with two nearby ski resorts and a large resort along the lake. Several mining companies are headquartered in the city, due in part to the historically rich deposits of silver, zinc and other minerals. The city takes its name from the Native American tribe in the area, whose original name was Schitsu’umsh. French fur traders gave them the Coeur d’Alene name.
Sources: 24/7 Wall St., Attom Data Solutions, Beef2Live.com, BoiseDev.com, Coeur d’Alene Tribe, CompTIA, CoreLogic, Curbed, EastIdahoNews.com, Forbes, Idaho Potato Museum, Idaho Press, Idaho Statesman, Inlander, InvestingNews.com, KIFI-TV, The New York Times, U.S. Bureau of Economic Analysis, U.S. Bureau of Labor Statistics, U.S. Census Bureau, USA Today, WBUR-FM, World Atlas, World of Waterfalls, Zillow
