The waterfront-property market not only is becoming more of a buyer’s market; it’s becoming more of a local buyer’s market.

Prior to the big real estate rush earlier this decade, about 80 percent of waterfront property buyers lived in the Inland Northwest, and about 20 came from outside the region, says Century 21 Beutler Waterfront broker Bill Fanning.

From 2002 to 2007, however, the percentages flip-flopped, with out-of-town buyers accounting for most of the waterfront sales activity in the Inland Northwest.

“The locals were virtually run out of the market,” Fanning says.

In the past two years, activity has slowed substantially, and prices have dropped. Interest from the out-of-towners has dwindled, which has opened the door for more people from the Inland Northwest buying recreational properties within an hour- or two-hour drive of their primary residence.

“I just went through a major price reduction,” Fanning says, referring to the properties he lists. “It’s a great time to be a buyer.”

One interesting characteristic of local waterfront buyers, according to Fanning, is that they often are reluctant to make offers that are dramatically lower than the asking price for a given property. He says they prefer to see the price reduced rather than make a substantially lower offer.

People shouldn’t be afraid to make offers, though, he says. In the current market, there often is a significant difference between the asking price and the final sale price of a property, a fact that isn’t apparent simply by looking at listings.

Gene Smith, an associate broker with Tomlinson North Inc., says activity at the upper end of the Spokane-area real estate market has involved waterfront property. According to Spokane Multiple Listing Service statistics, he says, four homes have sold so far this year in the $1 million-plus price range. Of those, three were waterfront properties, and one included a large amount of acreage with a lake on the property.

Fanning says activity has been slow in the upper price ranges in Kootenai County, but he says he expects that to change at some point in the near future.

“Very shortly, somewhere in the next 12 months, there’s going to be a crossover point where interest rates are going to be too juicy, the prices will be too juicy, and we’ll see a nice little run,” he says.

Each lake and river has its own unique characteristics and its own somewhat distinct market. Consequently, Fanning says, it’s hard to say whether there are better values at one lake compared with another.

In general, though, prices of properties on smaller lakes might drop more precipitously in the current market. During the recent real estate boom, he says, out-of-state buyers looked at price differences between properties at smaller lakes and higher-profile lakes – Lake Coeur d’Alene, Lake Pend Oreille, and Priest Lake – and they thought they were getting great deals along lesser-known bodies of water. That phenomenon might have driven up prices artificially, he says.

The good news is that most buyers should be purchasing properties for what they’re worth in the current market, rather than speculatively paying higher prices with the expectation that values will increase.

“The speculative nature of the real estate business isn’t going to be with us for a while in the recreational properties,” he says.