Interest up in homes and loans

Although home loan interest rates rose slightly last week, it appears that today's home prices still offer some of the best buys in history. According to the National Association of Home Builders today's homes are affordable to nearly 76 percent of average wage earners. But with the current level of scrutiny of prospective homeowners by lenders, ownership can be elusive.

"While today's report indicates that homeownership is within reach of more households than it has been for more than two decades, overly restrictive lending conditions confronting home buyers and builders remain significant obstacles to many potential home sales, even with interest rates at historically low levels," said Barry Rutenberg, chairman of the National Association of Home Builders (NAHB).

Those prospective buyers may be feeling a bit apprehensive on news that the 30-year interest rate for home loans ticked up a bit last week. A quick check of the Coeur d'Alene Association of Realtors website however showed that the current rate of 3.74 percent remains among the lowest in history. Local banks still report having plenty of money to lend, but admittedly are more cautious about who they lend it to. It is not unusual for a lender to ask for three years of tax returns and they are likely to give a second look to late payments or other credit issues. Still, there are people buying homes.

As we have previously reported here, last year more folks bought homes from our MLS inventory than in any year since the market downturn of 2008. This January, sales of single family homes on less than an acre maintained last year's pace and agents are reporting sustained activity. Some are even complaining that it is difficult to find the homes their buyers seek, citing a shortage of inventory in some areas.

One of the challenges facing home buyers continues to be competition from investors. Nationally at least, 23 percent of home purchases were attributed to investors, the same as in January 2011. When one out of four home sales is to an investor, you have to wonder if you aren't buying, whether you are missing the boat. It appears real estate is once again an investment vehicle of choice, less volatile perhaps than more traditional investment opportunities especially with the global financial markets' uncertainty.

Still, with the growing activity in the housing market, prices in most price ranges have not appreciated noticeably. In the West, that region of the United States that includes Idaho, sales are among the strongest with an 8.8 percent increase in sales while prices remain off about 1.3 percent. With sales activity increasing though, prices are bound to stabilize and begin rising as available inventory shrinks.

According to an article by the Associated Press, "The housing market is flashing signs of health ahead of the spring-buying season. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.

"Sales have now risen nearly 13 percent over the past six months. While they are still well below the six million that economists equate with a healthy market, the gains have coincided with other changes in the market that suggest more sales are coming."

"The trend is clearly upward," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

As always, if you want to know what is happening in your neighborhood, your Realtor has the tools to identify your market trends and give you a very good idea of what to expect.

Trust an expert... call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.