How low can they go?

Interest rates dropped again last week to a new record low of 3.67 percent reflecting seven-tenths of a percent of the previous week's record. That represents the sixth week in a row of declining interest rates. Perhaps as a result, a recent survey showed that a majority of homeowners think housing prices will appreciate in the next year. One would have to think that with interest rates so low, housing demand will rise as it has in many parts of the country.

Of the 1,000 people surveyed, many believe that interest rates will also rise during the year ahead. Still, a slowdown in the pace of new jobs and income growth is creating a plateau in consumer sentiment that might delay a full recovery in the housing market, according to Fannie Mae's survey. Fifteen percent of those surveyed reported that their household income is significantly lower than it was 12 months ago, which marks a record low in the annual survey.

According to Fannie Mae, many prospective homeowners are taking a "wait and see" approach to the housing market. Still, 75 percent of Americans aspire to own a home and consider home ownership a major life goal, according to a new poll of non-homeowners aged 22 to 50 conducted by Integra Realty Resources, an independent real estate valuation firm.

Of course the answer is employment. With more than 8 percent of our eligible working population out of work there are a lot of people who are forced to "wait and see" even if they have always dreamed of owning a home. Low prices and low mortgage rates are not going to help those folks.

A move that could help the housing market however is the lifting of the moratorium on investors wanting to participate in the 203(k) rehabilitation loan program offered by the Department of Housing and Urban Development (HUD). These loans provide funds to individuals to purchase and renovate houses and multifamily dwellings of up to four units while providing extra money to rehabilitate the properties. Since the 1990s these loans have barred all but owner occupants from their funds.

Now, the Mortgage Bankers Association (MBA) is urging HUD to end its moratorium on allowing investors to take part. The association concedes that the moratorium was the right course of action when it was implemented, but notes that today's housing market is vastly different.

"Communities would benefit from investors buying bank-owned properties, renovating them through the 203(k) program and selling or renting them," says Steve O'Connor, MBA's senior vice president of public policy and industry relations.

Many areas of our counties in North Idaho would benefit as distressed properties become renewed by investors, raising up the values of the neighborhoods they currently drag down. It's great that homeowners can get these loans, but it is that unemployment factor that keeps this from happening with enough frequency to make much of a dent in many of our smaller communities.

As we continue to observe, for those who are employed and whose credit is intact, there likely has been no better time in history to make the move into your own real estate. Market conditions are perfect for first-timers and old-timers as well with prices down on buildings, land and homes in many parts of the region and ever shrinking interest rates making it easier to pay back your mortgage. If you rent, you can be sure your rent will be higher in 30 years. If you buy, you will lock in a 30-year mortgage that will never increase.

Next week we will share the year to date statistics on how our real estate marketplace is doing. We are hopeful that our earlier trends will continue and that we will be able to report a more stable and improved market. Stay tuned.

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.