Fed action not panacea for real estate

While it is true that the announcement of the Fed's intent to buy $40 billion of Mortgage Backed Securities was received well by Wall Street and interest rates pierced previous historic lows, consumers may not see much impact beyond this point. With several months of already low rates, lenders have been very busy. It is unlikely then, that they will be compelled to drastically lower these already low rates to entice more borrowers, especially with new fees for banks on the horizon.

Starting Nov. 1 of this year Fannie Mae and Freddie Mac will begin charging higher fees to banks looking to sell off their loans. This additional fee will further cut lender profits so maximizing profits from interest rates charged is still to their benefit, especially with their current workload.

Even so, we are pleased that interest rates have ceased their recent, gradual uphill climb. With loan requirements rigid and employment figures persistently low, attractive interest rates have provided at least some incentive to buy real estate.

Most agree that the housing market is recovering. Most too, agree that this recovery is a slow one and given the uncertainty of the job market, it is likely to stay that way. Lower interest rates cannot hurt, but they are unlikely to spur a real estate boom.

We have seen the recovery firsthand here with many parts of North Idaho realizing upward movement both in activity and in pricing. At least that's true for the more densely populated areas of the area. Those areas though, that do not enjoy the level of industry of the more populous areas and the jobs that result, are still waiting for their recovery. Prices have continued to languish in many of these smaller towns and rural properties have not fared well. Perhaps a lower interest rate would compel some hardy commuters but nothing helps like local jobs.

As noted here, we have seen investor buyers for rental properties and the competition for multi-family buildings has been apparent. Still, we find ourselves waiting for recovery in our commercial properties. Some improvement has been noted in specific areas but overall the market is slow as buyers and tenants take their time, negotiating the best possible terms before proceeding.

This month the Coeur d'Alene Multiple Listing Service began reporting vacant land data in addition to its very thorough statistical reporting. Those figures further demonstrate the lack of activity in large development parcels and rural properties with large acreage. The encouraging news is that our sales of vacant lots have improved over last year indicating anticipation of more building. Our sales of newly constructed homes has finally caught up to last year with 11 percent of our single family homes falling within that category.

While this week's lower interest rates are encouraging, we will wait to see how much easing QE3 will bring to the consumer in the form of jobs and how compelled those consumers are to buy real estate before we predict a real estate boom.

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.