Rates and housing are on the move

Not that anyone should panic, but mortgage rates took another jump yesterday. That is twice in two weeks we have seen an increase. Still, with rates at less than 3.5 percent we don't expect a lot of wailing or for those who are shopping for real estate to change their plans. 30-year loans averaged 3.42 percent last week, rising from the previous week's 3.38 percent average. A year ago at this time, 30-year fixed-rate mortgages averaged 3.98 percent. The record low for 30-year rates is 3.31 percent, set on Nov. 21, 2012. So we remain in historically low territory, comfortably settled in the middle range of low. Many of us recall the pain of the 18 percent mortgages in the early 1980s, so we are not going to get excited about a rate nearing 3.5 percent.

Market movement is still in positive territory. Eight of the hottest markets in the nation are in California according to a recent report. These are areas with the shortest marketing times for homes even as prices inch up. This bodes well for the Northwest as the typical cycle will move that activity north and then east if history is any indication. During the boom, we saw California prices rise, then the Seattle area and then here.

The Wall Street Journal's "Market Watch" reports that: "The market is 52 percent as strong as it was prior to the 2008 crash." Sources for the report were; U.S. Census construction data, National Realtors Association existing sales, and delinquency and foreclosure rates from mortgage-data firm Lender Processing Services. While 52 percent would be a lousy score on an exam, it's the highest score the real-estate market has seen since the real-estate boom, according to the report.

"There are almost no housing market indicators showing weakness," says Mark J. Perry, a professor of economics at the University of Michigan-Flint. Construction starts hit a 54-month high in December 2012, reaching 954,000 on an annualized rate, a 37 percent jump on the year. U.S. existing-home sales rose more than 9 percent to 4.65 million in 2012, their highest annual level in five years. And the combined delinquency and foreclosure rate is at its lowest level in four years, according to LPS.

People are also remodeling their homes with renewed vigor, suggesting homeowners believe house prices will continue to rise. Earlier this week, the National Association of Home Builders said its Remodeling Market Index reached 55 in the final quarter of 2012, the highest reading since 2004. (Any reading above 50 shows that remodeling activity is growing.) "The increase partially reflects the remodeling work new homeowners undertake," says NAHB chief economist David Crowe.

Friday, the Commerce Department reported that home sales in December fell 7.3 percent from the previous month. But housing analysts who are looking past that headline see a lot of reason for optimism in some more positive long-range trends. Economist Robert J. Schiller of the reknowned Case-Schiller Housing Index, considers the housing market neutral. Bank of America's chief, Brian Moynihan says signs of recovery are being seen from his vista. Home price increases, reduced inventory and declining foreclosure rates are all indicators that give him confidence.

Closer to home, we too see some positive signs. Glenn Crellin at the University of Washington's Runstad Center for Real Estate Studies sees improving market conditions with rising average prices and fewer foreclosures in Washington State, much like we have seen here in Kootenai County. In particular, homes in Hayden Lake, Dalton Gardens and Coeur d'Alene have shown marked improvement both in average prices and in number of housing units sold last year. Post Falls too showed improvement although not at the same level as those other cities.

All the experts agree, we are not completely out of the woods and predictions of another boom like the middle of last decade are not likely. Still we are encouraged by the level of market activity in the local area and in the West as a whole.

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