Signs of fall = encouragement
Fall is in the air. The children are in school, the crops are ripening and soon, the beautiful fall colors will return. The encouraging signs though will be found in the building of North Idaho. A leisurely drive through any part of town with vacant lots reveals a bustle of activity as houses and buildings are under construction; homes for the families and businesses anxiously waiting their completion.
Winco Foods has moved their deadline up and should open by November. Peak Fitness is well under way with their tennis facility and all across the Rathdrum Prairie new homes are in various stages of completion. A quick drive through several of the newer subdivisions on either side of Prairie Avenue shows there are workers busily preparing these homes. From foundations to framing to finishing the driveways people are out working. The increase in school enrollments is a good indication that we are in recovery mode and our economy is moving in the right direction.
Long-term mortgage rates had risen more than a full percentage point since May, when Fed Chairman Ben Bernanke first signaled that the central bank could begin reducing its monthly $85 billion in bond purchases if the economy looked strong enough. Many economists had expected the Fed would decide at its policy meeting this earlier this week to scale back the bond purchases. But on Wednesday, the central bank voted to continue the bond-buying program at the current levels. Consequently, interest rates dropped .07 percent on average for a 30-year note.
Rates may also get a boost from the looming Debt Ceiling Debate. Each of the last two times that Congress debated the Debt Ceiling and debated until the 11th hour, mortgage rates dropped. This is because Debt Ceiling uncertainty creates Wall Street uncertainty and when Wall Street is uncertain, it tends to move assets from risky plays to safer ones. Mortgage bonds are among the safest places to park money. As demand for safe assets increase, U.S. mortgage rates will likely move lower. Mortgage rates tend to track the yield on the 10-year Treasury note.
As the August statistics we reported here a couple of weeks ago indicated, the rise in interest rates seems more to have motivated than hampered the local desire to buy. Apparently, folks realize that even though mortgage rates had risen in recent months, they remain historically low around 4.5 percent for a 30-year fixed interest loan - a slight decline from the prior week. We remind you that as recently as June 2011 the average rate was 6.79 percent, so this recent, modest decline may provide more stimulus to the mortgage market and perhaps the refinance market.
Our August figures show that new construction accounted for 14 percent of our year to date home sales. Last year that number was 11 percent. That is better than a 20 percent improvement and we are happy to have it. Our market continues to move at a comfortable pace; slower than the frenzied buying in the middle of the last decade but much improved from the dismal, deepest part of the recession.
To understand the market environment in your neighborhood, check with a Realtor member of the Coeur d'Alene Multiple Listing Service. With members from Sandpoint to St. Maries and Spokane to the Silver Valley, we cover a lot more of North Idaho than Coeur d'Alene.
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.