How high is affordable

We are enjoying a brisk real estate market and are delighted with our market improvement. We do wonder how long we can continue to post gains without pricing average folks out of the market.

According to the National Association of Realtors the national median home price is now at $230,000. In the Coeur d'Alene Multiple Listing Service our average is $193,520, well below the national median. Based on a median Kootenai County income of $49,673, as reported at realtor.com, homes in this price range are still considered affordable since payments on a mortgage would be less than 25 percent of the borrower's gross income when getting zero down financing.

So it looks like today we are in OK shape. The Veteran's Administration guaranteed loan program with allow qualified veterans $417,000 toward a home purchase and in our area you can still find a lot of house for the money.

We continue to hear murmurs of rising interest rates and the Federal Reserve hinting at rate increases by the end of the year. Even a small jump in rates will cause many to reconsider a home purchase. For a $200,000 loan at 4 percent interest a 1/2 percent increase would mean nearly 60 additional dollars a month added to their payment. As home values increase so do their property taxes, another additional expense for prospective homeowners' entering the market to consider.

Looking at trends nationally though, we are still delighted that we live in one of the most affordable areas of the country. This fact too, leads to in-migration as folks see that they can realize their dream of home ownership more easily here.

Lawrence Yun, NAR chief economist, says the housing market has shifted into a higher gear in recent months. "Steady rent increases, the slow rise in mortgage rates and stronger local job markets fueled demand throughout most of the country this spring," he said. "While this led to a boost in sales paces not seen since before the downturn, overall supply failed to keep up and pushed prices higher in a majority of metro areas."

Adds Yun, "With home prices and rents continuing to rise and wages showing only modest growth, declining affordability remains a hurdle for renters considering homeownership - especially in higher-priced markets."

It could well be that here in North Idaho with shrinking vacancy rates and rising rents, we will see continued demand for single family homes for quite some time. Demand of course increases competition and drives up prices. Rising interest rates will not only affect mortgages but the cost of construction as well.

Although construction activity can be seen all over our MLS area new construction sales have not increased as a percentage of total home sales. In fact, due to the pace of homes sales, new construction sales are one percent less of the total than last year at this time. There are still affordable homes however, both newly constructed and existing. You have to remain diligent and focused to land the best one for you but for now at least, you are likely to find one.

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.

Addition to last week's story on Edgewater at Mill River:

Joel Pearl Group has been directly involved in four home sales on Mill River Court in the past 12 months that were closed on the MLS (six sales sides), with sales ranging from $995,000 to $1,900,000. Joel Pearl closed one home in the last month for $1,382,500, and has a home listed for $749,000.