Things are lining up for another good year

With the terrific recap of 2014 last week, we now look ahead to see what readers can expect from the North Idaho market. With last year's new construction reflecting 17 percent of our single family home sales we anticipate that new construction will continue to thrive into 2015. This means more jobs and potentially more homebuyers.

Our already low mortgage interest rates dropped again last week - to an average of 3.66 percent - presenting even more opportunity for buyers. With the demand already demonstrated in 2014 for houses the low interest rates should continue to provide incentive to would be buyers. Add to that the position taken late last year by the Federal Housing Finance Agency; that Freddie Mac and Fannie Mae should ease up on credit requirements and we could see the release of pent up demand from formerly willing but unable buyers.

Freddie and Fannie are responsible for about 80 percent of today's home loans. They do not directly lend money but buy or guarantee loans that meet their standards after the loan is issued to the borrower. Prior to this edict from FHFA a conventional loan would require a 5 percent down payment. Now, with the loosening of requirements in an effort to boost home ownership, qualified borrowers need only 3 percent as a down payment to get financing.

For a $200,000 home loan then, instead of $10,000 buyers have to come up with $6,000. That could make a big difference in the length of time a buyer has to save before getting into a home. With rents on the increase it can be even harder to save in the short term, so that 40 percent difference should help would be homeowners move into their own home while mortgage interest rates hover near the lowest seen. Some are able to move into their own home for a lower monthly payment than if they were paying rent. Of course this makes ownership even more attractive.

When you add to that monthly savings the 9 percent appreciation experienced in Kootenai County last year - when compared to 2013 - a home is once again a sound investment. Given today's interest rates on savings the investment actually paid off quite well last year and we anticipate continued appreciation.

Unlike the "liar loans" or loans requiring no earnings documentation that fed the feeding frenzy of last decade these 3 percent down loans are the common 30-year mortgage. Buyers still have to qualify and prove their income, the loans do not adjust after a couple of years, making payments unaffordable so the default risk is lower than in those days of easy money.

"Right now credit scores for loans that are being approved are at their tightest level ever," said Mike Calhoun, president of the Center for Responsible Lending.

"The average American household's credit score is under 700, and the average loan that's getting approved is for people with a 750 credit score," Calhoun said. He sees the move to offer 3 percent-down loans for first-time homebuyers as a step in the right direction.

Still, some would say there is risk when you allow people to borrow with so little down. That risk is alleviated somewhat because the low mortgage interest rates help keep the monthly payments down over the term of the loan. Only property taxes and insurance will cause a fluctuation.

Of course we favor measures that allow more qualified people to buy homes. It's good for us and good for our community as it improves the local economy. We look forward to a productive 2015.

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.