Real estate outlook improving
In wake of our projection last week that the market looks like it will remain strong for the near future comes news that supports that theory.
Testifying before Congress last week, Fed head Janet Yellen promised that there would be no dramatic interest rate increases. Even so, the average rate for a 30-year loan increased slightly causing some concern. This rate is the year's highest so far but we Realtors have yet to see a slowdown in market activity.
Yellen's promise of caution when adjusting rates upward implies that the current mortgage rates are not likely to increase dramatically either. A spike in mortgage rates could have a negative impact on housing performance, even when demand is high. Still, the fact remains that the Fed does intend to begin raising rates as employment improves. Those seeking real estate ownership opportunities may be well served to put deadlines on their acquisitions to avoid paying higher rates later this year.
Another indicator that the market momentum will continue is that the National Association of Home Builders and Wells Fargo released its "builder sentiment index" report last week. The report showed that the index reached 60. Fifty is the line between positive and negative sentiment. The index was at 53 in July 2014. June's reading was revised higher from 59 to 60.
"This month's reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth," said NAHB chief economist David Crowe. "However, builders still face a number of challenges, including shortages of lots and labor."
Although we do not perceive a shortage of lots locally, some report difficulty in finding skilled labor. This is more evidence that the Fed's monitoring of employment could lead to more rate hikes.
Those who delay a purchase may have more to be concerned with than interest rates. As reported here each month, real estate prices continue to rise which leaves some qualified buyers suddenly unable to qualify for pricier real estate. Add to that appreciation a higher mortgage payment caused by rate increases and even fewer will qualify for entry level housing.
Even though housing prices are up over last year, our market is still among the most affordable. A median priced home in San Francisco is now $660,000, nearly equal to the peak of 2007 when the median was $665,000. Seattle home prices have now exceeded their 2007 peak of a $507,000 median priced home. The median now is $543,500.
No wonder the people most likely to move here come from those geographies. They can get a lot more home here for less money!
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.