Higher rates squeezing Kootenai County homebuyers

As temperatures begin to fall, mortgage rates continue to rise.

This combined with rising housing costs has made it more difficult for buyers to find a home and for sellers to get their house off the market. The mortgage rate is at 7.125%, according to Keith Pitsch, team leader at Pitsch Mortgage Team powered by Summit Lending USA. The current median home price in Kootenai County is $569,945 according to Coeur d’Alene Regional Realtors.

Those two numbers end up leaving homebuyers with fewer options, Pitsch said Friday.

"It's squeezing people down into a price point that doesn't afford them the house that they're looking for anymore,” Pitsch said. “If you go from $525,000 down to $475,000, it's a really different ballpark of a house that you're playing in now. It pretty much puts people on the shelf.”

Century21 Beutler and Associates real estate agent Christine Matheny said between a 6.49% and 7.49% rate on a $455,956 loan, the remainder after a 20% down payment on the median Kootenai County home price, buyers would see a drastic difference in cost.

“The difference is about $300 per month in principal and interest on the same loan,” Matheny said. “That can be a week’s worth of groceries.”

For people looking to buy a home in Coeur d’Alene, Post Falls or Hayden, it means maybe having to settle for a more affordable house in Rathdrum or the Silver Valley.

“They might have to have a plan B or choose to live in a different market or community,” Mountain West Bank President and CEO Scott Anderson said. “They’re farther from school, farther from work. Those are the downsides to rising rates. It creates other inconveniences.”

The current rates have also lengthened the home-buying process. People looking for a new residence may not be able to afford the same houses they could have bought a year ago, but they can afford to be pickier. With fewer buyers, people can take more time coming to a decision.

“Initially, they might identify three to five houses and have to make a quick decision because it was so competitive to get into those houses,” Matheny said. “Now they're not very quick to make decisions. They're kicking the can down the road and those homes are still sitting there, so they can take that time.”

In order to sell their house quicker, some sellers have been willing to offer concessions such as paying down points on the buyer’s mortgage so they have a lower rate.

“That's becoming a very commonplace occurrence,” Pitsch said. “I think the days of listing a house and selling it without a seller concession are behind us right now with the rise in rates.”

Mortgage rates and housing costs are dissuading some homebuyers and sellers from testing the market entirely.

“If a seller obtained a mortgage four or five years ago at 2.5% or 3%, they've got a relatively low payment today,” Anderson said. “That seller might not sell their house because they know they're going to probably have to borrow some money, and they're going to be borrowing money at a significantly higher rate today.”

However, Pitsch says the housing market is still strong in North Idaho.

“This isn't the end of real estate, it's just slowing,” Pitsch said. “It's a market fluctuation that on the long-term curve of real estate and its value, it's not going to have a huge impact.”

    Mountain West Bank President and CEO Scott Anderson
  

    Keith Pitsch of Pitsch Mortgage Team powered by Summit Lending USA.