COEUR d'ALENE - On its economic horizon, Kootenai County has much to look forward to enjoying. It also has plenty everyone will seek to avoid.

The unemployment rate will improve, gas prices will go down, business loan activity will increase during the second half of this year, and moderately priced homes will continue selling well.

The bad news is the unemployment level will take years to reach past lows, home building appears to be a long way off for much of the county, and future homebuyers might all face 20 percent down payments. Also, many businesses have to make up lost ground because of lousy spring weather.

The Press asked some people with their hand on the county's economic pulse what indicators of health they'll be monitoring and what they're expecting to see.

Randy Barcus, chief economist for Avista, says the weak housing market in the Coeur d'Alene area won't see a material reversal until next year.

Kim Cooper, a spokesman for the Coeur d'Alene Association of Realtors, said while seven months of inventory of unsold homes is considered healthy, North Idaho has about 16.4 months.

But that's an improvement from 20.6 at this time last year.

"That's a 20 percent reduction in absorbable inventory," he said.

The bad news is it's still 2 1/2 times what would be considered a healthy market.

Don't look for new home construction until the market reaches that 6 to 7 month inventory level.

On the all-important jobs front, Barcus said the unemployment rate locally will improve faster and be lower than the U.S. rate.

The bad news is "it will be higher than the pre-recession level we all got used to when it was below 6 percent," he said.

Unemployment rates will remain above 6 percent through 2017, Barcus estimated.

Barcus believes a slow and steady recovery from the recession is under way.

The U.S. Bureau of Labor Statistics has reported that Kootenai County has seen year-over-year positive employment growth for the past five months after recording declines in 25 consecutive months, he said.

In the most recent information, for March 2011, the county shows a strong 2.4 percent increase in employment, compared with 0.3 percent in neighboring Spokane County and a 1 percent increase nationally.

The monthly foreclosure rate, according to the RealtyTrac website, remains elevated in Kootenai County at about double the national rate and triple the rate in Spokane County, he said.

"Once we work through the foreclosure overhang, new home construction should begin in earnest, with the expected sharp uptick in construction beginning in 2012," Barcus said. "However, with bank lending terms tightened for home purchases, we expect to see strong demand for multi-family rental apartments for several years."

Business loan activity this year has been "choppy," with ups and downs, said Rod Colwell, president and chief operating officer at Mountain West Bank.

The bank, based on momentum gained this month, is planning on the summer being better overall. Other bank officials reported slow business loan activity, but said the situation is improving.

"The arrows are pointed in the right direction," said Kyle Hendricks, vice president of Idaho Independent Bank's Coeur d'Alene office.

Hendricks said confidence is increasing.

Improvements in gas prices could help.

Dave Carlson, a AAA spokesman, said the organization doesn't foresee major or rapid reductions in prices, but it does expect prices will come down this summer.

OPIS, a company that provides data to AAA, says summer prices nationally should be in the range of $3.25 to $3.75.

Colwell said the second half of the year will be better than the first for business loan activity.

In real estate, there has been momentum in mortgage originations, which have been much stronger in May than in either March or April.

Some real estate agents report being busier than last year at this time, but then many are working with investors looking to buy up distressed properties.

Colwell said Mountain West plans to match or slightly exceed last year's purchase transaction number.

"Time will tell," he said.

As for loan delinquency and foreclosure trends, he also expects the second half of the year to be better than the first.

Hendricks, of Idaho Independent Bank, said homes in the $150,000 to $250,000 price range have been moving well, and improving this spring.

Cooper said, "Interest rates are driving the activity right now."

Interest rates have gone through an extended period of historic lows, including dropping this week to 4.26 percent on a conventional 30-year fixed home loan from 4.38 percent last week, he said.

He said that if rates creep above 5 percent some of today's home shoppers might back off because they want a lower rate.

Colwell, at Mountain West, said, "The refinance business has really dropped off."

The refinancing business likely dropped off because the people who could refinance already did so in 2010 and 2009.

He said Mountain West hopes to replace the drop off in refinance business with plenty of purchase transactions.

"People are seeing the value right now, and seeing good interest rates to finance those houses," he said.

Eric Keck, Post Falls city administrator, said, "So far this year we have seen a significant drop in new home starts."

Mortgage regulations, slow sales absorption of existing new and previously occupied homes, and loss of funding for federal home loan programs have contributed to the drop, he said.

Some businesses, which do well in healthy housing markets, have been hurt by the drop.

Some have also been hurt by poor spring weather.

Jarrod McKee, an owner and manager at Aspen Nursery, in Post Falls, said the business is down 50 percent compared with where it normally is at year-to-date.

The business lost about five weeks of retail sales because of a cooler, wetter spring.

"Maybe we'll have a long fall" to make up for the lost business.

He said they will be open seven days a week this summer, instead of six, to make up for the loss.

He's predicting "steady but average sales" for the summer.

There has been plenty of good news in Post Falls, too.

"The main sector seeing growth right now, and for the immediate future, is the commercial and industrial sector," Keck said.

The city has a number of commercial real estate projects happening, including construction of a Love's travel center, tenant improvements for ALK Abello Source Material, and the annexation, zoning and site plan for new manufacturer UnderGround Force LLC.

There also is a steady pipeline of prospective warehouse distribution projects, he said.

"This is very encouraging as we have been in a drought of projects for some time," Keck said.

Unemployment remains about 10 percent and needs to improve, he said. UnderGround Force will create 125 new jobs at its facility.

"These are stable, family wage jobs that will prove to be a good match for our community," Keck said.

Hendricks said, "There's a fair number of folks that are now recognizing that now is the time to make that investment, and get today's market price."

Cooper said, "We're all hopeful that we're climbing out of this" downturn in the real estate market."