Will Kemper, an investor in property and a real estate agent, lost bids on two houses he was trying to add to his rental portfolio this year. He also lost two bids for another investor.

Each house had more than 15 offers, and each went for more money than Kemper expected.

“It’s the classic problem of a market that’s recovering,” he said. “Myself and a bunch of other people are still hoping that the price is lower than it is.”

Homebuyer Bill Leaton agrees. He put offers on about four homes before nabbing one in Kuna in the high $90,000s.

“It’s amazing how fast they were going,” he said. “The last two we just flat gave them what they were asking, and they still went. It gets frustrating ’cause you don’t want to get your hopes up.”

After years of decline, the Treasure Valley housing market has started to echo the pre-2007 boom. Prices have turned upward. Bidding wars have broken out. Builders are rushing to take out permits.

And investors are back. They’re looking for a place to make more money than they can make in today’s stock or bond markets, or with the pitiful returns offered by CDs and other bank accounts. While prospective homeowners still take out mortgages, investors offer cash.

Real estate agent Max Coursey said his clients who are investors are struggling to find properties they can buy to use as rentals in the Boise area.

“There’s just very little inventory out there,” Coursey said.

FORECLOSURES

Real estate professionals cite several reasons why the Treasure Valley’s housing market has tightened dramatically in 2012.

For one, fewer mortgage holders are receiving notices of default than a year ago, which means fewer distressed properties are for sale, according to RealtyTrac, a housing market research company. Its data show bank-owned properties and foreclosures have also fallen since last year. Short sales — when a home is sold for less than is owed to the lender — are up in the first quarter of 2012 from the last quarter of 2011.

“I believe the robo-signing controversy back in October 2010 put the brakes on foreclosure activity in Boise, as it did in many other markets,” said Daren Blomquist, vice president of RealtyTrac, which tracks housing markets nationwide.

“We’re starting to see some of those other markets post rebounding foreclosure activity as lenders start to catch up with some of the delayed foreclosures from last year. But we have not seen that as of yet in Boise.”

That could be partly because lenders are diverting more would-be foreclosures into short sales, he said. That would explain the increase in preforeclosure sales — typically short sales — in the first quarter.

LOW RATES, INVENTORY

Another factor is that interest rates are at their lowest point in 60 years. Rates for a 30-year fixed mortgage fell to 3.66 percent last week, while a 15-year fixed rate hit 2.95 percent, according to the Federal Home Loan Mortgage Corp.

Also, the number of houses for sale has dwindled to record lows. Based on May data from the Intermountain Multiple Listing Service, the Treasure Valley has about a 3 ›-month supply of homes for sale if no other properties were added. A six-month supply is traditionally considered a mark of a balanced market.

Mike Turner, CEO of Front Street Brokers, said the biggest reason so few homes are for sale is because so many people owe more on their mortgages than their houses are worth. That negative equity affected one in four Idaho mortgage holders in the last three months of 2011, according to Core-Logic, a national real estate research firm.

“A lot of us are just stuck in our homes,” Turner said. “The silver lining is it’s actually helping our market improve faster than expected by keeping the supply low.”

The competition among homebuyers and investors is helping to drive up prices. The median single-family home price in Ada County was $179,900 in May, up from $158,777 in April. In Canyon County, the median home price was $90,500 in May, up from $87,150 in April. Both counties hit their lowest median prices in January 2011.

So-called shadow inventory appears to be declining, too — at least as a perceived threat. Some real estate professionals say they don’t believe there is a gigantic supply of houses repossessed by lenders but not yet listed for sale.

“People keep throwing out the idea of this monster shadow inventory still looming, and from the foreclosure agents I’ve been talking to, the foreclosure inventory is reduced,” said Stacie Cudmore, an agent with Keller Williams Realty Boise.

Keller Williams led all real estate offices nationwide in the number of closed sales in 2011, according to Real Trends, a real estate consulting and communications company. The momentum continues, as the agency closed more than $90 million in sales in May 2012 — the highest monthly volume ever for the office, outpacing 2007 sales.

WHAT’S TO COME

The Valley should expect at least one last surge in foreclosures by the end of the year, said RealtyTrac’s Blomquist.

“We are past the worst of this foreclosure cycle, so in many ways the more quickly the Boise market can deal with the distressed properties left over from the housing boom and bust, the more quickly the market can move forward toward recovery,” Blomquist said. “In other words, when we do start to see increasing foreclosure activity in Boise, it will actually be expected and necessary, and not a reason for panic that the housing market is tanking again.”

Buyers are paying an average of $10,000 more than list price, said Hugh Hendrix, an agent with Windermere Real Estate in Boise.

Cudmore said most of her recent clients have had to pay more than the asking price, especially when buying a home in foreclosure. At least one paid about $37,000 more, she said.

“If I had more money or more buying power, I’d be buying everything I could to invest,” she said.

Kemper believes lots of people are still dreaming about buying and flipping houses but don’t have the money. Most of the investors buying now have cash, and Kemper said they’re looking for reliable rates of return on their investments through rents.

They’re also less worried about depreciation than investors in recent years, and low rental vacancy rates in the market show that there’s more demand than supply.

Average rents increased or remained flat in 2011 for most places. For example, the average rent for a three-bedroom single-family home was $907 in the first quarter and $908 in the fourth quarter, while a three-bedroom apartment was a dollar shy of its five-year high of $793.

Erik Larson, a senior vice president with Zions Real Estate Group in Boise, said low interest rates make long-term debt on an investment property attractive. He said most of today’s investors are putting together a rental pool with a long-term perspective.

“It’s a good thing,” he said. “It’s resetting the market.”

Sandra Forester: 377-6464, Twitter: @IDS_Sandra