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Subprime loans were invented for people with bad credit by people who needed a supposedly safe haven for a worldwide glut of investment dollars.

When the “no credit, no job, no problem” housing scheme inevitably collapsed, Montana largely escaped the fallout, but not completely.

Dean Luptak, president of Coldwell Banker The Brokers in Billings and Red Lodge, said anyone with a heartbeat could get a home loan during the bubble days.

“You were afraid to let your dog out in the morning. He might come back with a mortgage,” he said, repeating a popular joke from Phoenix, one of the housing markets that has suffered through one of the sharpest corrections.

Real estate players hope the new “first-time” and “mover” tax credits will keep their industry going until next summer when the Great Housing Recession should ebb. But that hope rests on broader economic factors than just housing.

The key question is whether people will have the future confidence and the income to buy a first or a better home when their incomes decline and the promise of forever-rising home values is urban myth.

On the plus side, Montana hasn’t seen the double-digit unemployment rates, the housing price meltdowns, and the budget crises that have plagued other states.

But the gap between income and housing costs here remains relatively large.

Montanans earned $34,644 per capita income last year, the 39th lowest in the country. But by midyear, Montana was one of only 15 states showing a slight increase in per capita income, and attitudes toward home ownership improved.

Beth Klunder, vice president at Western Security Bank, said she expects to finance $29 million in home sales this year. Half of her first-time buyers used the tax credit, and the portion was even greater in a Billings subdivision near Riverfront Park.

“People gobbled up anything in Josephine Crossing that’s new and nice and shiny and pretty and less than $200,000,” Klunder said.

At the McCall family subdivision by the Yellowstone River, the credit helped drive 12 of the 17 sales of patio homes starting at $149,900, according to Klunder, who financed most of the homes.

However, the “move-up” stimulus may not be as successful as hoped, because some people are buying smaller houses.

Of the first three sellers using this credit with Klunder, two were building homes and one was downsizing.

Nationally, as many as 25 percent of the buyers in 2009 bought homes because of the tax credit, according to a survey by the National Association of Realtors.

“The first-time homebuyer credit has definitely helped maintain, especially in our market, the level of sales we would typically have,” Luptak said.

This market has a 48-month supply of homes $600,000 and higher, so the “ladder up” tax credit is needed to move some of the more expensive homes, he said. But that benefit seems illusive.

“So far, the sellers either bought in the same price range, a lateral move, or they are still sitting on the sidelines. Rentals are tight because there are people who can’t afford housing or decide not to buy,” he said.

Interest rates have dipped below 5 percent again, the lowest Luptak has seen in his 26 years in real estate, and are another powerful sweetener.

“Even with these interest rates, in Billings, Montana, spending $1,200 to $1,500 a month for a mortgage is shocking to me,” he said.

Relative to the U.S. housing market, Billings home prices are steady and should appreciate a percentage point or two per year, he said. But it will take another decade for U.S. home prices to return to the peak set in 2006, he predicted.

When people see interest rates rising again probably by early next year, they’ll buy more homes, but not like before, he said.

“All buyers, I don’t care who they are, which generation, they’re all going to be more cautious,” he said.

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