Why You Should Consider Buying Now

The Anchorage housing market continues its flat line stability into fall. Single family homes values have averaged $366,000, plus or minus the cost of an airline ticket to Hawaii, since 2014. September closed sales were 271 compared to 277 in 2016. Condos remain at their 2015 value of $213,000. And for the past four months, condo sales have actually beat 2016 figures by 29 units. This is all good news for our housing market but it begs the question of ‘why’ when reports of Alaska’s economic recession continue to dominate the news. Let’s blame it on lack of inventory which is the biggest contributor to Anchorage’s housing stability. Homes priced below $500,000 have, on average, only a three month supply. It’s a competitive range and homes priced between $350,000–$400,000 sell within 29 days if priced correctly and in good condition.  
 
However, homes listed above $500,000 constitute 26% of our active inventory. There is a one year supply of homes over $750,000 with just 5.6 homes selling per month. If there is a developing soft spot in the market, it is over $500,000 where builders are forced to build and compete with pre-owned homes which are often larger and include landscaping, fencing and appliances. Even sophisticated buyers in this price range, who are most likely move-up buyers purchasing their second or third home, fail to recognize the benefits of the five star energy efficiency requirements compared to the 1980’s four star home. One group that does recognize those benefits, however, is the boomer buyer who doesn’t want the hassle or the unexpected expense of repairs and maintenance of an older home.         
 
Behind all these numbers is a growing concern of Anchorage’s housing affordability over factors that we have no control over. About this time every year, I have predicted a rate increase in December which has never occurred. However, this year may be the year it actually happens. And, as we all know, it is not the price you pay for the home but the mortgage interest rate that contributes the most to the cost of home ownership. Builders were already nervous about increases in lumber and lack of labor after the hurricanes hit Florida and Texas but now with the devastating wild fires in northern California there is bound to be increases in materials and labor shortages as the rebuilding begins. Already, local builders are reporting having to pay almost $10 a foot in labor costs for framing, an increase of 25% almost overnight. The tariff on British Columbia lumber has also driven up the cost of lumber. Framing is the backbone of any home and is just one example of what we can expect for increased costs in 2017 which will make any new home built in 2016 look like a bargain.
 
So here’s my advice for the last quarter of 2017. Buy now before mortgage rates increase and new home prices escalate due to material and labor shortages, pulling resale home values with it.