By Cora Carleson:
I know you are all curious about the market because of the election coming up, interest rates, and this shortfall in inventory we have right now. So I thought we would go over some stats, as you know, I LOVE STATS! Here is what we are seeing right now.
Rates of course are going to be different by the time you get this, but still vey close to the same. Right now, VA rates are at 2.5% WHAT, yes two point five percent! That’s amazing—simply amazing. This is thru an Alaska Housing Loan program. There, of course, are many different programs out there and rates are generally the same, but the fees you pay are not the same. This is where the difference comes in. Make sure you understand all the fees, what they are for and if they can cut any of those fees, it’s okay to ask!
Here is what was said On Friday, Sept. 18, 2020, “the average rate on a 30-year fixed-rate mortgage remained at 2.977%, the average rate on a 15-year fixed-rate mortgage held steady at 2.541% and the average rate on a 5/1 ARM stayed at 2.969%, according to a NerdWallet survey of mortgage rates published daily by national lenders. A basis point is one one-hundredth of one percent. Rates are expressed as annual percentage rate, or APR. The 30-year fixed-rate mortgage is one basis point higher than it was one week ago and 115 basis points lower than one year ago.”
Now, keep in mind this is average. Rates are different for everyone, because of each individuals circumstances and their credit score. So keep that in mind.
So here is what is happening in our local market. The hottest market seems to be the HOTTEST in the $275,000 to $299,900 price range with 82 active listings, and 56 pending listings but the interesting part is that the homes that sold, sold for 100.2% of the asking price! Yup, sold for more than the asking price! Not but much. Next hot market is $325,000 to 349,900 and they sold for 99.7% of asking price. This shows us that we have a solid market, AND we are short on inventory. Price point $225,000 to $249,900 is number 3 in our inventory check. This one comes at 100.1% of asking price. This is an interesting fact, there are 17 homes listed for sale $800,000 and 4 of those 17, are under contract! Did you know that there were homes in the Valley for over 2 million, there are 2 of them currently for sale.
Now let’s look at another part of the market, months of inventory. Currently on average, there is 1.5 months of inventory. This means that we are definitely in a sellers market. Anything less than 6 months is considered a sellers market, and well here we are—right smack in the middle of a sellers market. How long will it last? Can’t tell you that—because I honestly have no idea. I actually thought it would be over by now and we would start to see some changes in the market but its just not happening yet.
Presidential election: What does this have to do with the real estate market? Well it does because of opinion, perceived instability in the future, and just plain being preoccupied with debates, issues and options. Here is typically what happens during an election year. If the incumbent wins the election, things will usually will be volatile for a few weeks and then stay status quo, only because people don’t perceive big changes happening. If a new president is elected, thing may be volatile (interest rates, buy and selling habits etc) for about 90 days, and then things will usually calm down again once the masses see how the new president is going to be handling things. Now, please don’t misunderstand me, this is what usually happens, I am not suggesting for a moment that this IS how it will happen, this is just historical data. With that said, there is another interesting factor, Alaska is not as effected as the lower 48. I mean obviously, Washington DC may have some major changes to their real estate market if a new president comes in. But the Mat Su Valley is just a little bit unaffected I am sure you would agree.
Here’s another factor that goes with our market and you know exactly what I am going to say…..oil prices. There were a lot of things that happened this spring with oil prices. There was a price war between Russia and OPEC, the pandemic that changed the way people travel and commute which caused weak demand on global oil, not just here in our neck of the woods. Cutting back on production does stabilize prices—but we are stalled out at around $40.00 per barrel. Each time oil creeps up, more producers come on line and then the price drops again. It safe to say that until people start traveling on airplanes and taking cruses, and commuting in their cars—oil prices are going to stay low. Low prices are good for the general public, and Alaska’s economy is much more diverse than it use to be, but mining (and this includes oil) is very large and important sector or our local economy. I am sure everyone knows someone who works in mining or on the North Slope.
So will that this said—how does this effect you? Well we still have a very active market, and we are still low on inventory—probably will be for some times, because we cannot get certain materials or a stable labor force to produce all the homes that are needed to meed the need. Expect us to be in this kind of market for a while. We may see small changes and adjustments in the interest rates, but nothing earth shattering. We will see small adjustments in energy prices, but again—I don’t see anything over the top. I do think that investing in real estate for either your own home or a rental property is good for you and good for the economy. So, with that said, if you have a home that you need to sell, or a something you would like to buy right now, give me a call and we can get this done for you—take advantage of those rates people.