Predicting the future is always a risky task for columnists and this year, in particular, is fraught with uncertainty, from the state’s economic stalemate and how the potential actions of President Trump may impact inflation and interest rates. Nevertheless, here’s an attempt at local predictions but don’t hold me to them. New home inventory will remain at historic lows whether its single family, duplex or multi-family. There simply isn’t enough housing to meet our population’s needs. Last week, after pending sales, there were only 418 for sale single family homes scattered throughout Anchorage. And most of them, due to their age, have functional and cosmetic obsolescence which will continue to be good news for local remodelers and Home Depots.
I predict interest rates will rise to 5% by the end of 2017, making all home purchases more expensive on a monthly basis and requiring higher income to qualify. This rate hike will have little impact on the upper end of the market where buyers pay cash or exchange stock equity for home equity but it will impact buyers purchasing $500,000 or below valued homes. Homes priced between $300,000 to $500,000 will continue to be the strongest sales but increased inventory will make competitive pricing a reality.
Not only will the interest cost of home ownership increase but so will the cost of utilities. Look for continued rate increases for water/sewer/gas and electric. So turn out your lights and lower your thermostat when no one’s home.
Trending now in new home plans is the double master suite for multi-generational families. These home plans have first floor masters with connecting baths for the grandparents. Anchorage has one of the fastest growing aging boomer population in the U.S. and so that home plan will continue to be popular. So, too, will ranch homes. And surprisingly, they’re not just for boomers. Stairwells are expensive to build and take up valuable floor space. Remember those three-bedroom ranch homes of the 1960’s? They’re back with a craftsman style exterior and five-star energy efficiency.
So here is the bottom line: higher interest rates with a little more inventory due to projected job losses but overall a relatively stable market with neither appreciation or depreciation. Sellers should price competitively to active inventory and not look at past sales, and buyers beware of the risk and costs of aging homes and get a home inspection. More predictions next week after all the stats are in.