Published in Anchorage Daily News on 10.24.2023
In 1970 the mortgage interest rate was 7.5%. In l984, it was 18%. In l990, it hovered at 10%. In 2022, it began a downward trend and in 2015, it was around 4.5%. Covid hit and rates dropped to less than 3% if you were lucky enough to purchase on a particular day. Today’s rate is 7% plus, according to an online public chart, Freddie Mac, government sponsored mortgage investor. Now, we need to forget that historic COVID rate. We are living with many of the residual effects of covid and the worse thing we can do is look backward instead of forward. Today’s mortgage rate range of 7% is an historically good rate. People buy and sell regardless of the mortgage rate. Buyers are constantly making adjustments to their housing needs whether real or perceived based upon affordability and available inventory. The dual living areas on the same first floor went out in the early 2000’s. The breakfast nook was replaced with an eight-foot island used not just for a cooktop or a sink but as a family gathering place at the end of the school and workday. If living space has downsized the garage has grown from a double to a triple to include a heated RV space. Everyone wants more leisure and recreational time. COVID taught us to spend more time with family, friends and personal reflection. Changes in housing styles and size reflect this new mind set.
America’s aging boomers are selling their 4,000 plus sqft family homes and moving into condos with elevators and heated underground garages and with an easy exit to walk their family goldendoodle because we maybe can give up that extra sofa or anniversary china but not our beloved canine companions. Downsizing takes emotional energy as well as physical strength. Thousands of decisions need to be made about what to keep, what to give away to family, friends, or the Salvation Army. The condo market in Anchorage has jumped almost 25% in value the past couple years. But with an average price at $270,992 it remains the best buy in the market for either the first-time home buyer or the downsizer.
Young families are losing opportunities due to interest rates, rising homeowners’ insurance, high property taxes and lack of inventory. I wish I could tell you how many Anchorage residential building permits have been pulled YTD but the last report the MOA published was in April. I can tell you that MEA in the Mat-Su had 1,200 connects the vast majority of which were residential and not commercial. Frustrated home buyers in the entry to middle range need to be careful in their home selection. There remains a significant shortage. Yesterday, there was less than a one month supply of homes in all price points from $200,000 to $499,999 while the average MLS sale price is $490,810. Anchorage’s median age of a home is 42 years. Many are losing their economic life without proper maintenance. Flippers have become a common element in today’s home for sale market. What buyers need to understand is that new carpet, new paint, even new countertops, and cabinets may hide worn out or obsolete electrical or other non conforming current building code requirements. In the early l980’s there were several subdivisions built with wood foundations that are now past their economic life. Any remodeling over $10,000 should have a building permit but that rarely happens unless a next-door neighbor complains about the remodeling noise. One question buyers should always ask “Has this home been remodeled by a licensed, bonded and currently insured general contractor?”