What can home buyers and homeowners expect in 2014 in Alaska?
Affordability may be a chief challenge as interest rates continue to climb and inventory may also be limited within Anchorage but generally accessible in the Valley. As interest rates are on the rise, home buyers may be finding themselves in a position to having to settle for lower purchase prices. On the other hand, this can be a great opportunity to homeowners in need of selling but also understanding the effects of the market on pricing.
Lenders on the other hand are seeking more advantageous loan programs for their customers.
Case in point, Alaska USA Mortgage Company has just created a 3% down portfolio home loan with competitive interest rates and mortgage insurance rates.
The Federal Reserve with the appointment of their new chairperson will most likely continue its monetary stimulus. Although conventional wisdom indicates a slowdown in stimulus which will cause interest rates to rise, the new chairperson is also an advocate of more stimulus so this trend may either settle mortgage interest rates at about 5% or even cause a lowering in the 2nd or 3rd quarter of 2014. Remarkably, that’s still historically low!
The rise in rates is also the curtailment of refinancing out of higher-priced mortgages. Although and this may be subject to new regulatory guidelines, we may see the potential of competitive cash-out refinancing from lenders who will continue to aggressively compete for your future business. We should also see a comeback in adjustable-rate mortgages, or ARMs, especially in markets like Alaska where housing turnover is consistently in the 5 to 10 year range, if not less in some cases. Again, as interest rates may continue to rise, ARMs may become an attractive alternative, especially longer term ARMs, with 7 or 10 year fixed rates.
For those of you still in the lower 48 or Hawaii planning your move the Southcentral Alaska, keep in mind Alaska is a different market than the lower 48. Our turnover rate is high due to the large presence of military and government homeowners. These homeowners generally are moved in and moved out of state with regularity. We also have a larger segment of retirees growing each year especially in the Valley.
As our home values can be lower than East and West coast big city areas they are also higher than rural mid west and southern US regions. Some home buyers will breathe a sigh of relief while others may be stuck with sticker shock. The important thing to keep in mind is that it is what it is and for most of you the change will be to one of the best lifestyles anywhere in America.