How YOU can win, even in this crazy Real Estate Market.

So what’s really going on in South Central Alaska’s real estate market? There’s been a lot of buzz over the last several months as to what is exactly going on. I wanted to give you all a breakdown of the market as well as some tips if you are looking to maximize your return in 2022 and take advantage of the changing market. 

Through the unpredictable time that COVID-19 brought over the last 25 months we have experienced a real estate market that 100% of folks in the industry have never seen before. The driving force of this was in spring of 2020 when our global economy was struck with a worldwide pandemic. The pandemic drove interest rates to all time lows making homeownership not only affordable but achievable for many who never imagined it possible. As homeownership became easier and cheaper than it had ever been, housing inventory became low. This is due to the hundreds of thousands that jumped into the real estate market to take advantage of the low interest rates. As the demand became high the supply became lower and lower until we experienced shortages that we had never seen before. Builders couldn’t keep up with the demand to build because so much of the workforce was cut off and it was practically impossible to get building supplies here to Alaska without it taking months and months longer than usual. 

We sailed through 2021 with record low interest rates in the 2’s and low 3’s and since the demand was so great homes continued to appreciate and sell for all time highs. Even though home values rose as much as they did, buyers were securing insanely low interest rates ultimately giving them maximum buying power. This evened out the fast appreciation that many homeowners experienced. 

We knew interest rates wouldn’t stay at those low rates forever and unfortunately as January 2022 came to a close we began seeing them increase steadily to the 4-6% that has become our new normal. Historically if we look at the graphs we are back to the “average” interest rate that we saw through most of the 2000’s.  

What exactly does this rise in interest rates mean and how can you take advantage of it? 

As a seller, what you need to know is that interest rates may continue to rise. 

Ultimately when interest rates rise it makes it more expensive for buyers to buy homes. This means there are many who maybe could have been able to afford to buy your home last year, but this year they may not be able to. I’ve seen many clients who were approved for a particular amount last year and this year the amount they are approved for has significantly decreased. So for example someone who could afford a home at $450,000 may only be able to afford $400,000. 

The reality is, buyers are dropping out of the race and they are going to continue to do so as interest rates continue to rise. The increasing rates and limited inventory have many buyers choosing to wait for a market “cool down.” 

With that being said in some situations and price points we may not see as many buyers in the market meaning less competition and less offers. If you have been thinking about listing your home and cashing out your equity it may be a good idea to do so while the competition is still high. 

As a buyer in this market there is still a lot of hope to be able to secure your home sweet home. Since many buyers are dropping out of the race, the time to shop is NOW. As the competition lessens, take advantage of the “back to normal” interest rates and get in before they rise any more.

We know this market has been shocking for many. If you are looking to take advantage of it and reach your real estate goals in 2022, we would love to help! If you have any questions or if you’d like to know the value of your home please never hesitate to reach out to us! We are here for you!

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