In 2019 the housing market heated up after the Federal Reserve declined to increase interest rates, and in 2020 the momentum is poised to continue, according to mortgage analysts.
Most experts agree that the Federal Reserve will not be stepping in to raise rates any time soon, a move that would surely slow down the market.
The consensus is that the Fed's are likely to remain on the sidelines for six to 12 months, or until there is more data indicating either an economy that's heating up, or an economy weakening.
Among the key housing market predictions for 2020: Nationwide, while house prices are expected to flatten, a mixture of economic growth, high employment and low interest rates should drive demand.
In the Wasilla and Palmer areas of Alaska, a steady stream of inbound residents and good economic conditions have allowed most home values to increased 3-6%, year over year. And, more and more people continue to move to the area or relocate from other parts of Alaska…
Buying and selling trends in this area can be somewhat seasonal, and if you intend to capitalize on the low interest rates and the rising tide of inventory in the Spring, NOW is the time to plan the purchase or sell a home in the Mat-Su Valley!
2019 Home Sales (Palmer Wasilla)
Should You Buy A Home In 2020?
Buying a home is one of the most important financial decisions a person will make. Deciding to buy a home comes down to individual circumstances. Are you starting a family? Do you have a steady job with prospects for advancement? The advice of an independent financial advisor or Mortgage Lender can be helpful.
A key rule of thumb is to keep your debt-to-income ratio as low as possible. Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. To get a mortgage, the Consumer Financial Protection Bureau recommends a total debt-to-income ratio below 43%.
For short term residents, such as Military PCSing to the South Central are of Alaska, another question to ask: Does it make more sense to rent or buy a home in 2020 if I only plan to keep if for a few years?
A key metric to consider in this decision is the price-to-rent ratio, which is the ratio of median home prices to annualized median rent in a given location. As a general rule, ratios ranging from 1 to 15 are low, meaning it's typically better to buy. Ratios from 16 to 20 are moderate, meaning the advantages of buying are less clear. And ratios of 21 and higher mean it is much better to rent.
Ok… so let’s take a hard look at the numbers for the most commonly rented areas by Military Members. We will look at ratios for Palmer and Wasilla as well as in the municipality of Anchorage in the Boniface Parkway to Muldoon road areas and Eagle River.
2019 Adjusted Rents South Central AK
2019 Median Home Prices (Sold Units) South Central AK
The other side if the discussions is long term appreciate that can be seen in a health market if you buy at the right price and sell when the market is doing well. However, we will save that discussion for another day.
A recent trend has been millennials moving out of city apartments to buy homes in the distant suburbs or cheaper parts of the country. We are seeing this same trend in the Mat-Su valley, as individuals are relocating from renting in Anchorage to buy a small home in the Valley for a monthly mortgage amount that actually costs them less than their rent in Anchorage. There are however, some considerations when buying a home that come in the form of up front costs and long term ownership costs.
Also on the checklist for buying a home: having enough money for a deposit, getting preapproved for a loan, and checking your credit score. Make sure that any potential home to buy is somewhere you are willing to live for the long term. If you have or plan to start a family, consider the quality of local schools.
The most important step you can take is to hire a trusted real estate agent. A great Real estate agents will help you find a home to buy that meets your family’s needs. They will also be willing to help you get what is important to you in the transaction. Whether that is negotiating the price down for you of fighting to get you closing cost help.
But remember, it's ultimately your decision as to whether or not its right for you to buy a home... Don’t be sold on the idea by anyone, if you don’t think it’s the right time or decision for your family!
What our clients say about us:
"Sharon strives to be completely in tune with the client's needs, wants and desires. She has a special knack at maintaining patience and providing reason through the stress of home buying. She is smart, articulate, flexible and studied in her craft. We were lucky to have her as an agent"
Author: Nate Shaw
We love what we do!! It is our passion to educate and guide clients through the process of buying selling or investing in South Central Alaska Real Estate.