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Test your knowledge of the local real estate market.

by Connie Yoshimura

Test your knowledge of the local real estate market by answering the following questions.  

If you score more than 75% consider yourself an expert.  You may be surprised at some of the answers which appear at the bottom of this column.

1.      How many single family building permits have been issued YTD 2013?

a.  150    b.  211   c. 304   d. more than 400

2.        This number is a

a.       20% increase from last year   b.  30% increase   b. about the same      c.  10% decrease

3.        Single family sales have increased by what percent in 2013 from 2012?

a.       10%   b.  20%   c. 25%    d. more than 30%

4.       What is the average price of a condo sold in May 2013?

a.        $175,000     b.  $199,000    c. $205,400    d.  $221,478 

5.        The average number of days on the market for single family homes is

a.   30 days     b.  45 days     c. 56  days    d. 75 days

6.    What area in town has had  the greatest increase in homes sold during 2013?

7.    Identify the area of the municipality that has had the greatest increase in condos sold.

8.    For sale single family homes have declined by what percent when compared to 2012.

9.    Has the decline in inventory resulted in an increase or decrease in sales price?

10.   What single family price range has less than a two month supply of inventory?

11.   How many $l million + homes sell per month?


Answers:

1.   146 single family permits were issued as of the end of May.  June should see a sharp increase in permits as the frost was very deep this year and builders have postponed digging foundations.

2.   This is a 20% increase in permits YTD but last year was an historic low so we still have a long way to go to meet the housing needs of our population.

3.   Sales have also increased by approximately 20%.

4.   $205,400 which indicates increasing value.  Year to date average is less at $197,194.

5.    56 days.  This is a 25% decline in days on the market from 2012.

6.    Downtown.  It’s a small market and even a few sales makes for a big increase.

7.    Girdwood!  The second home market is recovering along with the economy.

8.    Approximately 20% decline in inventory.

9.   Interestingly enough, prices have only increased by 1%.  This could be due to our aging housing stock.

10.   Several price ranges have less than a two month supply of inventory including homes from $180,000 to $199,999 which is to be expected.    $225,000 to $249,999 and $300,000 to $349,999 also have less than a two month supply of inventory.

11. They sell at the rate of 0.62 per month.

Interest Rate Increase is More Than a Baby Bump

by Connie Yoshimura

     The big news in the housing market came from Washington, D.C. this week. According to the Federal Housing Finance Agency, interest rates jumped up almost half a percentage point from approximately 3.5 to 4.0 percent for a 30-year fixed rate mortgage, creating a scramble to buy up existing inventory before rates rise even further. The almost half point bump, the largest bump on record within a three-week period, has created significant fears of continued rate increases, propelling buyers who have previously been sitting on the fence to make a purchase now. The .5 point rise diminishes home buying power. For example, a $300,000 mortgage at 3.5 % has a monthly principal and interest payment of $1,347.13 while a 4% rate increases the monthly payment by $85.11 which means that a buyer needs to make an additional four times that amount, or $340, to qualify for the same $300,000 home. If rates increase from 3.5% to 4.5%, the payment will increase by $172.92 which diminishes buying power even more.

     We've known for quite some time that historic low interest rates, the lowest being 3.35% six months ago, can't last forever. Smart buyers buy when prices and rates are low. Unfortunately, most of us never know when the bottom of the market occurs. We only know that in hindsight and so that time has already passed and for those of us who missed it, we can let out a big groan. The lowest 30-year interest rate occurred in December 2012 when the rate was 3.35 and the average sales price in Anchorage was $331,997 for single family homes. The average sales price for April 2013 was $338,065, another creep upward.

     But the price of a home is much less important than the interest rate paid over 30 years. Interest on a fully amortized 30-year loan for $300,000 at 3.5% is $184,968.26. An increase of 0.5% annual interest rate would be an additional $30,640.26 over the lifetime of a loan. That's why it is ridiculous for buyers to quibble over a $1,000 counteroffer or even $10,000. Offers from buyers that fall apart over a few thousand dollars in a seller's counter aren't receiving good advice from their selling realtors and buyers aren't seeing the forest for the trees. An interest rate bump of 1% costs a lot more than a loss of $5,000 in closing costs paid by the seller or a slightly higher sales price. In the long run, a lower rate of interest rules over purchase price every time.

     In the coming months, it might be well worth it to pay to lock or buy down your interest rate, particularly if you're purchasing a new construction home which might be four to six months before completion.

Purchase Price 3.5% 4.0% 4.5% 5.0% Payment Increase
$200,000 $898.09 $954.83 $1,013.37 $1,073.64 $175.55
$300,000 $1,347.13 $1,432.25 $1,520.06 $1,610.46 $263.33
$400,000 $1,796.18 $1,909.66 $2,026.74 $2,147.29 $351.11
$500,000 $2,245.22 $2,387.08 $2,533.43 $2,684.11 $438.88
$600,000 $2,694.27 $2,864.49 $3,040.11 $3,220.93 $526.66

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503
907-646-3600