While Alaskans "hunker down" and observe social distancing, the real estate market is going to slow. With business disruptions having a domino effect on incomes and the economy, a number of buyers and sellers will likely wait things out.
For Alaskan home buyers moving forward with their plans, there are 3 emerging trends to be aware of:
1. Mortgage lenders are beefing up credit quality. Higher credit scores, larger down payments and low debt-to-income ratios are being sought. Jumbo mortgages are seeing higher cash reserve requirements.
2. If sellers postpone their sales plans, home inventory could become very limited. As of early March 2020, the Anchorage area had just under 2 months of supply in price ranges under $350,000.
3. On the upside, mortgage interest rates should remain very low for a while.
Today I had the opportunity to attend the annual Yukon Title Company Economic Update. For the past several years, they have brought up Ted C. Jones, PhD to give an economic forecast to the local real estate industry. Ted is the Chief Economist for Stewart Title Guaranty Company, and always gives a fun and informative presentation. This year was no exception. Here are a few of the points that stuck with me:
The national economic update is looking a little bleak. I knew the national debt was huge, but Ted really put into perspective for me. What especially struck home was the point that the sequestration that's designed to cut government spending is only 2.2% of our total spending. That's barely a drop in the bucket! Likewise, one of the big questions in real estate right now is what will happen with capital gains taxes. Ted's not sure, but the President's recommended 35% is HUGE! And, will certainly have a big impact in the real estate industry.