Cora Carleson.....................4

Hey Cora! Could you possibly predict the future for me and let me know what to expect with interest rates, housing prices and anything else I will need for investing in real estate this year? Signed, Futurist

Dear Futurist, hmmm… Well, that will be hard to do especially since I have no superpowers at all! But I can share with you what I have been reading and what the experts (if there really is such a thing) are saying about 2023 housing market.

Interest Rates: Many people feel that rates will continue to climb if inflation climbs. The Federal Reserve raises interest rates to slow down inflation – so watch what is happening with inflation and that will be a clue as to what rates are going to do. I personally feel that rates will drop again around the end of January to about 5.5%. But I have no magic 8 Ball, this is just what I am seeing.

Home Values – Up or Down: What I read is from all over the US. And our Alaskan market is nothing like other markets. Let me elaborate a little bit… We do not have an over abundance of housing. In fact, we are short on housing. As rates climb, it makes it more difficult for builders to borrow money to build speculatively (building before they have a buyer and speculating on selling the home for a profit when it’s completed). The problem for builders is that when rates are 5% over prime, they could be paying 8 or 9% interest on their construction loan. This will greatly impact their ability to make a profit if the house has to stay on the market for a couple months once it’s completed. In turn, this means builders will opt to wait until they have a buyer lined up and under contract before they begin construction. Now let’s say we have a buyer lined up ready to go and now the builder can begin construction but closing on this new build will likely be at least 6 months

or more when the home is completed. No big deal, right? Wrong… Recently, we have seen where rates have increased over 3% during a 6-month period. Why is this so bad? Because if rates go up while the home is under construction, the buyers MAY not be able to afford the home once it’s completed! This is what unstable interest rates do to an economy. Now, we, here in Alaska, have a relatively small market compared to San Diego or Las Vegas, but it puts a damper on those builders who what to venture out and build something before it’s sold. If we take these factors under consideration, then we have demand on new construction, but trepiExperience dation because of unstable interest rates... it’s a conundrum for sure.

Matters! Because of this factor, I don’t think that we will have a decrease in property values like in other parts of the US. We are a small market and if new builds continue to slow here, demand will rise. I do not see a decrease in home prices, I see it slowing down and not increasing as fast as it has in the last 24 months, but... Real Estate Investing: I know, you just want to find out if now is a good time or not. Well, I dropped my crystal ball the other day in an elevator and, unfortunately, it shattered, right there on the 13th floor! So, until my new one gets here from Amazon, I will have to go on what I have been reading. Buying for investment doesn’t have anything to do with the market, it has to do with where you are financially. Here are some questions to ask yourself: Do you have enough money saved? At what point will the property make a profit? How long will it take for you to reimburse yourself for your initial investment. In short, if property values are up – rents are up. So, do the math… or have your friendly realtor do it for you! The goal is for the investment to pay for itself. There are always good investments out there, you just have to find them.

Call Cora Today!

Keller Williams Realty Alaska Group Of Wasilla 621 S Knik-Goose Bay Rd Wasilla, AK 99654

www.clcandassoc.com 907.982.5700