A buyer's market: though interest rates are rising, there are still plenty of reasons to invest in the Alaska housing market.

AuthorBonham, Nicole A.

Graced by the advantage of unusually low interest rates the past several years, the real estate industry nationwide-and corresponding lenders--have burned the midnight oil to keep up with demand.

Now, with rates rising again--if relatively slowly--what impact does that have for buyers and sellers and those in between? Also, at the start of a new year, what's ahead for investors, first-time buyers, and those looking to move up? Brokers and agents from around the state check in with their opinions and in-the-trenches perspective.

SLOWING EVIDENT

Already, as residents here and throughout the nation adjust to the increasing interest rates, the impact is evident of a minor slowing in the race to snap up bargain deals. Industry watchers predict some moderation in the coming year, with economic indicators suggesting the boom that came from the lowest interest rates in several decades is slowly correcting itself.

Mike Race, the owner/broker of Juneau-based Coldwell Banker Race Realty, reports sales up in 2003 compared to the previous year. "Up 55 percent," he says. "We have done well, with great attitudes."

This despite Juneau having among the state's highest costs for new construction of single-family housing, according to Alaska Housing Finance Corp. For second quarter 2003, AHFC reports the average sales price of a newly constructed home at $342,044, with an existing home costing an average $211,896.

"Rates may climb or stay the same," Race predicts for 2004. It's undeniable, however, that whatever happens, rate fluctuation does have a measurable impact. "Low interest gives a purchaser more purchase power, more bang for the buck," Race says. "Real estate buyers and sellers find the appraisers busy with re-financing, which slows the process for home purchases."

The Juneau Realtor applies quantitative logic to the impact property sales have on the local economy.

"About 20 percent of a purchase price goes back into the community, stimulating economic growth, buying paint, carpet and furniture," he suggests.

Dave Somers, owner/broker of Fairbanks-based Somers & Associates, also reports positive figures for 2003 with strong potential to continue this year.

"The market (in 2003), compared to the previous year, is slightly improved," Somers says. "Still a strong seller's market for anyone who has a nice, clean house in good repair." House prices are up in all categories, with some indication that will continue, he predicts. There is a strong buyers' demand. "We have plenty of buyers and not so many houses."

The average cost for an existing house in Fairbanks during the second quarter last year was $176,467, according to AHFC, with new construction costing an average $208,786. By the end of the second quarter 2003, AHFC listed 1,150 single-family loans and 27...

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