Real estate update:
Time to buy or sell?

Story by Tosha Kelly

With all the horror stories coming from down south, you may be wondering if 2011 will be a good time to buy or sell a home. Fortunately, we have dodged the economic bullet in that Alaska real estate is still a fabulous investment, says Eva Loken, associate broker at Prudential Vista Real Estate, Inc. "We haven't lost a lot of value, and inventory and sales are about the same. We are lucky in Alaska, so far."

Both mortgage rates and home values are stable, says Jeff Stanford, assistant vice president and senior mortgage loan originator at Alaska USA Mortgage Company. The economy isn't booming, he says, "but we're not in a bust yet."

Many experts had predicted a rise in interest rates that really never materialized. Interest rates remain in the four to five percent range, and it's been that way for a while, says Sue Benedetti, vice president of home loans at First National Bank of Alaska. "Where rates are going, I would not venture to guess. I don't think they'll go substantially lower than what they are right now."

According to Stanford, the federal government has pledged up to 600 billion in mortgage back securities to help stabilize and keep rates low.

One of the biggest differences between Alaska and the Lower 48 is that we have not experienced a crash in home values. "As far as the property value," Stanford says, "we are maintaining better than anywhere else in the US. It's still a great time to buy, but keep in mind that homes aren't appreciating like they were. You won't be making 10 percent equity in your property in a year."

Home values remain steady, but condos are dropping, says Loken. And, newer homes are holding their value better than the older homes. There has been a drop in upper end homes (above $750,000). Lower and mid-priced homes are stable, but taking a bit longer to sell. "People are sitting on their money because they don't know what's going to happen in the national economy. Consumer confidence is low."

For sellers, the downside is that you might get full asking price, but you'll be asked to pay a lot in closing costs. "If you don't have enough equity to pay $3,000 to $5,000 of the buyer's closing costs, then it may be tough to sell even if you get full price," says Loken.

Loken also says that problems can arise when people come up from the Lower 48 and expect sellers to sell at any price. "The buyers need to recognize that Alaska, luckily, is not in the slump the way other states are. They're not going to get the same kind of fabulous price that you'll find in someplace like Arizona."

Stanford, Loken and Benedetti all agree that until we know what Congress is going to do, the market could get better or much worse. If Congress is going to eliminate the mortgage interest tax deduction they are "going to do harm to a very fragile housing market," says Benedetti.

"If they come up with something that will give people confidence, then we'll probably just keep chugging along the way we are," says Loken. "Everything relies on what they do in Congress and DC, and that's a scary proposition."

The National Association of Home Builders recently launched a website dedicated to preserving the mortgage interest deduction and protecting homeownership. Visit SaveMyMortgageInterestDeduction.com for more information.