If you're looking for a first home in Anchorage, you have a wealth of options to choose from. Prospective first-time buyers in particular may be wondering whether to make the jump into homeownership or to try renting a house first. Luckily, Anchorage does have a variety of great entry-level or "starter" homes for those needing an affordable place to begin their journey as an owner. In addition, the downtown area is seeing an uptick in low-maintenance condo options which are perfect for busy professionals and young couples who may not have the time for a fixer-upper or a property requiring lots of yardwork. But this abundance of options doesn't mean that renting is out of the question either; sometimes it's better to wait and rent a little longer before committing to a mortgage.
Here's are three reasons to consider when trying to decide if you should rent or buy in Anchorage, AK:
The Anchorage Housing Market
The first thing you should consider is the rising cost of rents in Anchorage. According to RentJungle.com, the average cost of a one and two bedroom unit right now is around $1,083 per month, and Zillow is reporting that the average rental price for a single-family home is closer to $1,650.
You can find a solid turn-key condo or townhome for around $150,000, and detached single-family homes typically start around $190,000. Let's assume that you you're interested in buying an Anchorage condo for $150,000. If you have some money saved up, say, enough for a 10% down payment, and get a loan with a 4.25 percent interest rate, your total monthly payment could be around $900 per month, which includes your property tax. Not only is this less than the average monthly rent for a one-bedroom unit, but you'll be building your own equity too as opposed to building someone else's.
Choosing Your Type Of Home
Some home buyers, particularly eager first-timers, opt for a starter home that's not quite up to standard yet. A fixer-upper is a romantic notion; plenty of people love the idea of buying a shabby home and then revamping it to its full potential by hand. But this can be quite costly, especially if you budget conservatively. This is where buying a new construction home is especially valuable, especially if you can take advantage of a VA loan (or something similar) to help you finance your goal of home ownership.
It's no secret that condominiums and townhomes are usually more affordable than a single-family home. It may not always have been your dream to buy a condo, but there are several great reasons for doing so. First, if you can't afford a single-family home right now but a condo is in your price range, it could be a wise financial decision to invest in the condo now, rather than renting for the next few years. This will allow you to build the equity you need to move into something different in a few years, or keep it to use as a rental property after you move out.
Be Aware Of Homebuying Costs
Initially, buying a home can rack up new costs that you haven't had to deal with as a renter, but it can be a more lucrative option in the long run. It offers tax incentives, payments go to your mortgage, and homes in Anchorage have appreciated slowly but surely. Of course, there are things like repair costs, emergency funds, property taxes, insurance, and many more hidden expenditures are first-time buyers often don't expect. That being said, a good Realtor® puts your needs first before their commission. They'll let you know about hidden expenses before you even start looking at homes and keep you informed about the buying process from your very first meeting until you receive the keys to your new home.
If you're curious about whether it's more worthwhile to invest in real estate now or hold off for a few more years, we'd be happy to provide you with the data you need to make an informed decision. Send us a message or give us a call at 907-240-2804 for more information about the Anchorage real estate market.