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Spring Anchorage Housing Update

by Connie Yoshimura

The first four months of this year have demonstrated a remarkable stability in the Anchorage housing market due to a continued lack of single family inventory. The Multiple Listing Service tracks listing and sales data from thirteen geographical areas from Turnagain Arm to Peters Creek and each one has had a decline of single family homes for sale. Overall that decline measured 17% when compared to the same time in 2016. Days on the market were reduced by 23% and sales by 2%.  When compared to the 17% inventory decline, the 2% reduction in sales is meaningless and shows that buyers are continuing to be active in the market. The average sales price remains steady at $360,000 but there is definitely some compromise in value with homes now selling at 98% of list price compared to 99% last year.   

But what these statistics don’t reveal is the buyer demands for home repairs due to our aging housing stock which is suffering from cosmetic and functional obsolescence. What you see on Houzz, Pinterest and HGTV is not what you’ll get in an Anchorage home that is thirty years old, even if it has been remodeled. Many of these demands stem from home inspectors who offer recommendations beyond health and safety requirements. These ‘recommendations’ can cost sellers several thousand dollars if they want to continue with the purchase and sale contract. Buyers, in particular, millennials, who generally lack funds for closing costs, are also asking for seller paid closing costs up to $10,000. Repairs, seller paid closing costs and the 1% decline in sales vs. asking price indicates a softening of values but not lack of sales. Buyers are actively looking and buying but want concessions. These concessions are hidden costs to sellers and are not reflective in the market data.     

One of the slower times of year for real estate sales is between now and the middle of July.  Buyers and sellers are busy with graduations, vacations, visiting family and friends, and enjoying the long summer days but the smart buyer will tear themselves away from all the sun filled outdoor activities and go home shopping. Mortgage interest rates bumped up an eighth of a percent last week and although it is anybody’s guess, I’m betting they will continue to creep up which increases the cost of any home financed purchase. Builders are expecting a 15% to 20% increase in lumber prices as a result of the tariff put on the import of Canadian soft lumber. Local residential building activity remains at record low permits and is likely to continue at that snail’s pace through the end of the year. However, lack of inventory is still the determining factor in the stability of the local housing market. As of last week, Anchorage had two hundred fewer single family homes for sale than a year ago at this same time.

Anchorage Housing Market Separation: Price Point and Location

by Connie Yoshimura

What’s happening in the Anchorage housing market depends on where you’re looking and what price point. For despite the increase in available homes (current inventory last week after pending sales was 722 compared to 454 for the same week in 2016  according to MLS), some geographical areas have actually had a significant decline on days on the market, indicating there is still a substantial unmet need, particularly under $400,000. One question that is frequently asked to realtors is ‘How long will it take to sell my home?’ and recent MLS statistics indicate a strong market in certain geographical locations. For example, Spenard has had a 31 percent decline in days on the market; Dearmoun Rd to Potter Marsh a 33 percent decline; Abbott Road to Dearmoun Road a 21 percent decline and Seward to Boniface Pkwy a 21 per cent decline. Not including condos or mobile homes but including Chugiak/Eagle River, the overall days on the market has declined six percent from this same time last year to an average of 56 days.

Not unlike the political firestorm whirling around us today, our market is fractured and it is impossible to simply categorize it in general terms. A recent full page colored ad in the Alaska Dispatch News made reference to the 1980’s when homeowners dropped off their keys at local lenders and left town. That sort of rhetoric is irresponsible and could not be farther from the truth regarding our local housing market. There is nothing statistically to indicate the Anchorage housing market is on a precipice of unmitigated disaster.

Our current inventory of available homes is comparable to that of 2010 and 2011 while at the same time our population has increased over the past five years. Over the past five years inventory of available new homes has fallen due over regulation for subdivision development and most recently to snags in building permits created by the implementation of the new Title 21 while at the same time ‘like new’ homes in certain southeast communities owned by relocation companies are competitively priced to move quickly, sometimes as much as a 15 percent disconnect between new and a relocation property. Traditionally, this time of year, military move outs are frequent but any reduction in forces is on an indefinite hold. The inventory in the Eagle River and East Anchorage housing market, affected most by JBER rotations, will tighten up as we move into fall.   

A realistic assessment of value is now the key to a reasonable time on the Anchorage housing market and successful sale. Sellers need to take a long hard look at not what has sold in the past six months but what their competition is today. Then, be prepared to do some negotiating. Simply put, homes that lack showings are over-priced because we still have homes coming on the market that sell within a week, particularly in the most desirable locations.

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503