Inventory Shortages Continue in 2022

It’s hard to believe that yesterday there were only 88 single family homes for sale in Anchorage, inclusive of all price points. And that between $475,000 and $525,000 there were only three! Those three included a home built in l960, l961 and l975, prime examples of Anchorage’s aging housing stock. Eagle River faired a little better with 30 active homes and there were 15 actives in the Mat-Su. This confirms what many housing experts are predicting that with the residential land shortage in urban areas, buyers are moving farther and farther out of urban cents. This is particularly true since a recent study found that 32 percent of all home buyers are looking for more outdoor space which is private space, i.e. larger lots, and not shared common open space. Plus, 15% are looking for work from home space and 9% are looking for strong internet, a necessity for working from home.

But Anchorage isn’t the only city with an inventory shortage. This lack of inventory is as widespread nationally as the current omicron virus and with no cure in sight. The rush to purchase is propelled by the fear of rising mortgage rates. A four percent rate increase seems like a given reality in 2022 but for those of us in the industry who thought 6% was a great rate, a 4% is simply a shrug of the shoulders. But for many even a higher rate is not going to slow the stampede for a new home. Unfortunately, inventory crunches construction difficulties will continue to slow new construction. Builders can’t build homes fast enough to keep a balance between supply and demand. Therefore, buyers can continue to expect appreciation but perhaps at a more steady pace, depending on where you live. Last year’s average rate of appreciation was only 6.93% although nationally that rate rose to 18%. Increased prices are making buyers lower their expectations but all buyers are concerned about the age of the home and would prefer to buy newer rather than older due to the continued high cost of remodeling.

How are other markets grappling with this housing pandemic that is creating chaos in the market. Arizona is a favorite vacation or second home market for many Alaskans. One report has builders  spending $5.045 billion for 873 land purchases in Maricopa County which includes Phoenix. With those land grabs, the average new home price in Metro Phoenix of $430,000 may have the opportunity for reasonable appreciation. If only there was land available to purchase in Anchorage! As you know, Anchorage is land locked by mountains, water and the military bases.  Its only option is for higher density.