Are Anchorage Home Values Stalled?

And the answer is no due to a continuing depletion of available homes for sale. Whether that stall floats along for the remainder of the year or dips downward depends not so much on  mortgage interest rates but available inventory. So, unless Anchorage has a tremendous exodus of homeowners to the Mat-Su or the lower 48, there is no downward spiral of values in the foreseeable future. Multiple offers continue to plague well-qualified buyers. As of yesterday, there were only 149 single family homes for sale whereas our thirteen month average was 212. Once again, we have less than a month supply of single family homes for sale with a population of approximately 292,000. And, unfortunately, we are not able to build our way out of our depleting and aging housing stock. There is no easy solution to this dilemma. April 2023 building permits were  only 19 compared to 22 in 2022. A handful of duplexes have been built since the first of the year but multi-family has declined by 112 units since the same time as last year.

In the resale market, many homeowners are hanging onto their refinanced mortgage rate as low as 2.5%  made available during our COVID years. The lingering effects  of long COVID is not just related to an individual’s health but to our economic health as well, particularly as it relates to housing. Homeowners fortunate enough to purchase or refinance during that time are now refreshing their homes by painting and replacing flooring.  Some are even spending that $30,000 plus for a new kitchen and remodeling their bathrooms. The last three years would have been a good time to purchase Lowe’s or Home Depot’s stock.  And it still may be with Anchorage’s median age for a home of 42 years. We can’t build new homes fast enough and there’s no decline in costs due in part to the doubling  of commercial interest rates. Builders are looking for pre sales—the sure thing in residential new construction with non-refundable notice to proceed funds as high as 7 to 10%, albeit is contributed to the down payment at closing which may take eight to a year to complete.  Buyers continue to have offer fatigue after losing out time and time again to cash buyers who fix up aging properties and then flip them to long awaited and frustrated buyers. 

Last week, I received three inquiries asking if now is a good time to sell their home. It is interesting to know that for the first time since 2017, MLS has reported a 1.24% decline in the average sold price. Anchorage and Alaska has weathered many market shifts due to events beyond our control. I remember when oil was $9 per barrel; the 2018 earthquake; the Valdez Oil Spill; the change in the passive income tax laws. We’ve shuddered through many economic challenges but never such a lack of inventory.

Any decision to sell a home depends in part to personal circumstances which include marriage, birth, death and job change. In almost every decision to sell the family home there choice there is a personal reason. A good location can always get you top dollar. Remodeled kitchens and bathrooms add value. Refreshing a home with new flooring and paint has become a necessity thanks to Pinterest. Homes that are 42 years old have gone beyond their economic prime, so to speak. Every year they continue to lose more economic life.  They will need a new roof, a new furnace to say nothing about the ten year old water heater that needs to be replaced. They, like refrigerators, are no longer built to last. But don’t misunderstand me, I believe all single family homes have value, regardless of their age or location. Lack of inventory and the high cost of new construction which is not declining due to high transportation costs. Anchorage imports every single nail in a new home. 

 There is never a guarantee of appreciation but lack of inventory is as good a guarantee as it gets.

As always, thank you for your many referrals. If you would like to talk more about the summer real estate market feel free to give me a call/text at 907-229-2703.