Anchorage Versus Alaska

Published in Anchorage Daily News – 9.06.2023

There is one thing about the residential real estate market that you can always count on. And that is it’s NEVER boring! Every buyer, every seller, every home is unique. Every situation whether it is related to marriage, birth, death, divorce, or job change is also unique. However, combining all those factors into statistics can usually give us a bird’s eye view of the market.

The August 2023 Anchorage number of single-family homes for sale was only 331 units. That number was more than two-thirds less than the pre-pandemic August 2018 inventory. Anchorage values have followed the national trend of a 25% increase in values with the average sales price topping out at $500,737 in August. The year-to-date average sales price is $480,908 but values have seasonal fluctuation primarily as a result of new construction activities, so a better judge of the market is comparing date to date rather than year to date averages. But the real dilemma is that not only is there a lack of inventory in general but that 50% of all active inventory is ABOVE the $489,577 average YTD closed value.

Anchorage feels like it is becoming a haven for the very wealthy. There are currently 34 homes for sale above $1 million and of those 15 are above $1.5. Many of these are older homes located on the bluff, Campbell Lake or on the hillside with unobstructed inlet views. You might be surprised to know that 23% of all Alaskans own their home free and clear. Many of these million dollars plus homes fall into this category. However, Fannie Mae has increased their Alaska single family loan limits to $1,089,300. Although there are not many buyers willing to pay a mortgage rate of over 7% for a million-dollar mortgage.

Anchorage MLS has 13 MLS districts ranging from downtown Anchorage to Girdwood to Peters Creek. Take a guess as to what district has not reported a decline in closed sales? The answer is none. But all housing is costing more. As of March 2023, two-bedroom apartment rents plus all utilities have had an average increase in Anchorage of 5%. Our neighbor to the North, the Mat-Su Borough, had an average increase of 9%. Actually, I am not surprised by these increases. Landlords have no choice but to increase their rates due to increased maintenance costs for aging properties, property taxes, utilities, and increased insurance costs yet to come our way due to our preponderance for earthquakes.

So, all homes, regardless of whether they are for sale or rent, will continue to cost more if we have a lack of inventory which begs the question as to where Alaskans are going to live in the future. The Kenai Borough, the Mat-Su Borough, all have housing options that cost less than the Municipality of Anchorage. I once had an Anchorage mayor tell me that a city is defined by its commercial buildings. That’s what people see, he said, not subdivisions. I remember being awestruck by the glistening office towers in Beijing but when you turned the corner the alleys were full of century old huts without water and sewer and skinny rickshaw drivers begging for a ride. And I once had a planning director tell me he/she didn’t care if everyone moved to the Valley. As if that’s where they belonged…. If they couldn’t afford to live in Anchorage.