Stability Factors in our Housing Market

Anchorage isn’t the only city that’s suffering from a lack of housing.  According to the Department of Labor’s ‘Market Trends’ report published in May, the 2,100 new housing units built stateside represented a 12.5% decline from the year before.  Anchorage’s new units declined more than in other areas.  Only 423 new units were built in 2016 compared to 850 the year before.  These numbers represent single family, duplexes and multi-family units.  The increase and decrease of these numbers can be attributed to multi-family starts which are generally low income and subsided housing units.
 
The low new construction starts has created stability in our market with continued low inventory of available homes for sale or rent.  There are approximately 92,000 rental housing units statewide, or about one third of our housing inventory.  Rents have stabilized with only a one per cent increase in Anchorage.  The average two bedroom apartment rents for $1,238 plus utilities.  That’s a statewide average with a vacancy factor of 5.8 percent.  Single family homes can rent for as much as $4,800 in Anchorage.
 
Another factor contributing to our stable housing market is the lack of Alaska foreclosures which was less than one percent in 2016 (0.60) compared to the national average of 1.53, despite Alaska’s job losses the past two years.  Low interest rates are also contributing to the stability of our local and statewide housing market.  Although projected to increase in 2017, they have remained stable at 4% for a 30 year fixed rate.    Many buyers are putting 20% down to avoid mortgage insurance and there are a surprising number of cash buyers in the market. Due to the lack of rental housing, many move-up buyers are considering renting out their existing home rather than selling it.  
 
Every housing market has its nuances but this market is particularly steady in value and sales despite the gridlock over our state budget crisis and the pink slips filtering through  our work force.  From a housing perspective, it appears our citizens have more faith in Alaska’s economy than its elected state officials.