The First Quarter Was Good for Real Estate

The Anchorage real estate market is holding steady, despite a bump in residential inventory for the first quarter of this year. Sales volume jumped from $167 million to just over $189 million, a 13% increase in volume. However, to accomplish an agreed transaction, there is a little bit more negotiation with homes now selling 1.5% below an adjusted list price. And MLS reports an almost 5% reduction during the past six months from the original list price to the final price. These adjusted sales prices also do not take into consideration closing costs which is an increasingly popular buyer request. These statistics indicate an active buyer’s market, but sellers need to price right and be prepared for some negotiation. Increased inventory is occurring above $500,000 and there is currently a 21 month supply of homes between $750,000 and $999,000. Overall, however, there is only a 2.43 month supply of homes for sale in Anchorage and in Eagle River that supply is 2.6 months.

The average sales price continues to hover around $350,000 where homes in good condition can still expect multiple offers. Eagle River had 81 sales the first quarter, more than any other area. It’s popularity is due in large part to its close proximity to Alaska’s scenic beauty. Other areas where increased sales occurred over last year include Abbott/Dearmoun Road and Boniface/Muldoon. The latter area has a significant number of moderately priced single family homes.

Unfortunately, new construction is not benefitting from this increase in buyer activity. Single family permits are actually down from last year’s first quarter which had 52 new permits issued compared to only 43 this year. Duplex permits were exactly the same at 26. The big increase in residential permits came in the multi-family category, an increase of 50 units to 148. The multi-family category can be either for rent or sale. Combining residential, multi-family and commercial first quarter construction activity was down $55 million, $120 million compared to $177+million last year for the first quarter. So far this year, Spinell and Hultquist Homes each have permitted seven single family homes. Spinell has also permitted 14 duplex units and Petersen six. Not much activity for a community of 300,000.

Residential alteration or remodeling continues to increase with 142 permits compared to 122 last year. Elevator permits, which are counted separate, have had a light increase to 31 for the first quarter. As our population ages and baby boomers decide to age in place, many are opting to remodel which includes an elevator.

Low interest rates continue to spur buyer activity with many buyers deciding now is the time to buy before mortgage rates go up late summer or fall. Despite the concerns over Alaska’s economic future, the need for a new home persists due to marriage, birth, death, divorce and job change. Our population growth the past few years has been as a result of births, and the demand to move up to a larger home with more bedrooms is a common reason to make a move in today’s market. That need is not going to change regardless of interest rates or lack of inventory.