The Hidden Underbelly of Our Red Hot Housing Market

The red hot housing market has pushed its way into the new year.  For January 2021 MLS reports a 41% increase in the number of sales compared to last year’s January plus an average price increase of 12.95%. This past week there were 65 pending sales in Anchorage/Eagle River.  Residential days on the market has dropped to 38 compared to 74  from last year.  Even the often overlooked condo market has had a 26% increase in solds; a 16.59 increase in value and a list to sale ratio of 99.47%.  As a result of this appreciating market, there is little but no negotiation in price in either the condo or single family market.  Buyers  wanting to make less than a full price offer on recently listed property will simply lose out because available single family inventory is now less than one month—an all time record low.   There is always the occasional ‘odd ball’ property on the market due to functional obsolescence, poor maintenance or a challenging location but properly priced even these have only a reasonable time on the market.

But this hot market is just one segment of our local housing for those with secure jobs or savings and who are eligible to buy with historic low rates that benefit move-up buyers, millennials, boomers and everyone in between.  It’s also a great time for sellers wanting to sell an older home or a marginal investment.  There’s nothing that an historic low interest can’t fix –not even the need for a new furnace, an outdated septic system or a new roof.

But what we don’t hear much about is the ‘underbelly’ of the market—the definition of which is a weakness that is not normally seen.  Figuratively, it means a vulnerable or weak party, similar to an Achilles heel. And so here lies our housing underbelly.  The Dept. of Labor and Workforce Development reports that 24,100 fewer Alaskans had jobs in December 2020 compared to December 2019.  And this was before the devastating announcement that thanks to Canada Alaska has lost its cruise ship industry for summer 2021 all the while COVID rages through our seafood industry. 

According to a recent report by KTUU, Clark Halvorsen, the president and CEO of United Way of Anchorage, is having 92 appointments per day with struggling homeowners and renters.  This non profit is able to disburse roughly $300,000 per day in relief.  But more relief is needed.  Then President Donald Trump signed a $900 billion federal COVID-19 relief bill on Dec. 27, 2020 which included $25 billion in relief for renters.  Alaska received $200 million with $35 million going directly to the MOA.  AHFC received roughly $164 million for statewide distribution to qualified recipients.  The money will be paid directly to landlords, property managers and utilities which is different than the prior program.  The goal is to start processing in mid-February which is next week, according to the KTUU report. Renters and property owners should apply who believe they need assistance. The AHFC website with a questionnaire can be found at  www.ahfc.us.

Don’t get me wrong.  I am grateful for all the buyers and sellers who have an opportunity to take advantage of our historic low interest rates.  It feeds my industry and probably many of yours. It is a tremendous opportunity to increase our local home ownership rate and for buyers to enjoy all the social and community benefits of home ownership.  But lets not forget our ‘underbelly’ — those individuals and families who are not yet able to purchase a home of their own. And, also, lets not forget the small multi-family investor/owner who may be forced into foreclosure because their unemployed tenants can no longer afford to pay rent.

Thank you for your many referrals. Please feel free to call me anytime. After all, residential real estate is almost 24/7. Call/text 907-229-2703.