Now that the numbers are in, the following is my analysis of 2012 Anchorage area real estate market activity. The charts and data used in this publication are copyrighted by AK MLS, Inc. No portion may be reproduced, redistributed or retransmitted without the express permission of AK MLS, Inc. Further, AK MLS, Inc. does not warrant the accuracy of the information or data contained herein.
A. Residential Single-Family Homes
History: The Anchorage area real estate market appreciated strongly from 2001 through 2007, during which we saw the average single-family sales price increase 58%. However, from 2007 to 2012 we saw price stagnation in the low to middle price ranges (up to $400,000) and depreciation in the upper ranges (above $500,000). The $400,000 to $500,000 range was a mixed bag.
Present: As we look back at 2012, it is readily apparent that we finally broke through with an average single-family home sales price increase from $321,958 in 2011 to $337,387 in 2012. This was a 4.79% upswing. The median sales price actually gives a truer picture of market activity. 2010 and 2011 single-family home sales had exactly the same median sales price at $295,000, while in 2012 it jumped to $309,900. The 2012 5% median increase closely matches its’ 4.79% average increase. Median sales price tells us the price wherein the same number of homes sold above that price as below it. In comparing the minor difference in 2012 average sales price to median sales price, it tells us that the majority of single-family homes sold for less than the average sales price and a few ‘million dollar plus’ sales boosted the average sales price. This helps to confirm the fact that Anchorage really made some positive sales and property value progress in 2012.
Take a look at the following positive results: 1. Beginning in May, 2012 the number of Anchorage area single-family homes for sale at the end of each month was less than the corresponding month for every previous year, all the way back to 2005. 2. Average single-family “homes for sale inventory” in 2012 was down 20% from 2011. 3. The number of single-family homes listed in the MLS that actually sold in 2012 was greater than every year back ’til 2007. 4. The number of homes sold in 2012 was up 11.9% over 2011 and sold approximately 16% faster. Therefore, with inventory down 20%, the number of homes sold up 11.9%, average and median sales prices up 4.79% and 5% respectively, we had a great year!
If I were to make a broad statement about the Anchorage area market for single-family homes, I would say the following: Statistics tell us that we have a very good market for single-family homes under $400,000 (currently less than four months inventory in most of that range), and a buyer’s market above $750,000. The $400,000 to $500,000 range is not too far from the ‘under $400,000’ range. $500,000 to $750,000 can be a real mix, still leaning toward a buyer’s market. Above $750,000, it’s a buyer’s market.
So, the question is: What’s been driving this recent upswing? Mortgage interest rates are a primary factor, along with increasing consumer confidence. Current 30 year mortgage rates are in the incredible 3.375% range…..very near historical lows. When you look at the rate charts below, you get some instant appreciation for current rates. With that said, loans are more difficult to qualify for now than they were just a couple of years ago. If you are a buyer who can get a loan in this market, it’s a great time to be looking. I keep saying that there’s no telling how long the current great interest rates are going to last! I said it last year and the year before, but I have to say it again because….remember not too long ago when rates were at 6% and we thought that was great? It’s not if…..but when, that day will return. Remember this: The monthly principal and interest payment on a $250,000 mortgage (6% interest, 30 year) is $1,498.99. At 3.5%, that same payment will get you a 30 year, $334,000 mortgage. The monthly principal and interest payment on a $400,000 mortgage (6% interest, 30 year) is $2,398.20. At 3.5%, that same payment will get you a 30 year, $534,000 mortgage. Remember that you’ll typically have a reserve account payment for property taxes and homeowner’s insurance along with a mortgage insurance premium (if you put less than 20% down) in addition to the above. Current rates make a significant difference in what you can afford!
Anchorage area condominium sales continue to limp along. On a positive note, the number of condominiums sold in 2012 is up 8.1% over 2011. With that said, per MLS statistics, 2011 condominium sales were the lowest in over a decade.
The average condominium sales price in 2012 was $195,364, down 1.76% from 2011. Per the chart below, you can see that average sales prices have been bouncing around in the $190,000-199,000 range for the past five years.
Condominium sales vary considerably from complex to complex. Sales success rates are very dependent upon available financing, i.e., is the complex FHA, VA and/or AHFC approved? Is the association well-managed with reasonable dues and adequate reserves for future capital expenditures such as roof replacement? Is the complex in a reasonable location and make for a nice neighborhood? Is it new, newer or old construction? Is it apartment style, attached, detached, covered parking, garage, etc?
What does the future hold for our local real estate market? I believe that 2013 will look a lot like 2012. This prediction however, depends on the continuation of low mortgage interest rates. Longer term predictions are difficult to make since there are so many factors over which we have no control, but history tells us over the long-term that real estate is one of the best investments you can make. With a consistently growing population, housing in Alaska and the U.S. in general will be in demand. Baby boomers may be downsizing, but younger generations are looking to upsize. Tastes will change, housing will change, etc., etc., but the overall demand will be there. The condition of the Anchorage area and Alaska economies are dependent upon numerous factors, but in general, economic experts view the future with a positive outlook, predicting growth in several areas. The Municipality of Anchorage is a rather diverse market with significant differences in various areas and price ranges. As always, ‘location, condition and price’ have a significant bearing on how quickly a home sells! Not to mention…..make sure you have a good and caring Realtor!
The following are links to previous Anchorage Area Real Estate Market Activity Reports:
Anchorage Area: Mid-Year 2012 (14 page PDF format will open in separate window)