Now that last year’s numbers are in, the following is my analysis of 2014 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 through 2011 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. We finally broke through in 2012 with an average single-family home sales price increase of 4.8% from $321,958 in 2011 to $337,306 in 2012. In 2013, it went up another 2.9% to $347,242 and up again in 2014 3.2% to $358,456. 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 5% to $309,900. In 2013, it went up another 3% to $320,000. We finished 2014 up 2.8% to $329,000. Median sales price gives us the price wherein the same number of homes sold above that price as below it. In comparing the minor differences in yearly 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 2012-14.
The number of homes listed for sale in 2014 was down 3.8% from 2013 and the number of homes actually sold was down 7.2%. With that said, those homes sold 2% faster at an average sales price increase of $11,214 over 2013. Given our low inventory and fast sales at higher prices, we continue to have a strong single family home market in the Anchorage area price range of $500,000 or less. The $500,000-$750,000 range falls into the normal category, while homes priced at $750,000 and higher are still in a slower, buyer’s market.
2014 continued the positive single family home sales trend we began to see in 2012, giving us strong sales three years in a row. It’ll be interesting to see what 2015 has in store for us. Although we’ve seen a recent significant drop in oil prices, the retail/commercial sector of the Anchorage area market continues to grow.
Today’s rates (as of January 15, 2015) for a conventional 30 year mortgage are currently at 3.625%, up only a quarter percent from two years ago. Rates were moving up in 2013, but have been slowly coming back down throughout 2014. Hopefully, rates will stay where they are, or continue moving down a while longer. When you look at the rate charts below, you get some instant appreciation for current rates. A fixed rate loan guarantees the rate is locked for the life of the loan. If you have a variable rate loan, or wait a while to buy while rates move up…… just a one percent increase means you pay $250 more per month on a $300,000 loan. 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 qualifies a loan in this market, it’s a great time to be looking and buying, due to current rates.
After years of merely limping along, Anchorage area condominium sales took off in 2013. In 2013, the number of condominium sales were up 15.5% over 2012. 2014 sales were up 4.25% over 2013. In 2013, condominiums sold 22% faster than 2012. 2014 continued the momentum with sales averaging 54 days, 12% faster than 2013.
In addition, in 2014 the average condominium sales price was up 1.2% over 2013, ending the year at $205,643. That doesn’t match the 4.2% sales price increase in 2013 over 2012, but sales prices finally jumped out of the $190,000-199,000 range they were hovering in from 2008 to 2012.
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?
We had another great year for Anchorage real estate in 2014. The recent drop in oil prices has created some areas of concern in the local economy, so it will be interesting to see how things play out in 2015. The condition of the Anchorage area and Alaska economies are dependent upon numerous factors, but oil supply/demand/pricing is the most significant. With that said, we continue to have new retailers moving into the area, low rental market vacancy rates and continued new residential and commercial construction within the municipality. Due to our vacant land shortage, we continue to see more and more high density new construction in the form of condominiums, townhouses and multi-story complexes. Long term predictions are difficult to make since there are so many factors over which we have no control, but history tells us that real estate is one of the best long term investments you can make. With a consistently growing population, housing in Alaska and the U.S. in general will continue to 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 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!