As of January 8th…..2015 local real estate sales data has been compiled and released by the Alaska MLS. As a result, the following is my analysis of last year’s Anchorage area real estate market activity:
A. Residential Single-Family Homes
21st Century History: The Anchorage area real estate market appreciated strongly from the beginning of 2000 through 2007. During that time, we saw an average single-family sales price increase of over 86%, from $175,590 to $327,070. However, from 2008 through 2011, the market was quite timid and moved down slightly with an average single-family sales price reduction of 1.6% to $321,958. We saw price stagnation in the low to middle price ranges (up to $400,000) and depreciation in the upper ranges (above $500,000). We finally broke through again in 2012 with moderate, but steady sales price increases since then in the low to mid-range price (up to $500,000). We ended 2015 with an average single-family home sales price of $366,585. This was a 2.27% increase for the year, and a 13.9% increase over the past four years.
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 it jumped 5% to $309,900 in 2012. In 2013, it went up another 3% to $320,000. 2014 was up 2.8% to $329,000 and we finished 2015 up 1.8% at $335,000. Median sales price gives us the price wherein the same number of homes sold above that price as below it. In comparing the minor annual percentage differentials between average sales price and 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 has made some positive sales and property value progress in the past four years.
The number of single family homes listed for sale in 2015 was up 5.3% over 2014. The number of homes actually sold was up 6.3% over 2014. In addition, single family homes in 2015 sold 2% faster than they did in 2014 with an average sales price increase of $8,129 over 2014. That compares to 2014, in which the number of single family homes listed for sale was down 3.8% from 2013 and the number of homes actually sold was down 7.2%. With that said, in 2014 those homes sold 2% faster at an average sales price increase of $11,214 over 2013. As a result, we continue to have a low single family home inventory and faster sales at higher prices. This makes for a continued 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.
2015 continued the positive single family home sales trend we began to see in 2012, giving us strong sales four years in a row. It’ll be interesting to see what 2016 has in store for us. Just like I said in last year’s report at this time……”although we’ve seen a recent significant drop in oil prices, the retail/commercial sector of the Anchorage area market continues to grow”. This year we’re facing a state budget deficit of $3.6 billion, and an interesting political arena attempting to mitigate the issue. With that said, Alaska’s deficit is far less than the Federal Government 2015 budget deficit of $439 billion! At least Alaska now has among other things, a Permanent Fund balance of $50.8 billion as of January, 2016. This includes a 2015 return of 4.9%, amounting to a net income addition of $2.4 billion to the fund. I strongly believe that we’re not looking at a repeat of the mid 1980’s crash, but with that said, time will tell if and how much the real estate market is actually affected. So far, the actual results have all been good!
Today’s rates (as of January 8, 2016) for a conventional 30 year mortgage are currently at 4.0%, up 0.375% from this time last year. Rates were moving up in 2013, but slowly came back down in 2014 and slowly rose again in 2015. Hopefully, rates will stay where they are, or move up slowly if they continue to rise. The 0.25% Federal short-term interest rate hike in December may indicate that we’re likely to look at some upward mortgage interest rate progression in the future. When you look at the 30 Year Mortgage Interest Rate Graph 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 for a loan in this market, it’s a great time to be looking and buying, due to current rates. I remember back in the 1980’s when I had to pay a 9.5% rate on my 1st mortgage and 13.5% on a 2nd mortgage. That was ridiculous! We should all have a long term goal of eventually paying off all mortgages and living debt free. I’m there, and I’d like to help you get there if you have any questions.
After years of merely limping along, Anchorage area condominium sales finally took off in 2013 with a 15.5% upswing in the number of units sold. 2014 sales were up 4.25%, but we saw a minor 1.1% drop in 2015. Back in 2013, condominiums sold 22% faster than 2012. 2014 continued the momentum with sales averaging 55 days, 12% faster than 2013. Finally in 2015, sales averaged 58 days, 5% slower than in 2014. Frankly, that’s still a very good market time number with inventory numbers still in a very reasonable range. Plus, there’s good news below regarding average sales price increases.
In 2015, the average condominium sales price was up $7,291, or 3.5% over 2014, ending the year at $213,071. Average sales prices were also up 1.2% in 2014 and 4.2% in 2013 when they finally jumped out of the $190,000-199,000 range they’d been hovering in from 2008 to 2012. 2015 median sales prices were also up 2.33%, ending the year at $197,500.
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 homeowner’s 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 2015. As mentioned above, the 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 2016. Due to 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 information and expertise with a good and caring Realtor helping you buy or sell your home!
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