2016 Year-End Anchorage Area Real Estate Market Analysis

As of January 6, 2017….. the full-year local real estate sales data for 2016 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 through 2015 in the low to mid-range price (up to $500,000).  We ended our somewhat stagnant 2016 with an average single-family home sales price of $366,080.  This was a decrease of $756 from 2015, but a 13.9% increase over the past five years.

The median sales price actually gives a truer picture of market activity.  The median sales price in 2014 was $321,000.  In 2015 we finished up 2.49% at $329,250 and 2016 saw a slight increase of 0.23% to $330,000.  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 over the past five years, but definitely slowed down in 2016.december-residential-sales-average-sales-priceThe number of single family homes listed for sale in 2016 was up 25.5% over 2015.  That’s a huge jump over the 5.3% increase we saw in 2015 over 2014.  The number of homes actually sold was actually down 1.9%.  That’s another definite shift from 2015 when sales were up 6.3% over 2014.  In addition, single family homes in 2016 sold 13% slower than they did in 2015 with an average time on the market of 51 days.  With that said, 51 days is not a bad timeframe for those homes that sold.  However, we definitely saw a market shift in 2016, down somewhat from the positive single family home sales trend we began to see in 2012, giving us strong sales four years through 2015.  It’ll be interesting to see what 2017 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 another significant state budget deficit, and an interesting political arena attempting to mitigate the issue.  With that said, Alaska’s deficit is far less than the Federal Government budget deficit!  It’ll be interesting to see if there are any positive effects on Alaska as a result of our new president and his administration.  At least Alaska now has among other things, a Permanent Fund balance in excess of $50 billion as of January, 2017.  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 been good, but we definitely saw slowing in 2016!december-residential-active-listing-inventorydecember-residential-sales-number-of-unitsdecember-residential-properties-a-look-at-supply-and-demandToday’s interest rates (as of February 1, 2017) for a conventional 30 year mortgage are currently at 4.25%, up 0.25% from this time last year.  Rates were moving up in 2013, but slowly came back down in 2014 and slowly rose again in 2015, then back down in 2016…..until Donald Trump was elected…..and we saw them spike up almost a full percent to their current rate.  Hopefully, rates will stay where they are, or move up slowly if they continue to rise.  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 30 year, $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.2016-mortgage-interest-rates-graph2016-30-year-mortgage-history

B. Condominiums

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 and a 5.3% drop in 2016.  Back in 2013, condominiums sold 22% faster than 2012.  2014 continued the momentum with sales averaging 55 days, 12% faster than 2013.  In 2015, sales averaged 58 days and 60 days in 2016.  Frankly, that’s still a very good market time number with inventory numbers still in a very reasonable range.  And, the average sales price in 2016 was almost identical to 2015.december-anchorage-condominium-number-of-unitsIn 2016, the average condominium sales price was $213,058 vs. $213,071 in 2015.  The 2015 price was up $7,291, or 3.5% over 2014.  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.  december-anchorage-condominium-average-sales-priceCondominium 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?december-anchorage-condominium-a-look-at-supply-and-demand

C. Conclusion

We had a solid year for Anchorage real estate in 2016.  As mentioned above, the drop in oil prices, state budget deficit, presidential election results, etc., have created some areas of concern in the local economy, so it will be interesting to see how things play out in 2017.  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!

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.

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