Anchorage housing market stable

Alaska Foreclosure & Real Estate News

By Carly Horton
Alaska Journal of Commerce

Ignore the headlines about a housing crash, said Anchorage's real estate experts.

For months, consumer confidence in the real estate market has taken a beating. Cities like Detroit, Las Vegas and Stockton, Calif., have experienced foreclosure rates as high as 5 percent in some areas. And if the headlines are any indication, a dwindling economy, unstable real estate values and a high number of subprime mortgages have become the norm.

But the panel of Anchorage real estate experts who addressed the crowd at the Anchorage Chamber of Commerce luncheon on April 7 says not to worry.

“The real issues are not being covered; Alaska's just being lumped together with other states,” said Dan Fauske, CEO and executive director of the Alaska Housing Finance Corp. “In this game, perception can become reality.”

Alaska is in its 21st year of uninterrupted economic growth, and the state has a low number of subprime mortgages and the lowest foreclosure rates in the nation, Fauske said. Alaska's housing market has slowed over the past couple of years, but that doesn't mean it's a bad time to sell or purchase a home.

Cody Gibson, president of the Anchorage Board of Realtors and CEO of Keller Williams Realty Alaska Group, likens the slowdown to “driving 90 miles per hour and then slowing down to 55 (mph). It feels slow just because you've been going so fast, but you're still moving right along.”

It was a buyers' market for much of the decade, thanks largely to record-low interest rates. Sales skyrocketed at the same time appreciation rates rose at similar rates throughout much of the city. This created higher demand, thus fast-rising selling prices.

Fauske and Gibson said Anchorage is entering what's referred to as balanced market, meaning the market is still growing but at a more moderate pace.

A seller's market means there is less than five months of listing inventory. A buyer's market means there's more than seven months of inventory. A balanced market has five to seven months of listing inventory.

In the municipality of Anchorage — which includes Eagle River, Chugiak, Girdwood and Indian as well as Anchorage — as of March 1 there were 978 residential properties listed, according to the Alaska Multiple Listing Service. That's an increase over the previous month, when only 944 residences were listed. On March 1, 2007, there were 933 residential properties listed. That doesn't include condominiums, which, as of March 15, had 556 active listings.

“Most markets are still appreciating,” Gibson said.

For the month of March, the average selling price of a single-family home in the Anchorage area was $332,300. For March 2007 it was $317,921.

Gibson says there's no reason to wait to purchase a home. Currently, there's about three-and-a-half to four months of inventory for the average home.

“You cannot predict the market. Prices for homes may go down, but interest rates are going up,” he said.

From Jan. 24 to March 13, interest rates increased by 0.6 of a percentage point.

“No one's ever been successful at timing the market; no one knows what it's going to do. If someone has a crystal ball, I'll buy it,” Gibson said.

Those who want to sell their homes in a reasonable amount of time may want to adhere to what Gibson refers to as the 20/20 rule: The home should be in the top 20 percent of condition of homes in the same price range, and in the bottom 20 percent in terms of price.

“If you have 10 homes in the $300,000 to $350,000 range, your home should look nicer than eight of them and be priced more competitively than eight out of those 10,” he said. “That doesn't mean cheaper, just more competitively. Whether that's price per square foot, the size of the lot, newer amenities - whatever makes your home more valuable than someone else's.”

As of April 15, there were 171 properties on the market in the $300,000-$350,000 range. Nearly 475 properties in that price range have sold between April 15, 2007 and April 15, 2008.

He said homes were selling for 99 percent of the list price two years ago, but most still sell for over 90 percent of the list price.

The types of residences available have also changed in recent years. Developers are building more high-end homes and condo units. One example is the condos at 10th Avenue and E Street, in Downtown Anchorage, where some units are listed for nearly $2 million, according the Alaska Multiple Listing Service's Web site.

A handful of other condo units with price ranges approaching $1 million have cropped up throughout the Downtown area in recent years.

Developers announced this spring plans for a high-rise building in Downtown that will feature several floors of similarly high-priced condos atop one floor of retail space. A parking garage will be attached.

Even when the housing market is in a slump the best properties still go quickly. Gibson said the job of a great Realtor is to interpret the market for his clients.

“Realtors can make phenomenal money even if the market's awful,” he said. “If the foreclosure market goes through the roof, I'm OK with that. It just means my clients will become the banks and lenders, not the buyers.”

Even so, realtors are on a mission to instill confidence in the state's housing market. The Alaska Housing Finance Corp. is financing a consumer confidence campaign “in order to get good solid info out there,” Fauske said.

Deemed “Alaska's Housing Market: Built to Last,” the TV ads and a series of community meetings emphasize the state's stable housing market and low interest rates. The campaign has cost roughly $150,000 thus far and will continue through May.

Mark Korting of Re/Max Properties Inc. of Anchorage, said homes that sit on the market for a long time are usually in poor condition, located in an undesirable neighborhood and/or are overpriced. The market has stabilized, sales are fairly consistent, and “and it's pretty much a return to normal,” Korting said.

“The market can only sustain so many years of double-digit appreciation,” Gibson said.

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