Continued Stability in Anchorage Housing Market
While the housing market in the lower 48 is booming with new home communities and an active resale market with 6% to 18% appreciation, the Anchorage housing market remains stable, despite the state’s economic woes. Thanks, in part, to a continued lack of new home construction, the Anchorage market has lost less than 1% in value on single family sales in the past 18 months. A six month summary of building permits shows 300 new housing units permitted in 2017, but with two-thirds of them in the duplex and multi-family category. Only 95 single family homes have been permitted during the first six months of this year with an average value of $423,289. That number does not include the lot cost. If an average lot with public water, sewer and paved road costs $140,000 that puts the average new home around $600,000 compared to the MLS average sales price of $365,000. That’s a mind boggling difference between brand new and pre-owned for buyers when doing comparable shopping. If you can find a new construction home under $500,000, my advice is to buy it!
Four builders make up over 60% of the permits with each between 16 and 13 permits. Those builders are Troy Davis, Hultquist Homes, Spinell and the ever increasingly popular owner/builder who builds primarily on isolated lots on the hillside. Generally from the construction trades, these do it yourself builders hope to save a 6% profit which after it is all said and done is the hoped for profit from larger builders with a general contractors license and residential endorsement.
Resale homes generally have landscaped and larger lots and a lower price per square foot even if they have been remodeled. In order for builders to compete with resale properties, they need to create a different product such as ranch homes or include the popular open two-story great room in their designs. Buyers for new homes are also requesting triple and even four car garages. Many of today’s new two-story homes get stretched to 3,000 square feet. Incremental square footage for bedrooms and living areas is relatively less expensive than kitchens and bathrooms—the two most expensive rooms in any home. Some buyers are willing to pay for a higher price per square foot to not have to worry about potential roof and furnace replacements in an older home. And for those of us who have remodeled, once you start you know it is hard to stop. The idea of a fresh coat of paint and new carpet suddenly makes those brass light fixtures look pretty dated.
On a weekly basis, Anchorage has about 100 more homes on the market than last year. Yet, prices have remained stable, although there is more negotiation between buyers and sellers. There is also a widening disconnect between original list price and final sale. That decline is 3.45 percent and does not take into consideration any seller paid closing costs on the buyer’s behalf. However, the real test of the market will be this coming fall buying season. Mortgage rates remain at near historic lows and well – maintained resale homes that are less than 20 years old are hard to find. Housing permits are at historic lows. So far, the state’s economic woes has had little impact on our local housing market and that’s my prediction for the end of the year.