Forecasting Alaska: The housing market, a bright spot in otherwise troubled times
ANCHORAGE, Alaska (KTUU) - The economic fallout of the COVID-19 pandemic may feel like a cloud holding steady above the heads of every Alaskan but if you’re looking for a bright spot, the housing market may be your best bet.
Sarah and Wylie Rogers know first hand just how quickly things are moving right now, the couple both bought and sold a home in the past year.
“We bought this first, all the paperwork was done for the purchase ahead of the sale,” says Sarah.
Already on the hook for their new perfect place, the need to find a buyer for their old property could have been stressful, instead it was quick and perhaps more importantly, profitable.
“They put on the market on Thursday, had a handful of showings on Friday, and over ask offer Saturday morning,” Sarah said with an appropriately excited smile.
Perhaps the only notably out of the norm experience in the whole endeavor was signing the paper work when selling their home. Thanks to pandemic protocols of the title company the pen ended up being put to paper in a parking lot off of C street.
An over ask offer – both buying and selling homes during a recession – may sound unusual but the fact of the matter is that while the economy is trending down in a number of sectors, the housing market is hot.
“2020 amazingly enough was a really good year for the housing market in Anchorage. And we’ve seen some really positive results with appreciation in home values in terms of sale prices up well north of 5%,” says Bill Popp, President and CEO of the Anchorage Economic Development Corporation.
Economist Neal Fried agrees “part of the housing market is one of the bright spots in our Alaskan economy right now. Those are hard to find.”
The reason that housing has remained a strong portion of the economy has to do with a combination of factors. Interest rates are unusually low. In many cases right now those rates are under 3% and that creates more buying power for a perspective house hunter. Additionally, inventory is low and when low inventory meets increased buying power what you find is a competitive housing market.
Paige Gibson has seen this effect first hand, she and her husband recently purchased a second property out in the Big Lake area but they weren’t the only ones interested.
“Of course as soon as we liked it, and the price had dropped, we got into a multiple offer situation,” says Gibson.
A real estate agent in her own right, Gibson says she is seeing that trend all over the market, “I’ve seen more multiple offers this year than ever.”
Tied into the home sale increase, at least in Gibson’s view, is the product itself.
“I think a lot of people have more time on their hands so they’re, you know, doing more house projects. So we’re seeing better options on the market than we’ve seen in years before,” says Gibson.
Interestingly while housing prices are soaring the price of rent has come down.
“We are seeing some declining rental rates. Prices are going down, we’re seeing an increase in vacancy,” says Popp.
According to the AEDC CEO, some of that decline in renters is due to those low interest rates. Former renters are becoming buyers for the first time.
Unfortunately, that’s not the entire story. The biggest contributor to the shift has been out migration. According to Popp, in 2020, more than 5,000 people moved away from Anchorage.
“This is concerning, people moving away from our city is a loss of economic opportunity and energy, and it’s about a 4% decline in our population. So we’re gonna want to watch this very carefully, but the rental market is softening a little bit as a result,” says Popp.
Despite the concerns of a dwindling population, the expectations in this sector for 2021 are positive.
“We think it’s going to be another good year for the Anchorage housing market,” says Popp.
So while the economy has certainly taken a hit here in Alaska, the housing market, for buyers, for sellers and even for renters is providing a bit of firm footing in this otherwise unstable time.
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