INSIDE REAL ESTATE: Anchorage condo market holds steady so far in 2016
Condo sales in the Municipality of Anchorage have remained consistent year-to-date when compared to the same time as last year, and prices are stable with only 0.82 percent increase from 2015.
This bodes well for the first-time homebuyer and downsizers who are looking to scale back their square footage and utility expenses. It is also indicative of the continued interest and activity in the lower price ranges of the Anchorage market.
Single-family homes have actually fallen in average sales price by 4 percent when compared to the average price of $366,585 in 2015. In general, the average condo days on the market has decreased by 33 percent.
The number of condos sold for the first two months of the year has remained consistent at 132 and 134 respectively. This decline in days on the market is consistent throughout the Municipality of Anchorage, or MOA, including Girdwood, Eagle River, and Chugiak/Peters Creek, which is somewhat surprising as it is not unusual for perimeter sales to fall when an economy slows or stalls due to the indecision by the legislature on how to handle its budget shortfall.
One major factor contributing to the stability of the condo market is the lack of new construction. Multi-family starts are down and only one duplex was permitted in the first two months of this year compared to thirteen last year at this time.
This downward trend in condo starts will undoubtedly continue at least through the first half of the year as developers grapple with the new Title 21 regulations. The new Title 21 impact is going to be felt most in this entry level market as the MOA’s desire for denser development can’t help but increase costs not only for construction but design time as well.
It is a common misconception that building up is less expensive than row or townhouse style lower density. Interior corridors have to be heated and maintained. Four story buildings must be built to commercial standards. For appraisal purposes, condo square footage is measured interior paint-to-paint of the living area only and common areas are never taken into consideration when evaluating the value.
Although there is some market demand for flats in three and four story buildings with interior corridors the vast majority of buyers, including millennials, are still looking for a garage attached to the living area as opposed to a common garage area where the buyer is assigned a stall which may, or may not, have a storage area nearby.
Buyers also want access to a private backyard even if it is only a couple hundred feet. The MOA, on the other hand, requires more shared open space and even designates its configuration and location. I would challenge planners to tour communities that have shared open space to see if and when it is used.
The most popular amenities to single family or condo development are sidewalks, trails and connectivity. In today’s world, where security is becoming more and more an issue in neighborhoods, buyers want their children to play within eyesight and walk their pets on frequently-used sidewalks and trails. Townhouse style condos with attached garages, whether old or new, will continue to have excellent absorption in 2015.