Buyers are hesitant and inventory is up
The 2016 Anchorage residential market could best be described as having had a minor fender bender, not the fatal crash so many naysayers predicted for the housing market.
Thousands of owners have not turned in their keys to the bank like they did in the 1980s. In fact, Alaska continues to rank in the bottom three states for foreclosures. Values have remained constant with minor pockets of decline due to aging housing stock and in some geographical areas.
Transportation and the medical field continue to bring new residents to Anchorage. The military and oil industry continue with their in-and-out migration.
There are, however, some minor dents in the market. Homes that are 30 years old and in need of maintenance and remodeling are not appreciating and in some instances, depreciating in value from their original purchase price from five or 10 years ago.
Two of Anchorage’s most expensive areas, downtown Anchorage and DeArmoun/Potter Marsh, have seen a modest decline in average sales price while the rest of the market has remained flat with virtually no appreciation in the average sales price of $362,000 from a year ago.
Areawide average days on the market has increased by only a modest 6 percent.
But, what has increased is inventory. Buyers have a much wider selection than they did at the beginning of the year. September had 999 active listings compared to 569 in January.
While some of this increased inventory is seasonal, this September had the highest inventory of for sale properties since 2011 while at the same time sales dipped to 275 from the previous month’s 325.
More inventory doesn’t mean more buyers. Quite the contrary. There is definitely emerging a hesitancy in the market place. Buyers appear to be distracted whether by the somewhat electrifying presidential election or the state and local concerns over the economy. For whatever the reasons, buyers are taking their time in making a decision.
But, as inventory begins to fall which it does every winter and the long anticipated Fed increase rate occurs in December, buyers will begin to feel the pinch. Current 30-year fixed rate mortgages are at 3.5 percent.
We’ve heard the threat of a rate increase for the past two years but this time, whoever wins the White House, it is almost a certainty.
Motivated buyers would be wise to take advantage of the wider selection and current mortgage rate before more change occurs.
Buyers looking for a new home are going to continue to be frustrated by a lack of finished inventory. New home starts remain at historic low levels while at the same time prices continue to increase.
Winter construction costs for heating and tenting will exacerbate the price disconnect between new and resale even more. Now is not the time for buyer hesitancy if you’re in need of a home.