Prices rise acoss country, but not in stable Southcentral Alaska
A recent article in the Wall Street Journal recapped rising home prices in the United States. Recovering from the housing recession of 2008, home prices in Denver are up 29 percent; Houston 43 percent; Seattle 32 percent, and even Phoenix and Las Vegas, which had a plethora of vacant and foreclosed properties not that long ago, have seen home prices rise 48 percent and 52 percent, respectively.
Contributing to these increases is a recovering national economy and limited inventory in some select areas. Also, a growing fear that our near historic low interest rates of 3.85 percent for a 30-year fixed rate mortgage, will increase in October 2015, is propelling home buyers to act now.
After all, it is not the purchase price of a home, but rather the long term cost of the mortgage that is the defining financial commitment. Buyers should be less concerned about negotiating with a seller over $5,000 than the potential increase in interest rates which is sure to come in the near term.
Limited inventory is a major factor in rising home prices and short days on the market. The number of days on the market is a good indicator of how tight a local housing market is. In Denver, homes are snapped up in 8 days.
In Seattle, the median number of days on the market is 22 days. Portland Oregon is 31 days. Some sellers are holding out for even higher prices in certain metropolitan areas. Other homeowners who purchased at the top of the market are still not ready to sell, hoping for a break even after closing costs.
Another factor contributing to limited inventory is the lack of new construction homes. Nationally, building permits rose 6.4 percent, and in the west, starts rose 15 percent. However, this increase doesn’t seem to fulfill buyers’ demands for more housing.
So, how does Alaska’s housing market compare to the Lower 48? Statistically, “stable” might be the best adjective to describe it, but underlying currents and trends point to rising prices and frustrated buyers.
On the “stability” side of the equation, prices in Southcentral Alaska, at least according to MLS statistics, have actually declined; albeit, less than 1 percent, but nevertheless it points to stability in the marketplace as far as pricing is concerned.
Much of that “stability” can be attributed to our aging housing stock, the majority of which was built prior to 1986. These homes which are now almost 30 years old have reached not only cosmetic obsolescence, but functional as well.
Those little-used rooms called the formal dining and living rooms are definitely out for the millennial buyer, as well as the aging baby boomers looking to simplify their life.
However, buyers are frustrated by lack of inventory which continues to hover in the lower $400’s in Anchorage. In 2007, the number of available homes was over 1,000 for this time of year. And then, we have our continual dilemma of lack of housing starts, which no administration seems willing to cut through the red tape to solve.
Single family building permits, the preferred choice for over 85 percent of all home buyers, has actually declined year-to-date over last year and has hit a record low of only 79 permits through the month of April 2015.
Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected].