Home prices in Alaska jumped last year to a new high of $389,000
Strong demand and low inventory catapulted the average home price in Alaska to a record high of $388,648 last year, according to a new state report.
Prices jumped 8.9% in 2021 from a year earlier, the third highest jump in three decades and only slightly below the record set in 2005, according to the Department of Labor and Labor Development. -Works from Alaska.
It was also the second straight year of rapidly rising home prices in Alaska, a trend seen nationwide as low interest rates and savings boosted by pandemic relief payments stimulated demand.
Interest rates have risen sharply in recent months, boosting monthly home loan repayments, but real estate agents from Southeast Alaska to Anchorage said the market remains strong.
In Alaska, Lower 48 residents looking for homes or land are helping to drive up demand, real estate agents said. At the same time, the problem of a lack of building land persists, complicated by soaring construction costs that are helping to drive up house prices, they said.
“It’s your classic macro love story, where high demand meets low supply and prices rise accordingly,” said Bill Bolling, co-owner of Gateway City Realty in Ketchikan.
Ketchikan, a scenic Southeast Alaskan community of about 8,000, saw the biggest rise in home prices in Alaska last year, a 16% increase to take average prices to 439 $961, according to the state report.
Bolling said Ketchikan has attracted newcomers who buy homes there and use high-speed internet to work remotely for employers. in the Lower 48, he says.
In addition, home hunters generally feel more urgency to buy now, to lock in a mortgage before rates and monthly payments rise further, he said.
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“Prices are raised in some cases,” above the asking price, Bolling said.
The average house price has also reached new levels in Juneau – the most expensive place to buy a home in Alaska, with an average price of $475,000.
In Anchorage, the average price for a single-family home reached $436,577 last year, according to the report.
In Juneau and Anchorage, the market was so hot late last year that five homes were sold for every listed home, the report said.
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“So they were being sold before they even got listed,” for example, by word of mouth, said Rob Kreiger, a state economist who wrote the report. “It’s not something I’ve seen before, at these multiples. It’s probably the clearest indicator that demand is outstripping available supply.
Rapidly rising prices have some people worried about a crash, he said. But the conditions that drove recessions in Alaska in the 1980s and nationwide in 2008 no longer exist today, he said. Increases in housing construction have contributed to these crashes, but there isn’t a lot of new housing construction in Alaska, he said.
“That doesn’t mean there couldn’t be an accident, but it wouldn’t be like those,” he said.
In fact, home prices remained relatively affordable last year, according to the report. That’s based on a measure that includes last year’s record interest rates and income, which rose last year thanks in part to pandemic relief payments.
Still, affordable housing experts say higher interest rates and prices are increasingly complicating the plans of many potential buyers.
Sue Perrins of NeighborWorks Alaska, which offers loans that help low-to-moderate income people buy homes, said costs are getting so high that some people the organization works with are shelving plans to buy a home. first home or moving to a bigger one. .
“Our feeling is that they can’t find properties to buy because the market has been so tight and has run out of inventory in an affordable price range,” she said.
Nationally, interest rates on typical home loans have risen from about 3% in the past two years to more than 5%, according to the report.
Mark Romick, deputy executive director of Alaska Housing Finance Corp., a state agency providing affordable housing, said rising interest rates and home prices can make it harder for people to get the house they want. Every 1% increase in interest rates often means $200 more in monthly payments for an average-priced home, he said.
He said the housing agency is working with Alaska banks and other lenders to provide programs that offer low-interest loans to many Alaskans, such as first-time home buyers, veterans or low-income people.
Affordability is an individual situation, depending on the buyer’s circumstances and other factors, said Anita Bates, who sells homes with Anchorage-based Berkshire Hathaway HomeServices Alaska Realty.
A big problem in Anchorage is the lack of new construction homes at affordable prices for first-time buyers, she said.
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She said rising interest rates have recently deterred some buyers, but the Anchorage market is booming.
“It’s still very active,” she said. “It’s a combination of a lot of things. There is still a lot of demand for housing, a real lack of inventory and, in my opinion, the rise in interest rates has slowed things down a bit, but not appreciably.
Single-family homes in Anchorage selling in ranges between $225,000 and $800,000 have exceeded their asking price by a small amount on average, according to data through the end of May provided by Keller Williams Realty Alaska Group.
Soldotna-based real estate agent Dale Bagley with Redoubt Keller Williams Realty Alaska Group said rising interest rates appear to have reduced the multiple offers that would come in for Kenai Peninsula property.
“It’s still a very hot market,” Bagley said. “A lot of houses are selling and a lot of land is moving.”
The average price for single-family homes on the Kenai Peninsula rose to $337,287 last year, a 10% jump, according to the state report.
Bagley said buyers still often offer cash to beat competitors and avoid appraisals and banks that can slow a sale or limit supply.
One thing he has seen since the start of the pandemic is that more people are buying land to park their RV or have a seasonal place to visit.
“People just want to camp and hang out, but the campgrounds are full,” he said.
Some Alaskans and foreigners are also moving to the peninsula to be closer to family, adding to local demand, he said.
“We’re seeing people wanting a summer home to escape the Lower 48 heat and be near their grandkids,” he said.
One of the downsides of the market is that it’s hard to see families losing a home they’re emotionally attached to buying, he said.
Kreiger, the economist, said it was unclear when the rate hike would cause the market to cool significantly.
National interest rates have averaged more than 5.25% recently, the highest since 2009 and a sharp increase from a year ago, according to the state report. But they could continue to rise for months and remain at historic lows, he says.
“That’s definitely the question everyone is asking,” Kreiger said. “But to say when that point will be reached will be nothing more than speculation.”
Daily News photojournalist Loren Holmes contributed.