So how is the market? At midway through the selling season, now is a good time to take the pulse of the Anchorage real estate market. Are we doing better than last year? Is it a buyer’s or seller’s market? Are property values going up? Well, this all depends. For a general perspective, let’s look at location and price range.
Fewer residential homes were available to purchase in the first six months of 2014 than in 2013, except in Areas 100 and 101. Unless potential sellers are moving out of state, the majority of them may lack motivation to sell for a couple of reasons. First, they may not want to give up their current great low interest rates. The extra cash they got through refinancing was likely diverted to other bills with the goal of being more financially secure against the next crisis. Second, the appeal of a location could be work-, school- or leisure-related. If they like their location, they could get the new construction feel by remodeling or updating to meet their needs instead of buying a new home in a less desirable area.
In 2014, a total of 1,234 homes sold -- a decrease of 7 percent from last year. Areas 25, 35 and 45 were the only areas with minor increases of 2 percent, 3 percent and 1 percent respectively. Since the last financial crisis, buyers seem to be more selective and cautious when purchasing a home. Even with low interest rates, today’s buyers are no longer buying short-term and betting on appreciation to help them upgrade. Longer-term livability and location are important. With a pool of buyers waiting for a new property to come on the market, almost 25 percent of the closed properties sold at or above the original listed price (adjusting for seller concessions) -- an increase of over 2 percent from last year.
Since the average sales price is often distorted by an extremely high or extremely low priced home, median sales prices are more accurate for comparisons. The median sales price of residential homes in Anchorage increased in seven out of 10 areas. Areas 15 and 30 had the biggest gains even with fewer homes on the market and fewer homes sold than last year.
However, some statistics are similar to last year. New construction makes up about 10 percent of the single-family homes on the market and accounted for slightly more than 7 percent of the closed sales. Foreclosures sales were about 6 percent and short sales made up slightly over 1 percent of the closed properties.
When you divide the market into price ranges, you can determine whether the market is a seller's, buyer's or balanced market. We consider less than four months of inventory a seller’s market, four to six months a balanced market and more than six months a buyer’s market. Inventory absorption is the number of properties for sale divided by the 13-month average of homes sold.
With a total of 759 homes for sale in the Municipality of Anchorage, the below-$500,000 price range continues to favor sellers with demand for properties higher than supply. The $500,000 to $750,000 price range tips into a more balanced market. With 70 homes in the $750,000 plus price range, qualified buyers have more choices and can be selective as supply exceeds demand. For the million-dollar-plus category, over 15 months of inventory may seem excessive but is down dramatically from the April 2011 high of 54 months.
For condominiums, with 316 units for sale, the inventory absorption rate also favors sellers in six price ranges and is balanced in three price ranges. Similar to residential properties, the two most expensive categories show less demand and more choices. The $400,000 to $500,000 price range has 13 months of inventory, and homes priced over $500,000 have almost six months of inventory.
When divided into areas, properties actively on the market and closed transactions have increased in seven out of the 13 areas when compared to last year. The 13 percent decrease in the median sales price in Area 5, even with an increase in sales, may be attributable to new construction. In 2013, nine new construction condos sold for a median price of $286,750 compared to only four ($350,217) in 2014. The 11 percent increase in Area 45 may have been the combined increase in existing and new construction condos. In 2014, there were 103 existing condos ($185,000) compared to 84 condos ($169,900) in 2013. New construction median also jumped up with eight condos ($287,200) in 2014 compared to nine condos ($241,900) in 2013.
However, when properties are broken out into so many different areas, a change in small amounts can lead to big percentage differences. For example, the increase from two to 12 units in Area 100 created a 500 percent change.
New construction is almost 13 percent of the condos on the market for sale and accounts for almost 7 percent of the closed transactions. Foreclosures sales have decreased to one this year from nine in 2013. Short sales were also down this year to 35 from 45 in 2013.
Overall the real estate market is steadily improving. Slow and steady growth will help buyers and sellers more than the hectic acceleration of the last housing bubble. Now we wait to see if the second half of the year sustains these trends or if the inevitable end-of-the-year seasonal slowdown dampens the overall midsummer performance.
Barbara and Clair Ramsey are local associate brokers specializing in residential real estate. Their column appears every month in Alaska Dispatch News. Their email address is email@example.com.