The average price of a single-family home in Anchorage jumped to a new high of $456,000 in 2022, even as Anchorage realtors said rising interest rates began to cool the market.
The slowdown is welcome, they said.
It’s an improvement from the frenzied pace seen in the pandemic’s first two years, when buyers faced nerve-wracking bidding wars and some homes sold almost immediately, for much higher than their asking price, they said.
This is still a seller’s market, said Larry Burke, president of the Alaska Realtors board.
But sales volume has slowed from last year and homes are beginning to sit on the market longer, for a month, he said. Also, for the first time in a few years, sellers are increasingly offering concessions on homes, such as providing help with closing costs or at times reducing the asking price, he said.
“We’re getting back to a normal market,” Burke said. “It was not normal during the pandemic.”
Still, the impacts of the pandemic continue to ripple through the market, keeping pressure on home prices, realtors in Anchorage said.
The pandemic slowed home construction as inflation, labor shortages and supply chain snarls boosted building costs.
In Anchorage, that exacerbated a long-term shortage of housing. Less than 200 single-family homes are for sale currently, leaving the market with less than a month’s supply of housing.
“It’s supply and demand, like it has always been, and our supply is extremely low,” said D’Ette Owen, president of the Anchorage Board of Realtors.
[Earlier coverage: Average price of an Anchorage home tops $420K amid ‘scary’ low inventory]
Anchorage home prices in 2022 rose 7.7% from a year earlier, according to figures from Alaska Multiple Listing Service, a real estate listing platform.
That’s the highest rate of increase in several years, the data shows. Three years ago, the average home sold for $80,000 less than it does today.
Home prices in recent years were juiced by super-low interest rates that led to a surge in demand for homes, realtors said. People had more money for a down payment as savings grew, thanks in part to stimulus checks, and people working from home sought larger dwellings, they said.
But after interest rates began rising early this year, the market has begun to normalize, Owen said.
The average rate for a 30-year fixed mortgage roughly doubled in 2022, sharply cutting buying power, though it’s still below the long-term historical average.
The higher rates have priced some buyers out of homes, helping reduce demand, realtors said. They’ve also reduced incentive for selling, since more homeowners are staying put to keep their low-rate mortgages.
Now, homes are selling close to their asking price, and multiple offers on homes have become rarer, Owen said.
“It’s been going through a correction now for the last six months, but it’s not a harsh correction,” she said.
Art Clark, co-owner of Alaska Real Estate Associates, said the average home price has continued to rise in the last three months of this year, with prices averaging $459,000.
He and others said they expect prices to continue to rise, at least slightly.
Anchorage’s lack of housing inventory and available land for building will help ensure that, he said.
“A small increase may be what happens,” he said. “I don’t see what would drive a price decrease.”