A Mid-Year Market Review

 

 

There are not many mid-year surprises in the Anchorage residential market place. All thirteen MLS districts from downtown Anchorage to Girdwood-Turnagain Arm have had a decline in sold units, amounting to a 35% decline in all sales. The average single-family sales price topped over $500,000 in May, the highest price since MLS began reporting in 2015. However, I have to believe that a $500,000 price point has been buoyed by several million dollar plus sales. To accommodate a flurry of million dollar plus home sales, MLS has added a new category of $1.5 million and above with 12 homes currently for sale in that category. This week there was a reported sale of $2.8m, an MLS record. Currently, there are 13 homes for sale from $1m to $1.5 m. You might be surprised to find out that of all 15 price ranges in MLS, the $1.5m and above has only an average of 8 days on the market! Many of these buyers are paying cash. This flight to luxury is the hottest market in Anchorage.

Moving down the value ladder to the affordable condo, there were only 54 for sale in May. So far in 2023 there has been an 8.17% appreciation which should continue to climb in the second half of 2023 to well over 11% due to a lack of resale inventory and the improbability of bringing on new condos for less than $325,000. The average price of a sold condo is now $263,568 compared to $209,000 pre-covid.

 

But what is most interesting in our market is the at long last realization that Anchorage has a housing problem except, of course for those that can afford to pay $1 million or more for a new home. And we can’t just build our way out of the problem. New single family builds through May were only 90 units compared to 100 in 2022. The doubling of interest rates has slowed spec building and most new construction starts are presales where a buyer must wait eight months to a year to move into a newly completed home.

 

One proposed solution for our housing crisis was laid on the Assembly’s table on May 23, 2023. Introduced by Vice Chair Zaletel and Assembly Member Cross, a local real estate broker, was a total repeal of all current residentially zoned properties to allow a broader use for higher density, mixed use and mixed density throughout the Municipality. Think Houston where office buildings are surrounded by residential subdivisions and higher density residential units. The proposed ordinance would go into effect on January 1, 2025 after a community wide discussion. The ordinance also waives any planning and zoning review or approval and is to be passed directly by the assembly which ultimately strips away the authority of P and Z effectively does away with the commission.