When I read that statewide unemployment benefit payments in March increased by 1,024% compared to a year ago and that the price of oil went negative, I worried about our local housing market. When I walked downtown this past Sunday afternoon and saw all the shuttered stores, I wondered if we will have those beautiful fuchsia and bougainvillea hanging basket this summer. I miss not being able to have sushi with my friends and professional colleagues. And most of all I miss not being able to do open houses on a Sunday afternoon so that I can visit with all of you. I, like so many Alaskans, have to ask myself what impact the COVID-19 mandates from the mayor and governor will have on our local housing market. And then, I read last week’s residential statistics.
Spring is the home buying season and despite COVID-19, sales are brisk. In fact, in many areas and price points, COVID-19 has had no impact at all. April MLS stats reported 205 closed sales– more April sales than in the prior three years. The average sales price was just over $400,000 as was March’s closed sales price. Since 2012, there has only been one month when the average price was over $400,000 and that was August 2019 so values have not fallen. April’s residential inventory was the lowest in 8 years which may account for the competitive nature in our market with multiple offers on many homes. From April 28 to May 4th, there were 77 pended sales reported in MLS, including 12 above $500,000. Eagle River had 28 pending sales last week, double what it had for the same week in 2018 and triple the number in 2019. Even the condo market appears to have stabilized despite how hard hit the hospitality and tourism industry is. The average condo sales price in April was $232,394 and there was a modest increase of 16 sales from the prior month. Pending sales capsulate the immediate market more than closed and April’s pendings were a concern for all industry watchers but yet it just didn’t happen.
So why do we have this disconnect? Both are realities. Some of the answers are in the Alaska Economic Trends online magazine put out by the Department of Labor and Workforce Development. If you do not subscribe to this plethora of free information, you should. Register to receive your monthly copy at https://labor.alaska.gov/trends/. Alaska has the highest out of state work force than any other state. There is a big difference between layoffs and seasonal jobs that won’t materialize this year. Approximately 21 percent of the state’s annual workforce is nonresident, and that percentage is higher in some seasonal industries and during the summer. We also know that at least 30% of BP’s work force comes from out of state. According to Alaska Trends, the Department of Revenue forecasts that petroleum revenue will represent just 17 percent of the state’s total unrestricted general revenue in fiscal year 2021.
Forecasts can rapidly change. No one predicted COVID-19 would shutter stores and restaurants and make working from home the new normal. There still could be some housing fallout from the mayor’s hunker down order and governor’s mandates. However, low interest rates and low inventory has kept our market stable and for that we should all be grateful. There is no better place to be right now than in Alaska.