Anchorage Housing Market Update

Before I begin my update on the Anchorage housing market, I would like to write a few lines to thank the realtors and staff who have joined or returned to Berkshire Hathaway Home Services Alaska Realty (BHHSAlaska.com) in the past few weeks.  A real estate brokerage, like any company, is only as good as the people they hire. Warren Buffett probably said it best “I learned to go into business only with people whom I like, trust, and admire.” Our business goal is not to be the largest brokerage with one hundred plus licensees but to be able to provide knowledge and up to date real estate representation for buyers and sellers. Many of us have spent over 40 years in local and state real estate. We gladly share our historic knowledge with our licensees and you, as our buyers and sellers. We are proud to carry the Berkshire Hathaway HomeServices name.  

The Anchorage housing market needs a shot in the arm.  Metaphorically speaking, it has the flu.  Sluggish, no energy, homeowners tired of shoveling 42 inches of snow so potential buyers can get to the front door. Interest rates are stuck at 6%, a little more or less, depending on the day and the latest headlines out of Washington. Anchorage residential inventory is at an all time low.  Yesterday, we saw only 87 residential properties for sale.  New listings are less than the number of pending sales, indicating buyers are still dredging through the snow and making offers on the little inventory that’s available, despite the age of the home. The number of closed units is slowly declining while the average sales price is up over 10% with a February high of $603,931, an historic record for average sales price.  Appreciation since 2020 is up over 40%.  If you are an aging baby boomer, thinking about a move to Florida or Arizona, or anywhere there is not 42 inches of snow and subzero temperatures in March, now is the time to put your home on the market. 

Let’s remember that Alaska does not manufacture any of the 10,000 or more parts that go into the building of a new home.  Tariffs make headlines every day but regardless of the percentage of product type some tariffs are definitely here to stay, making light fixtures, sheetrock and your favorite kitchen appliances more expensive.  Warren Buffet said “Tariffs are an act of war.”  Whether you agree with that statement or not, I would predict that the average new construction home will cost more than 10% from 12 months ago.

Although we have little or no influence over tariffs, what more can the MOA do to resurrect its almost helpless housing crisis?  Mayor LaFrance’s administration has taken positive steps.  They have legalized smaller and innovative housing types like manufactured houses and decreased the minimum size for a single-family lot.   They have expanded property tax abatements for new multi-family housing and for rehabilitation of deteriorated homes. A ten year tax abatement for first time home buyers, along with the $10,000 AHFC rebate for new construction homes with a 5 Star plus energy rating, would loosen up and make homes more affordable for the first time home buyer.   However, many deteriorated properties are cost prohibitive for rehabilitation and this program should be reexamined. Experienced remodeling contractors know you cannot control the costs for rehabilitation.  It would be more cost effective to tear down the structure and subordinate the lot to qualified residential builders.  The subordination would allow for construction financing and give every builder, large or small, an opportunity to participate in the creation of new homes for first time home buyers.