There is always a back story of how, where and when buyers and sellers enter the market. Nowhere or no time has this been more true than in 2020. Historic low mortgage rates brought a trove of first time buyers into the home buying market as well as move-up buyers. Given the pandemic; the joblessness in hospitality and tourism; and the perennial debate over how to make up the shortfall in the state’s operating budget, our local ‘close to the end of the year’ stats are truly amazing!
As of Dec. 23, 2020, Anchorage enjoyed a whopping 25% increase in total sales volume at $1.245 billion, not including condos and mobile homes. Single family homes appreciated 5.62% over 2019 for an average sales price of $395,907. Although August’s average price was over $404,000. According to MLS, there is only a 1.19 average month supply of homes for sale. Over 2.5 million dollar homes sell per month. I can remember when we had almost a three year supply of Anchorage’s most expensive homes. Last year, the average time on the market was 51 days. Today, it is 42 or almost a 20% decline.
If you are a buyer looking for a home, you will most likely end up in a multiple offer situation and paying more than the listed price. If you are a seller, however, you have some upfront responsibilities. Today’s buyers want your home to be like new, not like one built in l978. Despite the ‘historic’ lack of inventory, buyers expect the home to be ‘refreshed’ with new flooring and paint. A seller paid pre-home inspection can often mitigate frivolous cosmetic repair requests from buyers.
Still, there are always those less fortunate in the market. There’s the condo seller who lost his restaurant lease because the mall owner wouldn’t negotiate a reduction and is forced to sell his condo and move out of state for a hoped for new job. A husband who’s wife died of COVID and now needs to sell the family four bedroom home where they raised their children. Yes, the market is good but neighbors and friends will soon be gone. Then, there’s a family who needs to sell due to job losses and can’t afford to ‘refresh. And let’s not forget a tenant who is forced to move because the duplex she’s lived in for five years is being sold to a new owner occupied with a triple zero down loan under 3 percent.
The condo market is the one place where we see many of these back stories play out. Unlike the single family market, it has only appreciated a marginal 1.28%, despite the historic low interest rates propelling the single family market where it seems like the sky is the only limit. The good news for condos is that sales in Girdwood have increased 35% but the bad news is they have declined in downtown by 7.79 percent. After Nordstrom’s windows were boarded up, downtown seems to have lost its cache, at least for me. No holiday decorations and too many pot stores.
Commercial real estate also faced challenges in 2020. According to Lottie Michael, Senior Vice-President of BHHS Alaska Realty’s Commercial Division, “We are not back to normal.” However, she believes 2021 will be the year to make gains for the astute investor. “It is possible to obtain a commercial loan at 3.5% with a fixed rate for 25 or 30 years. Does anyone really believe we will be discussing COVID in 2046 or 2026 for that matter? 2021 will be the year to plant our investment seeds.” Let’s hope she’s right. Thank you for your referrals in 2021. Please feel free to call me next year!