A fourth quarter surge in activity brought 2016 within field goal range of 2015 home sales. Yearend sales for Anchorage came in just shy of 3,000, down only 58 sales from 2015. The late fall mortgage rate jump up to 4.325% for a 30-year fixed loan jolted both buyers and sellers into making buying and selling decisions even though the rate increase had been long expected. The year ended down only 2% in sales volume and, according to MLS, sale prices on average held at $366,000 for a single family home.
But the big question is what will 2017 look like with almost daily headlines of job losses? Are we headed for a real estate recession like 2008? The answer is not hardly and the reason is lack of inventory. Take a look at the chart comparing inventory and sales in 2016 to 2008, the year we saw the real estate recession hit. In 2016 Anchorage had 15.67 % less inventory than it had in 2008 while at the same time, we had 17.69% more sales. Even during the last recession between 2008 and 2011, Anchorage home prices fell only an average of 1.85%. Since then, they have increased 13.28%. Even with a decline of 2-3% in sales in 2017 and a similar modest increase in resale properties, we’re nowhere near the real estate recession numbers of 2008. Although I have bemoaned the lack of new home inventory over the past four years due to local over-regulation, it has successfully kept inventory low. Real Estate bubbles are generated in most part by over-building which hasn’t happened in several building cycles in Anchorage.
My advice to both buyers and sellers is to take action the first quarter of 2017. Anticipated statewide job losses and how the newly elected President’s decisions affect the national economy will make for some uncertainty the remainder of the year. However, what will keep at least Anchorage’s home market stable is continued lack of inventory, despite any surprises that come our way—either positive or negative.