MID-YEAR MARKET SUMMARY: A Slow Start Sets Up a Strong Finish
Midway through 2019, the Anchorage area residential housing market* is stable with sales prices holding steady at nearly the same as last year. Two notable outliers are downtown, which is markedly down and Girdwood, which is considerably up. Inventory is down 5% over the same period as 2018. However, it’s still a seller’s market with the average absorption rate of 3.67 months.
The mid-year statistics report is a tale of two quarters with a big shift between the first and second. The two major contributing factors are the Nov. 30, 2018 earthquake, which caused major structural damage to over 700 homes in Southcentral and interest rates that dropped to levels not seen since 2016.
During the first quarter sold listings were down 25% in January with the $250,000 to $300,000 price range taking the biggest hit. Aftershocks shook up buyers’ fears of structural issues. This trend continued but slowed by the end of the first quarter. February and March showed sellers’ reactions, which drops in sales prices down 5% in February and down 7% in March.
Inventory remained low for the first quarter which helped temper the reduction in sales prices. One area that has not recovered from the earthquake is the downtown market which dropped over 11% in average sales price. This might have been a result of the number of older homes in the area which trigger buyers’ fears of structural damage.
Bolstered by dropping interest rates and fading fears of earthquake damage, the residential market rebounded in the second quarter. Reported sales were up slightly from the previous year and sales prices were up 2.25%. By the end of the second quarter, mortgage interest rates had fallen to under 3.75%, saving buyers over $200 per month on an average priced home.
New construction sales and higher-end homes remain a bright spot. New construction home sales increased 13% and homes sold in the $650,000 to $850,000 range were up 142%. Lower interest rates granted buyers the power to increase the purchase price for an equivalent mortgage payment when compared to the previously higher rates. Additionally, sales prices in the Girdwood area have been up nearly 30% over the previous year indicating a strong demand for vacation homes and recreational property.
With the 2018 earthquake fading from consumers’ memories and interest rates remaining low, the market is prime for a strong finish in 2019. Homeowners are finishing up cosmetic earthquake repairs and inventory is starting to pick up. A welcome third and fourth quarter rally is anticipated for the Anchorage residential housing market.
*Residential market includes single-family homes, excludes condos and multi-family.