Homebuilding Expected to Lead Economic Bounce Back
As COVID-19 brought most of Alaska to a near standstill, the state’s housing industry was not only in full-swing, mortgage lenders became busier than ever. Historically low interest rates are driving the housing market’s booming success. Alaskans are building, selling, upgrading, downsizing and refinancing at record rates.
Alaska homebuilders continued to operate throughout the shutdown. The Anchorage Home Builders Association worked with the National Association of Home Builders to ensure building was designated critical infrastructure. This ability to continue work is one of the reasons homebuilding is poised to lead the nation’s post-pandemic economic recovery. An already strong housing industry kept Alaskans employed and helped others get back to work. The industry faces a labor shortage and the pandemic became an opportunity to bring people into the industry.
Robert Dietz, NAHB’s chief economist believes the worst is over for the U.S. economy. He predicts the next two quarters will be a period of rebounding for both the stock and housing markets. Dietz believes it will take the country two years to get where it was economically before the virus. But he believes the housing market will lead the economic comeback because it remained strong, building is putting people to work and mortgage rates are expected to remain low.
Single-family permits went up nearly 12% across the country in May, according to the U.S. Housing and Urban Development and Commerce Department. Builder confidence in the market for newly built single-family homes jumped 21 points to 58 in June, according to a NAHB/Wells Fargo Housing Market Index. Anything above 50 indicates a positive market.
Anchorage’s housing market is following what’s happening across the nation. Buyer confidence is high and Alaskans are taking advantage of low rates to buy or build their dream homes. In the month of July alone, 378 homes were sold in the Municipality of Anchorage, according to Michael Droege, a realtor with Century 21 Realty Solutions. That’s 68 more properties than in July 2019.
Sales could have been even higher but homebuyers are facing a lack of inventory on the market. In July 2020, there were 669 listings in the municipality, compare that to 946 the year before. The lack of inventory is great for homeowners looking to sell quick. Homes only sit on the market for an average of 31 days in Anchorage, according to Droege. Low inventory and low interest rates may have helped boost home price sales. In July, the average selling price for a home in the Municipality of Anchorage was $403,893, compared to $377,177 last year.
The average price for a home in the Mat-Su Valley is lower, $312,037, according to Droege. But that number is actually much higher than it was a year ago in the Valley, 18% higher in fact. The Mat-Su is also facing a lack of inventory, active listings were down 40% in July. Homes don’t sell quite as quickly as they do in Anchorage. The average time on the market in the Valley is 50 days, says Droege.
Down on the Kenai Peninsula, the story is a little different. The average selling price of a home is actually lower than it was a year ago, by about 3%. This is largely driven by higher sales price concessions, says Droege. He says sellers conceded nearly 6% on sale prices in July. On the peninsula, sales and sales volume are lagging behind 2019.
It’s a good time to be a buyer, seller or both in Alaska right now.