The first four months of this year have demonstrated a remarkable stability in the Anchorage housing market due to a continued lack of single-family inventory.
The Multiple Listing Service tracks listing and sales data from thirteen geographical areas from Turnagain Arm to Peters Creek and each one has had a decline of single family homes for sale.
Overall that decline measured 17 percent when compared to the same time in 2016. Days on the market were reduced by 23 percent and sales by 2 percent. When compared to the 17 percent inventory decline, the 2 percent reduction in sales is meaningless and shows that buyers are continuing to be active in the market.
The average sales price remains steady at $360,000 but there is definitely some compromise in value with homes now selling at 98 percent of list price compared to 99 percent last year.
But what these statistics don’t reveal is the buyer demands for home repairs due to our aging housing stock that is suffering from cosmetic and functional obsolescence. What you see on Houzz, Pinterest and HGTV is not what you’ll get in an Anchorage home that is 30 years old, even if it has been remodeled.
Many of these demands stem from home inspectors who offer recommendations beyond health and safety requirements. These “recommendations” can cost sellers several thousand dollars if they want to continue with the purchase and sale contract.
Buyers, in particular, millennials, who generally lack funds for closing costs, are also asking for seller paid closing costs up to $10,000. Repairs, seller paid closing costs and the 1 percent decline in sales vs. asking price indicates a softening of values but not lack of sales. Buyers are actively looking and buying but want concessions.
These concessions are hidden costs to sellers and are not reflective in the market data.
One of the slower times of year for real estate sales is between now and the middle of July. Buyers and sellers are busy with graduations, vacations, visiting family and friends, and enjoying the long summer days but the smart buyer will tear themselves away from all the sun filled outdoor activities and go home shopping.
Mortgage interest rates bumped up an eighth of a percent last week and although it is anybody’s guess, I’m betting they will continue to creep up, which increases the cost of any home financed purchase.
Builders are expecting a 15 percent to 20 percent increase in lumber prices as a result of the tariff put on the import of Canadian soft lumber. Local residential building activity remains at record low permits and is likely to continue at that snail’s pace through the end of the year.
However, lack of inventory is still the determining factor in the stability of the local housing market. As of last week, Anchorage had 200 fewer single family homes for sale than a year ago at this same time.