August reports just published by Alaska MLS Inc. document the continuing trend toward normal market conditions.
The number of sales contracts inked for existing and new construction homes and condos is off 6.5% compared with last year. This represents a return to historic levels of property turnover since the current long-term market recovery began in 1990.
The number of homes for sale (not including condos) stands at 1197. Inventory was at 1100-1300 all through the 1990's.
The existing inventory is fresh. Much of the increase from the chronic short-inventory levels of the past six years -- when only 500-600 homes were for sale in most months -- came to the market this summer. This is evidenced by the current listing inventory showing only 60 days marketing time, compared with last year's 610 homes for sale showing 96 days-on-market.
How long it actually takes a home to sell is what's important to sellers. That has hardly changed in recent years: 46 days for year-to-date sales in 2004 and 42 days for the same time frame last year and so far this year. Homes that experience exessive marketing time, over 90 days, miss the market's enthusiasm for fresh listings and become shopworn.
With demand relatively constant, and supply returning to normal levels, price appreciation has moderated accordingly. Compared with double-digit appreciation rates in recent years, 2006 is showing signs of about 6%-7% inflation. (Nothing suggest a decline in value.)
The average home in Anchorage now prices at about $325,000. Absorption calculations compare the amount of inventory with the rate of sales. For homes priced at the average low-$300,000 level, MLS estimates there is about a five month supply.
Supply of four to six months is an indicator of a balanced market. More than that -- such as the eleven-month supply of homes priced above $500,000 -- suggests a buyer's market. Less supply -- such as the 2.4 month supply of homes priced under $250,000 -- indicates a buyer's market.
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