The average selling price of a home in Anchorage last year was $322,280. This is the fifth consecutive year of average prices coming to rest in the $320,000-$330,000 range. In the ten years prior to 2007, home prices doubled. Given what's happening in so many other markets, Anchorage has much to celebrate!
Alaska MLS Inc. published year-end statistics today. The reports (http://www.reals8.com/statistics.htm) document the continued stability of the Anchorage housing market.
But for a flood of negative housing news coming from Outside, one would expect home prices to be rising here, given supply and demand factors. A total of 2367 homes sold last year, a two percent increase over 2010.
More sales happened during a time of a record low rate of new home construction. The market absorbed inventory, and by the end of December there was only a little over three months' supply of homes for sale. A balanced market is one with five or six months' supply. Where there is a shortage, market forces usually drive prices higher. Low interest rates also should have sparked higher prices. But headline-driven lower consumer confidence levels countered these traditional market forces.
For the last half of last year the total number of homes for sale ran below comparable months of 2010. Only at the $500,000 price level and beyond is there an adequate supply of homes for sale. There's five months' worth from $500K to $750K, ten months in the next $250K bracket, and something over two years of million dollar homes for sale.
Homes sell in about 71 days, and for 95% of their initial asking prices. The pattern is for many homes to have one price reduction of about 3% if they don't sell in a month. That price adjustment usually brings the home within striking distance: the gap between selling prices and where homes are priced at the time of sale is less than 2%. The corollary is that buyers ignore homes priced more than just a few percent above market and don't even make offers on them.
Condo prices have also been stable, with the average selling price in the $190,000 range for four years. Last year's average, $198,855 was almost four percent above 2010. However, lending standards tightened during the year, making financing for some condo projects harder to obtain. This explains fewer sales, a 15% decline, in the face of rising prices. There is only a four month supply of condos at present.
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