Alaska’s housing market is definitely holding its own these days in spite of the state’s economy taking a hit from declining oil prices. Though deja vu in terms of similar economic issues around oil prices during the 1980’s, things are different today in Alaska. The state seemingly has a system of checks and balances as things inter-relate with its housing market. Interest rates continue to be relatively low. Job losses are less dramatic than anticipated. Home inventories are stable as builders in the state did not glut the market with an oversupply of product leading up to the recession. And, rather than being a transitory stop on the way from her to there, Alaska is now home both physically and emotionally to a stable, embedded population.
All this is not to say that things are hunky dory in Alaska’s economy. Yes, there have been job losses and yes, there isn’t a lot of “extra” money around and yes, its economy is declining but Alaska’s housing market, though slowing, is holding its own.
Alaska’s economists just released its most recent Alaska Economic Trends Report. In that report, “the fact that prices didn’t drop during the first quarter of the statewide recession, and even increased modestly, indicates that the state market is stable right now despite the state’s job losses.” The average price of a single family house increased between 2015 and 2016. The average price of that house, between $315,000 – $324,000, is significantly higher than the national average of $234,000. The number of houses sold, as in other parts of the country, has decreased by 11%.
Affordability of housing in the state is holding steady. It takes an average of just under 1.25 paychecks to afford a typical home. Foreclosure rates, .60%, in 2016 are under the national average of 1.53%. And even though new construction is considered “tepid,” new home sales are up 2% bringing those sales in line with levels seen in late 2007.
Caution is the name the game in Alaska’s housing market. Caution, not panic, from home owners, developers, builders, lenders, everyone. Economists believe that the market will remain steady and able to weather the state’s recession without either producing a housing glut or reducing its housing supply. That news is cautiously good news.