The median price of a single-family home in Anchorage rose to a record high of $456,000 in 2022, even as Anchorage realtors said rising interest rates have begun to cool the market.
They said the slowdown was welcome.
That’s an improvement from the frantic pace seen in the first two years of the pandemic, when buyers faced nervous bidding wars and some properties sold almost immediately, well above their asking price, they said.
This is still a seller’s market, said Larry Burke, chairman of the board of Alaska Realtors.
But sales volume is down from last year and homes are starting to sit on the market a month longer, he said. Also, for the first time in years, sellers are increasingly giving concessions to homeowners, such as offering help with closing costs or sometimes reducing the asking price, he said.
“We’re back to a normal market,” Burke said. “It was not normal during the pandemic.”
Still, the effects of the pandemic continue to ripple through the market, putting pressure on home prices, realtors in Anchorage said.
The pandemic slowed housing construction as inflation, labor shortages and supply chains drove up building costs.
In Anchorage, it added to a long housing shortage. Fewer than 200 single-family homes are currently for sale, leaving the market with less than a month’s worth of homes.
“It’s supply and demand, as always, and our supply is very limited,” said D’Ette Owen, president of the Anchorage Housing Council.
[Earlier coverage: Average price of an Anchorage home tops $420K amid ‘scary’ low inventory]
Anchorage home prices rose 7.7% in 2022 from a year earlier, according to numbers from the Alaska Multiple Listing Service, a real estate listing platform.
This is the highest rate of increase in several years, the data shows. Three years ago, the average home sold for $80,000 less than it does today.
House prices have fallen in recent years due to extremely low interest rates, which has led to increased demand for homes, realtors said. People had more money to pay as savings increased, in part because of stimulus checks, and people who worked from home were looking for bigger homes, they said.
But after interest rates began to rise earlier this year, the market began to normalize, Owen said.
The average rate for a 30-year fixed-rate mortgage nearly doubled by 2022, sharply cutting purchasing power, though it’s still below the long-term historical average.
Higher rates have priced some buyers out of homes, helping dampen demand, realtors said. They also reduced the incentive to sell, as more homeowners stayed put to keep their low-rate mortgages.
Right now, homes are selling for their asking price, and many offers on homes have declined, Owen said.
“It’s going through a correction now in the last six months, but it’s not a drastic correction,” she said.
Art Clark, co-owner of Alaska Real Estate Associates, said home values continued to rise in the last three months of this year, with prices averaging $459,000.
He and others said they expect prices to rise at least slightly.
Anchorage’s lack of housing inventory and available land for construction will help ensure that, he said.
“A small increase can be anything,” he said. “I don’t see what will cause the price to drop.”
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