Indeed, the Alaska real property market hasn’t been able to maintain the same pace as the rest of the adjacent United States. While most of the country has enjoyed nine straight years of growth since the Great Recession, Alaska’s economy suffered a setback. In large part, due to job losses across the state (particularly those in the oil industry), the economy of Alaska slid into a recession that lasted for a while while the nation was thriving.
The state has suffered a net migration loss throughout the past decade. Therefore, real estate in Alaska has been lagging behind the national average over several years. While the median home price within the Continental United States experienced a short decline following the Coronavirus, property values in Alaska were a bit shaky for most of 2020 because of higher-than-average unemployment rates.
However, despite recent difficulties, Alaska appears to be improving, and the real estate market is no different. Inflation has risen again, and the Alaskan housing market is beginning to get hot. The actual property marketplace in Alaska is beginning to appear similar to the national market of 2012 when prices began to rise historically. Anyone looking to invest in Alaska real estate investment may discover today is the perfect time to purchase the house of their dreams.
These are the Top Alaska Real Estate Markets
The best real property market in Alaska is a subject of discussion. The following list will help you decide the cities that investors might consider paying particular attention to:
- Anchorage
- Fairbanks
- Juneau
- Wasilla
- Sitka
- Ketchikan
Alaska Housing Market Overview
- Median home value: $301,673
- The average sales Price For A Single-Family Home is $371,671
- 1-Year Appreciation Rate: +4.0%
- Number of Foreclosures (Q1): 78
- Employment Growth +5.6%
- The Unemployment Rate is 6.6%
- Pay Increase: +3.2%
- Median Rent Price: $1,369
- Price-To-Rent Ratio: 18.36
- The population: 731,545 (latest estimate from the U.S. Census Bureau)
- Median Household Income $77,640 (latest estimate from the U.S. Census Bureau)
Alaska Median Home Prices
Alaska’s real estate market hasn’t enjoyed nearly nine years of growth rates as its counterparts in the contiguous states. This doesn’t mean that prices haven’t gone up rapidly since the conclusion of The Great Recession, but instead, it’s true that the Alaska housing market has run through a few snags in the process. While the major markets across the United States saw consistent increases in price for the better portion of a decade, it was the case in Alaska. Alaska’s housing market went through a recession, which witnessed prices decrease at times and raises the question: What’s the typical cost of a house in Alaska? Are homes cheap within Alaska? Despite recent volatility, the prices in the state with the most northern climate are more expensive than the average for all of America.
The median value of homes within Alaska’s property market is currently $301,673. In the ten years prior (August 2011,) real estate in Alaska had a less expensive price of $235,000. Since that time, the median value of homes in Alaska rose 28.3 percent to reach the level they are at today. To put it into perspective, the median home value within the United States increased approximately 82.3 percent over the same time. After 10 years of growth, the median value of a home within the United States is $298,933.
But it’s important to note that the spread of the Coronavirus caused Alaska to follow a different course over the last year and a half. While median home values throughout the United States suffered a negligible decrease following the spread of COVID-19, Alaska home values fell through most of 2020. In reality, it was not until that third quarter of the year that the value of homes increased (six months after the rest of the nation).
A weaker-than-average economy probably causes a slowdown in appreciation. In the past, demand drove prices up across the country. However, Alaska did not have the funds to pour money into the industry. Particularly, the high 6.6 percent unemployment rate kept the majority of buyers from taking part in the market. Low demand has slowed market competition within the market competition in the Alaska housing market, and the prices have only risen around 4.0 per cent in the past year. On the other hand, the national average grew by 16.7 percent due to a highly competitive market and inventory shortage.
Surprisingly, the real estate market in Alaska could appear tempered. However, the absence of activity in recent times could be an opportunity to gain. While other states have driven many potential prospective buyers off the marketplace, it appears that the Alaska housing market seems to be more fairly valued. Instead of massive increases in the past year, buying homes in Alaska is much more affordable for the average home buyer.
Alaska Median Rent Prices
The prices of homes in Alaska impact the entire housing market, and the rental market is not the only one. The most recent rise in home values has impacted renting, but only slightly. For one thing, increased home prices and the absence of listings hinder a massive group of prospective buyers from gaining access to the market. Many people wish to purchase but cannot, which leads to another problem: the same demand and supply problem facing buyers hurts renters. Because more people are being priced out of the buying market, we see more renters competing for fewer properties than usual. This means that landlords in Alaska can charge higher rents than they were in the past.
According to the latest figures published by Apartment List, the median rent in Alaska has risen 5.8 per cent in the last year and currently stands at $1,369. The most recent rise in rents surpassed the value of homes. With the rise in rental prices, tenants are expected to pay for each size of unit in Alaska:
- Studio: $907
- 1-Bedroom: $1,022
- 2-Bedroom: $1,362
- 3-Bedroom: $1,869
- 4-Bedroom: $2,295
To put things in perspective, for a better understanding, the national average rent cost is $1,219, or 12.3 percent lower than Alaska’s standard rate.
Alaska Foreclosure Trends & Statistics
In the Attom Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, 65,082 U.S. properties received a foreclosure filing (default notices and scheduled auctions or repossessions by banks) during the initial six months of this year. “That figure is down by 61 per cent compared to the same period in the previous year and 78 per cent lower than the same interval two years earlier,” in the study.
To be fair, foreclosures are not happening primarily due to government programs of assistance and forbearance designed to mitigate COVID-19’s effects. Several safety nets offered by the government allowed homeowners in distress to stay in their homes even though they could not meet the mortgage payments. Foreclosures in Alaska aren’t different, and filings are down by around 42.7 percent in this period compared to the same time in the prior year. In total, Alaska saw a total of 161 properties filed for foreclosure from January through June. Only 0.05 percent of Alaska’s housing units are classified as distressed at this rate. If that’s the case, foreclosed homes in Alaska are comparable to national norms.
Despite the decline in foreclosures in the last few months, homeowners in the Alaska real estate investment community can expect more filings and not later. After the expiration of forbearance programs, homeowners in distress are expected to get current with their payments. The homeowners who can benefit from the help and those who can’t will likely have to submit a four-score application. Investors who set up financing today may be able to assist struggling homeowners and secure their next deal soon.
Alaska Real Estate Investing
It’s true: the Alaska real property market is not as advanced as the rest of the nation. Notably, the real estate market in Alaska is more vulnerable to the effects of Coronavirus than the rest of the nation. After the country’s second recession in the past decade, COVID-19 disrupted what was supposed to be a time of economic expansion. However, the virus continued to erode local economic fundamentals. This has led to low unemployment and continuing net migration loss, causing the demand for real property to increase.
Because, in significant part, due to a less robust economy and a lower house market, the real estate market in Alaska hasn’t had the same kind of growth as other states. For instance, the median value of homes in Alaska in the United States has increased 16.7 percent in the last twelve months. The rise is directly linked to demand, which has vastly outweighed supply. Because of increased savings, government stimulus, and historically low rates of interest, individuals living in the United States are more interested in purchasing than they were in the past. But, the number of homes available is as high as it should be. The demand has led to increased competition among the limited properties available, eventually allowing homeowners to pay a price increase.
There is a lack of demand for the Alaska property market; however, it isn’t experiencing the same level of interest as other areas of the nation. As a result, the median home value for homes located in Alaska has only risen 4.0 percent over the past year. But it’s important to note that Alaska’s moderate growth could be a good thing for investors. While investors see profit margins on deals decrease as each month passes, Alaska real estate investors remain positioned to succeed. This means that almost every one of today’s most popular exit strategies is still used for actual property buyers in Alaska.
Although prices in Alaska are hitting new heights every month, the local market isn’t as costly as the rest of the United States. So, there’s plenty of space for real property owners within Alaska to “flip” houses. The homes are being sold for more than ever before, and those who can secure a great bargain below market value can gain a lot.
Alongside the rehabilitation, local investors are beginning to focus more on rentals for long periods. For one thing, new indicators developed due to the Coronavirus have made long-term investments more appealing than their shorter-term counterparts. Mainly, it’s never been easier to get the money of institutions. With interest rates below three percentage, Alaska real estate investors can offset the higher cost and boost cash flow from the properties in operation. At the bare minimum, low mortgage payments mean investors could earn more from the rent they earn every month.
Alaska Housing Market Predictions
Making predictions about the housing market with any kind of error could be challenging. There’s always at least a little chance of error, particularly in a state with a unique character as Alaska. The Alaska real property market is unique to others in the nation, making identifying patterns much more difficult. However, making educated, in-depth, informed guesses is a best practice. Being aware of where the market is and where it’s headed in the future can assist real property investors in Alaska in keeping an edge over their competition. In this regard, below are some of those Alaska housing market projections that will more than likely be successful:
- Median home prices will continue to increase: Not unlike every other market in the nation, however, the Alaska real property market has seen prices rise due to supply shortages, rising demand, and low prices for interest. Although the prices haven’t increased at the same rate as in other areas of the nation, they’re still rising and will remain on the rise if inventory stays limited.
- Demand and supply will continue to determine the real estate landscape: Real property in Alaska is stuck in an unusual situation. The number of people leaving the state because of the current recession. However, the economy is growing and has led to the growth of jobs. This has led to the Alaska real market seeing an overall demand decrease. However, more buyers should return to the market and increase real estate investment when the economy improves. It’s just a matter of time before people realize Alaska has found its feet back and begins to move back. After that, property prices will be booming.
- Net migration is expected to be stable: Alaska real estate trends are still hampered by losses in net migration. More people have emigrated out of Alaska than those who relocated to Alaska because of the low job market. This has meant that the housing market hasn’t been booming in achieving its potential. However, improved economic conditions will help stabilize migration patterns, boosting housing development throughout the state.
Alaska real property trends aren’t fixed in stone but offer good insight into the future. Simply put, they’re an excellent tool for monitoring due diligence. Only those who can anticipate AK market trends in real estate with high precision have a better chance of achieving success.