On the whole, Alaska’s housing market remained stable in 2012, but energy costs and government regulations cloud the future, according to Alaska Association of Realtors President Michael Droege.
Statewide, combined single-family and condominium sales averaged $287,000 at the end of the third quarter of 2012, the latest data available from the Alaska Department of Labor and Workforce Development. Year-over-year sale price was up $17,000, or 6.2 percent.
Sales volume grew 8.5 percent over the same period.
The labor department reports a year-to-date sales volume increase of 8.3 percent for single-family units in the Fairbanks North Star Borough through the third quarter of 2012. The average price of a single-family home in Fairbanks rose 5.1 percent to $244,000.
Year-over-year condominium sale prices fell in the borough 5.6 percent to average $117,000.
Droege said heating costs in Interior could soon put the area’s housing market in steep decline.
“Energy costs in Fairbanks are really causing a lot of problems,” he said. “You have families paying as much for heat as for their monthly mortgage payment.”
If new gas supplies aren’t made available to curb heating costs, the Fairbanks and North Pole housing market could be hit with widespread “heating foreclosures,” Droege said.
In Anchorage, the sales volume was up 11.2 percent in 2012, Droege said, and year-end pending sales were up 17 percent over 2011. Prices rose 5.4 percent in the city to $338,000, according to labor department statistics.
The price increase was driven primarily by a 1.5 percent decline in housing inventory, Droege said.
Prices in the Matanuska-Susitna Borough rose nearly 3 percent to an average of $233,000. Mat-Su inventory remained flat, Droege said.
According to the labor department, price increases in 2012 in both the Municipality of Anchorage and the Mat-Su Borough followed declines of 2 percent in the municipality and 0.8 percent in the borough in 2011.
Droege said he expects Anchorage sales volume trends to slow somewhat and increase 5 percent to 7 percent in 2013, with a similar 5 to 7 percent increase in sale prices. He predicts available sale inventory will be down in the city another 2 percent to 3 percent in the coming year.
New construction in Anchorage will be “strong” Droege said, with 300 to 500 new single-family homes expected, though he admitted 500 units might be an ambitious prediction.
Available inventory should rise by about 5 percent in the Mat-Su Borough as a result of the limited space in Anchorage, Droege said.
Housing demand in Southcentral should continue to increase, Droege said, based on low availability in the Anchorage bowl and record-low interest rates. He said the housing market in Southcentral has bottomed out and is starting to recover, and supply may begin to outpace demand in the area, Droege said.
Juneau saw its single-family unit sales volume fall slightly, 2.2 percent, for the period; however single-family home sale prices rose considerably to 12.5 percent, according to the labor department statistics.
Though a small sample size with only 36 condominium sales in Juneau through three quarters of 2012, the price of those sales increased 8.1 percent, to an average of $212,000.
While sale prices continued to recover nationally, Droege said residential market volume fell 17 percent. He attributed the market compression to sellers unsure about the economy, government spending and whether they will be able to buy another home.
Droege called the Qualified Mortgage Rules, or QMR, passed as part of the 2010 federal Dodd-Frank Wall Street Reform and Consumer Protection Act, “potentially devastating” to the future of the national housing market. The rules will be enacted in January 2014.
QMR set forth Ability-to-Repay Determinations that lenders must follow, according to the federal Consumer Financial Protection Bureau, which will regulate the rule changes. Lenders will be required to check loan applicant’s income and current debt obligations including alimony and child support. Generally, applicants’ debt-to-income ratio will be limited to less than or equal to 43 percent, according to the Financial Protection Bureau.
Droege said many of the rules are common business practice, but a proposal to require a minimum 20 percent down payment for a mortgage to qualify for the best available interest rate is bad policy, he said.
“In 2010, 75 percent of mortgage applicants would not have qualified for the lowest interest rate out there under (QMR).”
Elwood Brehmer is a reporter for the Alaska Journal of Commerce.