Real Estate Blog

Understanding Current Market Conditions

Spring finally decided to show up! It's been a long winter here in Southcentral Alaska, and these longer days, sun, and greenery are a much welcomed reprieve. We are in a very unique market right now with low inventory, higher prices, multiple offer scenarios, and a lot of people cautiously entering the market or waiting to see if market conditions change.

Alaska has always ebbed and flowed with the real estate market, following our seasonal changes. We typically see an influx of listings and a higher number of transactions come spring and summer, and this year is no different. We are seeing those increased numbers on the same annual cycle, but year over year, we have been seeing a decline in the number of available homes. We just aren't seeing as many available homes on the market as we typically do, and our inventory has been steadily dropping since 2018. In April 2023, we had 211 available homes on the market in Anchorage; in April 2024, we only had 203 homes. Currently, we have dipped even further and are not seeing many signs of a steady increase. 

We know that the number of available homes has decreased year over year, but how has that affected our number of sales? Well, in April 2022, we saw 281 sales; in April 2023, we saw a decrease of 54%, down to 128 sales. Then this year, we saw a 10% increase to 141 sales. 

That's a lot of data, but what does it mean? In 2023, we started to see interest rates climb, and people were waiting to see if those would drop. Unfortunately, they are here to stay, and people still need to buy, so as people accept this new norm, we are starting to see sales steadily increase again. However, with the current shortage of inventory that we explained above, our pricing is starting to climb as well, which we will discuss next.

As we know, supply and demand have always been the two greatest indicators of pricing. Above, we have shown that inventory (supply) has been decreasing year by year. Additionally, we can see that sales and the number of transactions (demand) are increasing, thus driving prices higher. Yes, inflation, appreciation, and other factors are at play, but at a basic level, we have a shortage of homes, and that is creating our pricing increases. In fact, as you can see by the graph below, pricing is continuing to climb. In Anchorage, only looking at residential homes, our average sale price is continuing to climb. In April 2023, our average price was $456,000, and in April of this year, it had grown drastically to $528,000. 

Rates are here to stay for a while, and with an election year, there is still a bit of uncertainty in the market. What we do know is that if rates drop, prices are going to climb again. If you are looking to buy or sell in this market, there are many strategies we can implement to ensure you are well prepared. Reach out to me or my team, and let's make sure to get the best plan in place for your goals.