As COVID-19 brought most of Alaska to a near standstill, the state’s housing industry was not only in full-swing, mortgage lenders became busier than ever. Historically low interest rates are driving the housing market’s booming success. Alaskans are building, selling, upgrading, downsizing and refinancing at record rates.
Alaska homebuilders continued to operate throughout the shutdown. Interior Alaska Builders Association worked with the National Association of Home Builders to ensure building was designated critical infrastructure. The ability to continue work is one of the reasons homebuilding is poised to lead the nation’s post- pandemic economic recovery. An already strong housing industry kept Alaskans employed and helped others get back to work. The industry faces a labor shortage and the pandemic became an opportunity to bring people into the industry.
Mortgage lenders predict low interest rates to stick around for a while and that’s great news for the economy. Single-family homes are what’s most popular among buyers and builders. In August 2020, the average residential sale price in Fairbanks was $284,585. That number is up from a year ago. In August 2019, the average price for a home that sold in Fairbanks was $259,970. Homes are also selling a little quicker this year. The average listing that sells sits on the market for 39 days in August 2020, compared to 43 days in August 2019.
It’s a very similar economic outlook in North Pole, with houses selling slightly faster and at a higher price point than a year ago. In August 2020, the average sale price of a sold home was $268,697 compared to $248,986 in August 2019. The average sold home sits on the market for 32 days this year compared to 39 days last year.
The combination of low interest rates and low inventory on the market is great news for Alaskans and Alaska’s economy. As people continue buy, sell and build, it puts people to work and generates revenue. Despite the average housing price being more this year, low interest rates give homebuyers options. They can choose to spend more on a home than in previous years and have a similar mortgage because they’ll be paying more on the principal and less interest. Or, they can buy something in the range they were looking at while interest rates were higher, and enjoy a lower mortgage because of the lower interest rates.
The bottom-line for Alaskans is that if you’re thinking that it’s time for a change, now is a great time to be a buyer, seller or both in the Last Frontier.