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Anchorage housing market: stable but held back by consumer caution.

Potential home buyers in Anchorage are acting like fever patients -- shivering and sweating instead of buying. Bombarded by negative economic news and suffering from a slew of personal and political uncertainties, people who ought to be upgrading are instead watching and waiting, say realtors.

Simply Boring

"If one wanted to use a single adjective to describe this market, it's simply boring," says Connie Yoshimura, president of Fortune Properties. She notes that brokers are having to be more creative in their marketing and diversified in their listing strategies.

Ron Pollock, broker for 2001 Realty, says the buyers are still there, but they enter negotiations with relatively little enthusiasm. "Buyers are still buyers, but they're not committed to the sale. What people read in the paper is their reality. That really undermines the psychology in the community," he explains.

Pollock worries that the low interest rates available in the market now have not tended to push up home values. "My concern is we didn't have prices go up, but we have fabulous interest rates. Take away the interest rates and the prices could have actually declined," he says. Pollock expects that if rates remain low, the market will eventually pick up momentum. If they go back up, the market may actually soften.

Yoshimura isn't sure the low rates are all that helpful and may actually be hurting some potential buyers because savings rates are correspondingly low and may be contributing to a perception of financial loss or feelings of uncertainty. "Jobs help the housing market more than a 6 percent interest rate because you can't buy a house if you don't have a job, regardless of what the interest rate is," says Yoshimura, noting that long-term changes in the state and national job markets are adding to uncertainties and creating a drag on the market.

Brad Stern, vice president of Key Bank of Alaska, notes that "perception is a strong player" in the market. He's not surprised, therefore, that housing starts, projected to be about the same this year as last, are coming in a little below the mark. But he adds that more listings have come on the market as homes have recovered their value.

"Eagle River seems to be having a good year, both in terms of new construction and existing inventory. I see that trend continuing now that the infrastructure has been developed from a transportation aspect," says Stern. In fact, the Eagle River segment of the new home market has been generating pre-sales, largely because the area offers a better square-footage value and is convenient to the military bases.

According to local realtors, houses priced up to $150,000 have been selling well. The market up to the $180,000 price range is considered stable. Units under $135,000 have been "pretty strong," notes one broker. Condominiums have made something of a comeback, allowing sellers to realize a decent return on their sale for the first time in years.

Fear Factor

Jim Crawford, chairman of Crawford Real Estate, goes so far as to quantify the sluggish psychology in the market. He asserts that home sales would be 20 percent higher if it wasn't for the "fear factor."

"If fear were not the prevalent factor, people would be buying a lot more homes," says Crawford. He notes that the jitters persist despite numerous positive economic indicators, suggesting that potential buyers may be focusing too closely on the long-anticipated decline in the state's oil industry.

"If you ask people on the street if we're in a recession, they say we are. We haven't been for three years," Crawford says.

He ticks off a long list of new developments with positive long-term implications for the Anchorage and statewide economies: plans to build a new Air Force and Native hospital, new tourism projects, a promising role as an international air cargo hub.

"The diversification of the Alaskan economy is coming about," says Crawford. "For Seibu to put $50 million in this town (through its Alyeska ski resort expansion) is probably the most important economic news in 50 years. The notion that all the high paying jobs are going away is garbage."

He also says that rather than being suspicious of the recent trend of national retail chains opening stores here, local consumers should take heart. According to Crawford, the trend reflects the coming of age of Alaska's supply infrastructure, which will help overcome the traditional dominance of Seattle in dictating prices, inventories and constraints. The result will be a lower cost of living for Alaskans.

No Fools

"That's going to strengthen our overall economy. It's phenomenal," Crawford says, noting that the new retailers are making long-term investments. "Those people are no fools. They understand we have excellent long-term prospects for our economy."

Crawford expects little immediate change in the local real estate market. "I look for about a continuation of what we've got. It's a market that's in balance. If people want to sell, they can get an equitable price."

Adds DeAnn Gleason, president of Crawford Real Estate, "I look for next year to be a good year. Jobs are up; that turns the dollar around."

Fortune's Yoshimura agrees, noting that national trends in home building and buying are beginning to be reflected in the Anchorage market.

"There are fewer luxury home buyers in the marketplace. And people are interested in entry-level housing and upgrade housing."

Yoshimura notes a growing demand for smaller homes with continued emphasis on quality. She says enough housing to fill this demand is not locally available, but predicts the market will catch up in the next five years as the city's aging housing stock is replaced or augmented.

According to Yoshimura, new home construction is increasingly driven by the demand for affordability, resulting in a new outlook on home ownership.

"In the 90s, we're getting out of the idea that housing is an investment, looking at it more in terms of shelter. Buying a single-family home is not a way to increase net worth. The '80s have taught us that. I don't find anyone specializing in a house as an investment."
COPYRIGHT 1992 Alaska Business Publishing Company, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Author:Richardson, Jeffrey
Publication:Alaska Business Monthly
Date:Dec 1, 1992
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