During the Great Recession when housing prices plummeted across the country and foreclosures sprouted like weeds on vacant lots, Anchorage, Alaska, was a port of calm in the storm.
There was a bit of a hit, as housing prices declined by about 15 percent, but that was early in the recession around 2007 and 2008.
As for foreclosures, you would have been hard-pressed to find one. At peak, only about 1.5 percent of total inventory had drifted into foreclosure, reported Michael Droege, president-elect of the Alaska Association of Realtors and general manager at Century 21 North Homes Realty. "We are the least foreclosed market in the country."
There were good reasons for the stability. Oil is the biggest driver of the state economy, and most of the major oil companies have state headquarters in Anchorage; with two military bases in the region, federal spending remains high; and tourism, which did dip during the recession, remains a bulwark.
In addition, Native American corporations, major banks and hospitals make their home in Anchorage, said Scott Goldsmith, professor of economics at the Institute of Social and Economic Research at the University of Alaska Anchorage.
Because of the big military bases, personnel rotate in and out of the region, always creating a need for new homes, or the sale and purchase of homes.
The population of Anchorage has been slowly growing, and the whole metro area now counts close to 400,000 people, with about 300,000 in Anchorage and Eagle River to the north.
"The population has grown a little faster than the national average," Goldsmith said. "Normally, there is a high turnover in population, but the economy is doing well so people are sticking around."
Indeed, the state’s unemployment rate historically tracks higher than the nation as a whole, but through the depth of the recession, Alaska was 1.5 to 2 percent below the national average. Today, it stands at 7.8 percent.
The remainder of the metro population can be found in the Matanuska-Susitna Valley, or Mat-Su to locals, to the north of Anchorage. The biggest cities in Mat-Su are Palmer and the fast-growing Wasilla, whose former mayor was a Republican politician named Sarah Palin — you may have heard of her.
"Wasilla has been on a tear because the land is cheap up there compared to Anchorage," Goldsmith said. "But, everything is spread out."
To which Droege added, "Wasilla is the fastest-growing area in the state and a lot of that is because of the availability of affordable land. The average home in Anchorage is going to be sited on 8,400 square feet (with sewer and water) with a home of less than 2,000 square feet. The lot will cost about $150,000. In the Mat-Su, you are going to get an acre of land with a well for $30,000 to $40,000."
If one compared a home in Wasilla to a comparable home in Anchorage, the spread would be $100,000, Droege said.
The fundamental reason for this discrepancy has a lot to do with the uniqueness of Anchorage, in particular the lack of developable land in and around the Anchorage city limits.
"We have only 500 home sites available between Anchorage and Eagle River," Droege said. "That’s because there is a lack of developable land. In the Mat-Su, there is a lot more developable land."
With so little new-home construction and a population still expanding, that has put pressure on rental housing, or the lack thereof. The vacancy rate for rental housing is less than 1 percent; essentially, if you have something to rent, it’s already been taken.
That, of course, means rental rates are going to be substantial.
"I own a fourplex in Anchorage, where I rent three units and keep one for myself because I have a home in Mat-Su and sometimes I have to stay in Anchorage," Droege said. "If I wanted to rent the last unit, about 1,300 square feet with three bedrooms and two baths, it would go for $1,800 a month."
As one Realtor recently blogged, "The Anchorage rental market is exploding right now, and if you’ve looked for a house or an apartment to rent in the past six months, you know it’s getting more and more difficult to find. It’s certainly a great time to be a landlord."
Homes are expensive to buy as well.
In Anchorage, the average sales price for the month of August was $334,190, up 6.3 percent from one year earlier. Year to date, the average August sales price hit $332,625, up 4.11 percent from the same eight-month period in 2011, Droege reported.
You need to get what you need to get, so sales volume for August was up 20.8 percent. For the first eight months of the year, it was up 12.2 percent.
"I listed a home for sale at $425,000 and I had a full-price, no-concessions offer in two hours from the time it was listed," Droege said. "It had to do with the availability of inventory at that price range. The buyers had been looking and looking and when the house came on the market they had to move quickly."
That’s because that particular family wanted to live in Anchorage. Things are much different in Mat-Su.
"The average sales price in Wasilla for August was $231,204, up 4.2 percent over August 2011, according to the Anchorage Board of Realtors’ numbers. Year to date, the average sales price reached $232,951, up 3.37 percent versus the same period the year before.
In Wasilla, sold listings were up 24 percent in August versus August 2011, Droege said.
Oddly enough, the complaint about living in Mat-Su is the same as with any other American city, except more so: The jobs truly are concentrated in Anchorage, and whether one lives north in the suburbs or to south in the Kenai Peninsula, there is only one ribbon of highway either way.
As city dweller Goldsmith noted, "I wouldn’t live in Mat-Su. The commute is 45 minutes to one hour and there’s a lot of traffic. Besides, there is no planning in the Wasilla area. The community is not well designed. It’s a town without a town."