The recessionary economy slowed housing sales and new home construction in Alaska as the housing market was protected from the bottom falling out. Major national lenders that made newly developed creative mortgages blamed for much of the housing bust weren’t made in Alaska. As a result, the state is seeing few foreclosures and is already showing signs of recovering.
After nearly 20 years of growth and prosperity Alaska’s economy had been so good for residents that every Alaskan received a check from the oil industry via state government as a gift. Toughening economic times are expected to change that as the economy slows and energy markets turn slower.
The economy was fueled by a burgeoning tourist trade and a booming oil industry. Anchorage saw population growth as native Alaskan companies invested in their own communities. Bankers were making mortgages in the nation’s last frontier more aggressively than in many other areas of the state.
Home sales were aided by the first time buyers’ tax credit and are projected to improve during at least the first half of the year in Anchorage. Buyers are taking advantage of lower prices and near record low mortgage rates. Home values are forecast to deflate just slightly in Anchorage as a result in 2010 at 3.6%.
Juneau saw a spike in home sales in early summer after a slowdown that lasted more than a year and a half. In a move that hasn’t been seen in other areas of the country for more than three years, homes were selling as soon as they hit the market. Low interest rates and the first time buyers’ incentive acted to pull buyers into the market.
Facilities for a new gold mining plant are expected to stimulate the local economy and bring more than 400 employees to Juneau to bolster the housing market. With little affordable land left to purchase in the community even a small number of new residents will boost the market. Juneau is forecast by Housing Predictor to see home prices appreciate 4.2% in 2010.
In Fairbanks it’s quite another story with more foreclosures projected as the credit crunch and growing unemployment make it tough for many homeowners to make the mortgage. The recession has hit Fairbanks harder than most of the rest of the state. But the military base should help to make home sales steadier and pull the community out of the downturn. As sales improve, home prices will eventually rise, but are forecast to deflate an average of 3.1% in 2010.
In Sitka, a small fishing community on the Gulf of Alaska, which we have tracked for years is feeling little impact from the recessionary economy. Sitka never really experienced a big boom and won’t see much of a bust either. With little sales activity housing deflation is forecast at only 1.3% for the year.