2011 Alaska Housing Market

The numbers tell the story in Alaska. A mix of low risk mortgages helped to protect housing markets from the foreclosure crisis and other troubled home sales. Half as many homeowners in Alaska purchased subprime and adjustable rate mortgages as buyers bought more conservative mortgages, resulting in fewer foreclosures.

Anchorage Skyline

The Alaska Department of Labor announced the finding made through a study by the Mortgage Bankers Association as Alaska misses out on the national recession. However, home prices have fallen in the nation’s largest state measured by sheer square mileage, but nothing like they have elsewhere, declining to 2007 values.

Alaska also has a much larger share of government backed Veteran Administration (VA) and Federal Housing Administration (FHA) mortgages, measuring twice above the national average. The numbers show that there was less risky lending associated with Alaska’s housing market, and that has resulted in far less damage.

Alaska is one of those rare places in the U.S. that is expected to see growth as more businesses move to the state for lower payroll expenses and employees move for jobs with a stronger regional economy supported by the oil business, which is gaining health with rising oil prices.

In Anchorage, the state’s largest metro area, home sales slowed after the federal tax credit for buyers ended. However, its resilient economy has kept it out of the worst of the housing bust with relatively few foreclosures and out of the recession. But weak consumer confidence and tighter mortgage lending requirements are hurting the market for sales. Anchorage home prices aren’t forecast to do much in 2011 as a result, projected to decline an average of just 1.4%.

Local Alaska Housing Markets at a Glance

City Forecast
Anchorage -1.4%
Juneau -2.3%
Fairbanks -1.3%

In Juneau a rise in home sales led by the federal tax credit dissipated after the credit expired pushing sales up temporarily rather than lending any sort of permanency to increasing sales momentum. The event marked three years of declining home values, despite near record low mortgage rates.

Downtown Juneau

Home sales should improve in Juneau as consumers gain more confidence in the local economy with more residents going back to work, and are forecast to do so towards springtime with average housing deflation for the year to be contained at 2.3%.

As newcomers move to Fairbanks for jobs in greater numbers, the housing market is projected to see an improving trend in 2011 with low mortgage rates as one of the biggest exceptions in the country, but don’t expect home values to increase just yet. It’s still held back by consumer skepticism in the overall economy. Fairbanks is forecast to experience average home price deflation of just 1.3% for the year.