For first-time buyers in Alaska, the path to homeownership between 2018 and 2023 was anything but predictable.
But as prices climbed and rates followed, the dream grew harder to reach.
From cabins near Fairbanks to starter homes in Anchorage, new buyers faced shifting ground.
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Overall Homebuying Trends (20182023)
From 2018 to 2021, Alaskas housing market was heating up.
By 2020, historically low mortgage interest rates fueled a surge in demand.
Annual home sales jumped to roughly 5,760 in 2020 (and a similar number in 2021).
However, the tide turned sharply in 2022.
As the economy reopened and inflation picked up, lenders raised interest rates at a historic pace.
These higher rates dealt an immediate blow to affordability.
The net effect was that affordability worsened dramatically after 2021.
According to state data, the average mortgage payment in Alaska rose by 52% between 2018 and 2024.
What Types of Homes Are First-Time Buyers Purchasing?
Even under tight budgets, most first-time buyers in Alaska tend to seek traditional single-family homes.
From 2018 through 2023, about 8590% of owner-occupied purchases statewide were detached single-family houses.
This proportion remained very stable each year.
Condos are especially significant in Anchorage, which accounted for about 80% of Alaskas condo sales by 2018.
Many first-time buyers (and downsizing seniors) chose condos or townhouses for their lower price and maintenance.
Thats a 33% increase in condo prices since 2018.
From 2018 to 2021, roughly 100160 owner-occupied multi-family purchases were made each year statewide.
Some first-time buyers used this strategy to help cover their mortgage by having tenant income.
But by 20222023, buying a multi-unit property became much less feasible for the average buyer.
Only 63 such owner-occupant multi-family purchases happened in 2022, and a mere 29 in 2023.
During the late 2010s up through 2021, move-up buyers were common.
However, by 2022, the spike in mortgage rates largely froze these move-up plans.
Many homeowners decided to stay put rather than trade their low-rate mortgage for a high-rate one.
This meant fewer existing homes were listed for sale, adding to the inventory crunch that frustrated first-time buyers.
The Downsizing Trend
At the same time, a smaller but steady group of owners were downsizing.
Downsizers are often empty-nesters or retirees moving to a smaller, more manageable home (or a condo).
In 20182019, Alaskas sluggish economy made selling a larger home harder, so downsizing moves were relatively few.
This freed up some larger homes for sale.
However, this trend reversed sharply in 2022.
By late 2022, many discretionary buyers dropped out.
Alaskas cabin country cooled off, taking pressure off those markets.
For first-time buyers, this was a bit of good news fewer second-home buyers meant a bit less competition.
By the end of 2023, the housing market in Alaska had shifted to a much slower gear.
Most non-essential moves were on hold.
Who Are Alaskas First-Time Homebuyers?
First-time homebuyers are a diverse group, but they tend to share some characteristics.
In terms of income, first-time buyers in Alaska are generally middle-income households.
With those incomes, buyers can qualify for modestly priced homes.
These might be small starter homes, older houses in need of a little TLC, or condos/townhomes.
Areas around Anchorage and Fairbanks (which have Air Force and Army bases) see many of these buyers.
Many first-time buyers were able to get 30-year loans at around 34% interest.
Low rates allowed buyers to stretch their budgets a bit more.
By contrast, when rates spiked in 2022, affordability worsened everywhere in Alaska.
The Mortgage Rate Rollercoaster
Mortgage rates rose very quickly in this period.
But as the Fed later hiked rates to combat inflation, mortgage rates jumped.
For a first-time buyer, this increase was like a gut punch.
Higher interest drives up the monthly payment and also reduces the loan amount a buyer can qualify for.
This sharply limited what first-time buyers could afford by 2023.
Many first-timers rely on government-backed loans like FHA loans or VA loans.
By 20222023, affordability had deteriorated so much that even these programs had limits.
That said, without such programs many first-time buyers would have had no chance at all.
It usually makes up 4045% of statewide home sales by value in a given year.
Anchorage has the most developed housing market with a mix of single-family homes, condos, and townhouses.
It also has some of the highest home prices.
By 2023, that average price ballooned to roughly $491,000.
This steep increase put a strain on Anchorage buyers.
Housing in Anchorage in 2023 was the least affordable it had been in over two decades.
In 2018, the average Mat-Su home price was about $293,000, significantly less than in Anchorage.
By 2023, Mat-Sus average price rose to roughly $430,000.
Mat-Su also had newer subdivisions popping up and a reputation for being more family-friendly in terms of housing costs.
For someone working in Anchorage, the trade-off was a longer commute for a more affordable or bigger home.
Its an interior enclave that remained more accessible price-wise than Anchorage or Juneau.
In 2018, the average Fairbanks-area home price was about $272,000 quite a bit lower than Anchorage.
By 2023, Fairbanks average price was around $341,000.
Rural Alaska
Outside the road system and major towns, Alaskas housing is very different.
In 2022, Bethels affordability index hit 2.21, the highest (worst) in the state.
That implies youd need more than two average Bethel incomes to afford the average house there.
Alaskas experience during that time was more stable than many other states.
A peak in sales came around 2013, when nearly 7,993 homes sold statewide.
In contrast, 20182023 was far more tumultuous.
The swings in sales and the speed of price increases were unprecedented in such a short time.
Such rollercoaster volatility did not happen in the prior decade.
A major difference was the interest rate environment.
20082017 was largely an era of falling or low interest rates.
By stark contrast, 20182023 saw an interest rate spike that had no precedent in the prior decade.
Paradoxically, those ultra-low rates kept monthly payments manageable for a time, sustaining the boom.
But by 2022 and 2023, the situation flipped.
The resilience and determination of these buyers are evident.
