However, the tide turned sharply in 2022 and 2023.
Higher borrowing costs dealt an immediate blow to affordability.
The result: homebuying activity plunged.
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Statewide single-family sales fell to 4,459 in 2022 and then bottomed out at just 3,005 in 2023.
The initial period saw many moderate-income Alaskans successfully buying homes amid favorable financing conditions.
The latter period saw many of those would-be buyers sidelined by worsening affordability.
There are practical reasons for this emphasis on single-family properties.
Alaskas housing stock is predominantly single-family to begin with, especially outside Anchorage.
These homes often provide the space, privacy, and storage that Alaskans value.
This price gap made condos an attractive entry point for buyers with limited budgets or those seeking lower maintenance.
This 33% price jump since 2018 indicates high demand relative to supply for any affordable properties.
Their homebuying behavior between 2018 and 2023 reveals different trends.
Upsizing (trading up to larger homes) was a common theme through the late 2010s into 2021.
This likely froze a lot of move-up plans.
Second homes and vacation properties emerged as a notable trend during the pandemic housing frenzy.
However, this trend reversed sharply by 2022.
Mortgage rate locks for second homes fell once interest rates rose and lending rules tightened.
In Alaska, local realtors noted that many discretionary buyers dropped out once 30-year rates went above ~5%.
The result is that the cabin country markets in Alaska cooled.
First-time buyers (distinct from upsizers/downsizers) are a key part of the under-$250K demographic.
According to the Alaska Housing Finance Corporation, about 90% of AHFC-supported home purchases are by first-timers.
By the end of 2023, most non-essential moves were on hold.
Upsizers were staying put unless absolutely necessary, downsizers were cautious, and second-home dreamers largely stepped back.
The market became driven more by life necessities rather than elective lifestyle upgrades.
For moderate-income buyers, Anchorage presents a mixed picture.
By 2023, that average price had ballooned to roughly $491,000.
In 2018, the average Mat-Su home price was about $293,000 significantly less than Anchorage.
Housing in Fairbanks has historically been cheaper than Anchorage and that held true in recent years.
Juneau, the state capital, presents a unique housing market.
In 2018, the average single-family home price in Juneau was about $410,000, second only to Anchorage.
By 2022, Juneaus average topped $513,000.
These prices challenge even $150K-income households unless they have significant down payments.
During 20202021, the Peninsula saw a surge of interest: coastal and scenic properties were snapped up.
Shifts Compared to 20082017
The 20082017 period saw more consistent sales activity overall.
Even at the low point of the housing bust, Alaska didnt crash as hard as some Lower-48 markets.
A peak came around 2013 when nearly 7,993 homes sold as low interest rates spurred activity.
Such volatility was not seen in the prior decade.
From 2008 to 2017, Alaskas home prices rose modestly overall.
In contrast, 20182023 saw a sharper upswing in prices, especially during 20202022.
A major difference is the interest rate backdrop.
The 20082017 era was largely one of declining or low interest rates.
This kind of spike never occurred in the earlier decade.
It introduced a new obstacle for buyers: financing costs became a see-saw.
From 20082017, Alaska added more housing stock and had more new construction relative to demand.
By contrast, new construction hit a near-record low in 2022 despite strong demand.
Builders faced higher costs and labor shortages, and slowed production.
Overall, compared to 20082017, the 20182023 period was more tumultuous and challenging for Alaskas middle-income homebuyers.
By contrast, the interest rate shock of 20222023 severely hurt affordability for this group.
The average mortgage rate in Alaska climbed above 5% in mid-2022 and crossed 6% later that year.
In 2023 it averaged around 6.3%, with peaks near 7%.
For under-$250K income buyers, government-backed mortgages are very important in Alaska.
AHFC offers interest rate reductions for certain borrowers, down payment assistance, and other support.
Another aspect of financing is credit and debt-to-income (DTI) criteria.
When rates rise, the DTI on a given loan amount rises too.
They turned what was a very affordable situation in 2020 into an unaffordable one by 2023.
Yet paradoxically, ultra-low interest rates kept monthly costs manageable and sustained the surge.
The resilience and desire of Alaskans to own a piece of the Last Frontier remain strong.
