Q&A: 2019 Valley real estate market year in review, 2020 projections

WASILLA — Past President of the Valley Board of Realtors/ Lee Realty LLC Broker Eric Bushnell recently provided the Mat-Su Valley Frontiersman with a question and answer interview to shed insight on the Mat-Su Valley’s real estate market in 2019 and offer projections for 2020.

Q: All in all, how was the Valley’s real estate market in 2019?

A: “The real estate market was good in the residential and commercial sectors. More homes were sold than in any previous year. The commercial market was good with several new properties being built. We saw many new business startups come into the core area.”

Q: How did it compare to Anchorage’s market?

A: “The Anchorage saw approximately 2% less residential transactions in 2019. This resulted in a loss of approximately 16 Million dollars of production. The good news for the Anchorage market was that the median sales price stayed even at $340,000. This was the fourth year showing a reduced number of single family home sales, a 9.3% drop since 2015.”

Q: What were some of the notable trends or stats that piqued your interest?

A: “The number of homes placed for sale on the market less than $250K was down by 6.2%; however the sales of the homes remains strong with an increase in sales of 2%. This market comprises 44% of the overall market. As homes experience appreciation/inflation there will be less homes available in this market segment in the future.”

Q: What are some important figures or facts to point out to Valley residents looking to buy or sell homes?

A: “Current interest rates are really low, and will continue to be at historical low rates for the next 4 to 6 months. The Corona Virus is impacting national monetary markets and this is resulting in very low mortgage rates. We may see less movement of people over the next year. People may react to the threat by staying where they’re comfortable verses moving to a new community.”

Q: What is the median sales price of homes?

A: “The median price of homes rose in by 2.35% to $261,000; which is slightly less than the 2.41% gain in 2018. The Anchorage market was even at $340,000 median sales price.”

Q: Total number of homes sold YTD and how does it compare to last year?

A: “The local market may have been impacted in January 2020 due to the cold temperatures; however the numbers have been positive so far this year. The market has increased over 2019 by 8.1%. Jan/Feb numbers in 2019 may have been low due to the slowed market conditions as a result of the November 30, 2018 earthquake. We will have a better idea of the market after the 1st quarter ends, but at this time the market appears to be reacting positively.”

Q: The total number of new construction homes sold in 2019?

A: “The total number of new construction homes was 317, which was up 8.2% in the Mat-Su Valley. 99 new construction homes were built in Anchorage, which is up 10% over 2018. Construction of new homes continues to be centered in the Mat-Su Valley vs. Anchorage as there is considerably more land available for development.”

Q: The median sales price for a parcel of land in 2019?

A: “Land sales were very good in 2019, plus 130 sales, up 24%. We saw a mix of building and recreational lot sales in 2019.”

Q: What is the current median price for a new home in the Valley?

A: “The median price of a new construction home is $340,000 in the Mat-Su Valley, and the median price was $559,865 in Anchorage.”

Q: Relevant Anchorage statistics to compare to above questions?

A: “Land development and Municipality regulations have driven up the cost of a new home within the Anchorage market. A building lot within a subdivision is approximately $65,000 more in Anchorage vs. the Mat-Su Valley.”

Q: Is there any other important information you would like to get out there in the article?

A: “The Mat-Su market was good in 2019, both residential and commercial markets. Public perception seemed to be able to overcome the politics and budget cuts.”

Q: What factors contributed to the Valley’s current real estate climate and how does it tie in with the state and national economy?

A: “Recreational sales and some commercial activity is tied to the good times the national market is experiencing. A strong national market does take away some of the demand in our area.”

Q: Do you have any projections that you would like to share regarding the Valley’s real estate market in 2020?

A: “I was prepared to say that the market was going to be very good this year; however at this time I am seeing many nonprofit organizations experiencing difficulties. Many are struggling with cash flow issues which are a direct result of the State of Alaska budget issues. If the state does not solve the budget issues I forecast many businesses will start to experience cash flow issues.”

Q: In a nutshell, what does the Valley’s real estate market outlook have going for it and

what are some of the challenges it faces?

A: “Monetary policy is driving long term interest rates lower, resulting in more purchasing power. Lower interest rates actually push values higher due to increased demand. The headwind to our economy is as Corona Virus fears continue to build it may impact tourism. We’re already seeing conferences canceled nationally and it is only a matter of time before we see the cancellations here in Alaska. Oil prices have been pushed lower due to global markets. These issues will result in tightening of our local economy.”

Q: What are the most important things to consider when considering purchasing a home in the Valley?

A: “First look for a home that meets a majority of your needs and is the home that you’ll live in the longest. The longer you keep a home the less these costs impact the overall cost of homeownership. Buy the home to live in, not to resell.”

Conclusion:

“Our local markets are good but will be changing soon. The Mat-Su real estate market is growing because the population is growing. The Mat-Su is experiencing growth in all sectors. These gains are fragile and if local politicians make poor choices they may go away. Commercial lease rates are varied across a broad spectrum of property types. Newer building are drawing tenants away from older properties; however many businesses cannot afford the rates of these newer modern properties. The commercial lease market remains good for the next six months, but we expect slowing after that.

New construction is becoming more expensive due to tariffs and trade issues. New construction home account for 16.2% of the overall market. It is unsure at this time if the Corona Virus will affect the imports need for construction. Interest rates will provide positive stimulus for this sector and for residential sales. Traditionally low interest rates allow for greater price increases over time. Wage growth will be required to anchor the bottom 50% of the market, as this market is homes below $260,000. This segment of homes shrunk last year by 5.3% and only 52 new homes were built and sold in this price range; a drop of 20% in number of new construction homes built.

In Alaska there will always be head winds slowing our economy. I believe that the market will remain steady for the first half of the year. Good decisions need to be made at all levels. If you will be selling a home this year, I suggest getting it on the market now. The second half of the year we may experience a slowing of the economy. The result could be longer market times for many homes.”

Contact Mat-Su Valley Frontiersman reporter Jacob Mann at jacob.mann@frontiersman.com