Alaska home prices dropped in early 2017 for the first time during the state's recession, but economists are uncertain whether the drop signals a new trend or if it's just an aberration prompted by the housing market's slow season.

Other market observers, citing broader and more recent data, say the market remains stable. They point to flat-to-rising prices and below-average foreclosure rates.

"Home values appear to be holding steady," said Jan Miyagishima, mortgage director at Alaska Housing Finance Corp., a state agency focused on providing affordable housing.

Alaskans are closely eyeing housing prices in part because of what happened in the 1980s recession, when prices crashed and foreclosures leaped, said Dan Robinson, chief of research and analysis with the Alaska Department of Labor. Like the current recession, that bust also followed an oil-price plunge.

The foreclosure rate is flat today compared to the mountain of foreclosures seen during the 1980s housing bust, said Rob Kreiger, an economist with the state.

"I don't think it'd even register (today)," he said.

Still, he said, economists are closely watching the housing market.

The average price of a single-family residence dropped 2.6% in first quarter 2017, compared to the same three months in 2016, according to the agency's September issue of Alaska Economic Trends magazine.

"This is the first time we've seen it (in recent history)," said Kreiger. "We don't know if it has any legs or not, but it's definitely worth keeping an eye on."

The statewide average home price in first quarter 2017 was $313,146. That's down from $321,478 in first quarter 2016, Kreiger said.

The same data for the second quarter 2017, available to state economists after the magazine was prepared, shows single-family home prices essentially flat. The year-to-year price of a single-family residence declined almost imperceptibly, falling only $249, to $327,696.

Over a 10-year average, home prices increased 2.2%, the report said.

The first-quarter decline might suggest the recession is beginning to affect the state's housing market, the agency said in the magazine, published last week.

Kreiger said he's not reading much into the price drop, in part because the winter quarter is typically slow. The yearlong view could change, he said.

The report, part of a statistical look at the economy by the magazine, said foreclosure rates remain low. The Alaska foreclosure rate was 0.6% for first quarter 2017, slightly better than the 10-year average of 0.9%.

Alaska's record foreclosure rate came in fall 1989, at 10.6%.

The agency's data is based on a survey of lenders providing information on 30-year fixed-rate mortgages, an especially specific set of information, Kreiger said.

The agency has compiled that data since the 1990s in order to provide a consistent view of the market, he said. The value of other types of loans, such as 15-year or variable-rate mortgages, aren't included, he said.

AHFC on Tuesday pointed to a broader set of data from the Alaska Multiple Listing Service and realty associations in Fairbanks and Southeast. That information is based on single-family residences and condominium sale prices for the first half of 2017.

The reports, one for each quarter of 2017, largely show rising real estate values across the state's urban areas, including the Kenai Peninsula.

In Anchorage, the reports show residential and condominium prices were essentially flat during the first six months, year to year.

Mount Susitna rises behind homes in South Anchorage’s Bayshore neighborhood.
Mount Susitna rises behind homes in South Anchorage’s Bayshore neighborhood. Loren Holmes / Alaska Dispatch News

For example, prices of single-family residences averaged $350,306 in early 2016, but fell by $271 in early 2017. In the second-quarter, however, prices on average rose $394 year to year, to $376,353.

The MLS data, compiled by the Alaska Association of Realtors, provides a broader set of data than the mortgage-lending information reviewed by economists in the state Labor Department, Miyagishima said.

Limited housing inventory and low interest rates for home loans are playing key roles in supporting housing prices statewide, AHFC officials said.

Viki Kaas, a real estate broker for Homes Unlimited, who sells property in Anchorage and Wasilla, said she expected a "radical drop" in housing prices by now, given the layoffs and slowing economic activity.

"It absolutely has not materialized," said Kaas, president-elect of the Anchorage board of the Realtor association.

Kaas said she's seen little change in her market.

"I think it's been pretty stable," she said. "We're seeing well-priced houses in good condition selling fast. Ones that need a lot of work or are overpriced, they are sitting longer, but they've always sat longer."

Tribune Content Agency