A stiff 30% drop in the tourist trade, and the credit crunch, have brought two decades of growth to an end in the Alaska real estate market. In addition, a weakening economy, and a growing number of foreclosures, are also contributing to sluggish sales. For more on this, see the following article from Housing Predictor.
Falling tourism and weakness in the energy industry are hurting the Alaska economy. A drop of 30% in Alaska’s tourism industry coupled with less oil exploration has produced growing job losses.
Tourism is down so much that major cruise companies are moving ships out of Alaska waters, sending them to the Caribbean, where tourists can travel at less expensive rates. The changes are producing mammoth shifts in the travel industry as a result of the global financial crisis in America’s last frontier.
However, Alaska still has one of the strongest housing markets in terms of foreclosures, but as employees lose their incomes foreclosures are projected to rise to seriously damage local housing markets. The drop in tourism and the idling of oil rigs may result in Alaska losing population for a number of years. Alaska has already seen the longest string of job losses since the 1980s recession.
Nearly 20 years of growth and prosperity in Alaska is clearly coming to an abrupt end. Despite the slow down in home sales, Anchorage has seen its population grow as native Alaskan corporations invest in their own communities, strengthening capital in real estate markets.
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However, despite the increase in new residents, Anchorage will see further declines in its housing market through the remainder of the year, and is forecast to see average home values deflate 7.9% in 2009. Foreclosures are projected to rise as jobless levels increase.
Local Markets at a Glance
Unlike Anchorage, Juneau is losing population. The excess inventory of homes on the market for sale has transformed the area into a major buyers market with falling home prices like the majority of the lower 48 states. Home sales have been aided in part by the federal government’s first time home buyers tax credit, but as home values continue to decline many buyers have become skittish.
The growing inventory of homes is seeing more foreclosures added to the surplus to further pressure the marketplace. Sales are expected to remain sluggish for the remainder of the year. Juneau is forecast to experience average housing deflation of 8.7% in 2009.
Like a lot of other markets with military bases, Fairbanks was insulated from much of the national financial mess for the longest time. Then the credit crunch hit making it tougher for home buyers to obtain mortgages. As housing values decline in Fairbanks, the market is experiencing the pains most of the country has dealt with for much longer.
Homeowners who are unable to sell their houses are more freely walking away from their mortgages adding to the glut of homes on the market, deteriorating conditions. Fairbanks will see slower home sales in 2009 on projected deflation of 7.3% through the year’s end.
In the remote fishing community of Sitka, where many Alaskan natives live their whole lives the housing market didn’t really ever have a big sort of boom. Sitka was never targeted by big bankers selling their creative new financing instruments, and that will be their saving grace in terms of housing values. Home sales will be soft through the end of the year on minimal forecast housing deflation of 1.2%.
This article has been republished from Housing Predictor. You can also view this article at Housing Predictor, a real estate analysis and forecasting site.