Juneau hovers above national housing bubble

With prices stabilized, Juneau could see an increase in home sales

Posted: Sunday, February 07, 2010

If the real estate bubble burst in some U.S. markets like an overfilled balloon, then in Juneau it leaked a little air and pinched shut.

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Klas Stolpe / Juneau Empire
Klas Stolpe / Juneau Empire

Local analysts say confidence in the market has replaced last year's nervousness that followed a dip in home values. With prices stabilized and new interest among buyers, Juneau could see an uptick in prices - a fantastic forecast considering Outside markets.

Century 21 Broker Tom Porto said he considers himself lucky to be in Juneau.

"Is it running like crazy as far as sales? No. Is it steady and sales are good? Yes," he said.

A year ago Porto wasn't as optimistic but several factors lined up with the Kensington mine opening to change the outlook, he said.

Low interest rates, a solid inventory of properties and stable pricing created a buyers' market - an anomaly in Juneau considering its history of constantly rising prices, Porto said.

Incentives such as the federal $8,000 first-time homebuyer credit are acting as a "kicker" to get people out and looking, Porto said. Winter is traditionally a slow season for home shopping but Porto said open houses are attracting a "fair" amount of people these days.

If the positive attitude plays out, the city could see an increase of about 3 percent in home values, City Assessor Robin Potter said.

For now, the market is stable with prices running about the same in 2009 compared to the year before, according to city sales data.

Juneau's market factors paired with the pending mine opening to prompt an online site to place the city on its Best 25 Housing Markets list.

HousingPredictor.com says Juneau home prices would appreciate 4.2 percent this year.

"After what the rest of the country has gone through, we are one of the most stable areas," Potter said.

That seems true today, but Juneau didn't completely escape the national credit crisis that halted home sales across the country.

A dip in Juneau's prices in 2008 caused concern among some real estate professionals last year.

Like the rest of the country, Juneau's market activity started to drop toward the end of 2007. Price declines followed, going from an average of $297,000 in 2007 to $284,000, according to Appraiser Bob Henricksen, who keeps track of Multiple Listing Service data and other sales information.

The overall price decline of about 4.5 percent came with a 15 percent drop in the number of sales.

"That's a fairly large jump by Juneau standards but nothing compared to the blood-letting happening nationally," Henricksen said.

The national news still made locals nervous. Too many homes sat on the market through the winter but, as is typical in Juneau, spring and summer brought more buying activity.

"I thought that was a godsend for our market," Henricksen said.

Assessors disagree about how much local values dipped in 2008.

Separate segments of the market played out differently, but condos in West Douglas were affected the worst. They declined in value by 14 percent, according to Henricksen's data.

Other areas were impacted by as much as 10 percent to 15 percent, Appraiser Bob Young said. He, too, said the market stabilized in early 2009, with prices in some cases going up slightly at the end of the year.

Juneau escaped excessive declines seen elsewhere because its market wasn't inflated with the overdevelopment and speculation that occurred in Lower 48 cities such as Las Vegas, Young said. The city's lack of developable land has always conspired with high building costs to keep local prices high.

Alaska in general was also a late target of companies using unscrupulous lending practices that led to the housing bubble in other cities. As a result, foreclosures are up only slightly in Juneau.

But one result of the nation's real estate crash will impact Juneau, Young said.

Tight credit makes financing harder to get and has taken some buyers out of the market. Add those renters to hundreds of new miners - many of whom might rent instead of buy - and rents will go up, Young predicted.

Both appraisers said additional mine workers would cause market prices to go up.

In a search for homes in the medium price range where he thought miners might buy - $275,000 to $375,000 - Henricksen found 29 properties currently for sale in Juneau, compared to more than 50 three years ago.

"Unless the inventory increases, that puts a bit of pressure on the existing ones to once again raise prices," Henricksen said.

The mine company plans to employ 200 workers once the mine is in full operation. It is unclear how many will live in Juneau.

• Contact reporter Kim Marquis at 523-2279 or kim.marquis@juneauempire.com.

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