Anchorage - appreciation?

Question

Hi BP!

I live in and love Anchorage, AK. We've had a technical recession here - and now our budget with a new governor is up in the air... people are wanting greater stability than we've had for the past 3-4 years.

I am curious to peoples opinions - does a states only metro - the financial, health care, and transportation hub (3rd busiest cargo airport nationally), have to only grow (barring a catastrophic event like nuclear war, etc.)? I almost think it does - but I know many on here are not naturally optimistic. I'll add in - our land is locked between the beautiful Chugach Mountains and the Ocean/Inlet. So land is at a premium - and so are building costs - so values are only really threatened by job loss - and the increasing growth of the Mat-Su Valley.

I'd love the Alaskans to chime in on Alaska - but also want to get some outsiders perspectives - I don't think we'll ever be San Fran / Seattle sized... but we have some interesting components - as the states one true hub. Excited to hear perspectives!

Cam Jimmy · Answer

Don't forget about JBER! The military provides a lot of renters for us on the eastside :)

Connor Dunham · Answer

Hey, Thought I'd join the conversation now.

I have an appreciation factor in my valuation model. There could be depreciation, but it all depends on what your investment time horizon is. I just have a flat rate since I'm comfortable with a 20-30 year trend. There are other huge nationwide factors that come into play such as what the FED is doing, but the local effects all come back to demographics. How well does the Anchorage market do in retaining businesses and individuals who generate capital, build businesses and start families? What does the migration look like? What does the birth rate look like? Etc. What you’ll find is we do pretty good on birth rate and pretty bad on retaining talent and valuable contributors. This is the brain drain people talk about. There’s still a lot of work that needs to be done to provide housing and urban recreation for the 18-30 year old demographic so we can retain more. I’m interested to hear what other thoughts people have along these lines.

Anna Ferntheil · Answer

I am in Anchorage as well. I ended up investing out of state because the cost of entry is lower and I already own my home in Anchorage. I didn't want to sell my home, buy a multi family, live there for a year, trade up, etc. I almost went that route but decided that personally, for me, I have enough going on without adding moving every year that I could achieve the same end results in maybe a little longer time with a different approach. With the budget up in the air, I have a lot of uncertainty about the short term growth in Anchorage. I think long term, prices in Anchorage will be relatively stable for the reasons you mentioned at worst but appreciation is a question mark.

I personally chose to invest out of state because I didn't want to be too hand on with things. The turn-key methods fits well with my goals and lifestyle and there are markets out there currently experiencing growth with a pretty strong trend.

Eric Kissinger · Answer

Anchorage has some interesting metrics for sure. I think tourism will continue to grow which does not directly impact real estate but does intrigue people to move here (Alaska overall), or at least try a 6 month rental to try to plant some roots. My wife and I are a prime example. Neither of us ever thought we would move to Alaska but after a summer long road trip from the lower 48 we immediately wanted to try it. Granted a job here was a major deciding factor and made it an easy decision, but without the visit we would have never considered. Now we love it. And for the first two years, we rented.

But ultimately it does come down to jobs and opportunity. I think Alaska has wonderful opportunity, but does it have the economic structure/budget to advance rapidly, I don't think so.

Eric Giovannucci · Answer

Looking through the stats of home valuation and rental prices in the last 6+ years, Anchorage seems to be leveling out a little bit. The scare of JBER moving/closing the Army side back a few years ago certainly dropped some prices in the area and they have yet to rebound, and im not sure they will in the near future. However, most people I've spoken to in the area seem to think we will see a pretty stable market moving forward with maybe a few years of depreciation. This has pushed me to search for the older landlords that may be looking in to cash out their multi's. I know of one that is liquidating several properties and I landed a decent deal that flows well. Another option to defeat the minuscule downward trend in rents and values seems to be STR. As we all know the summer months are booming with tourists, hotels are outrageous, which allows AirBNB owners to be booked mid april-september. A lot of money to be made there it seems. With all this being said, I am still relatively new to this area but would love to get acquainted with active members up here and pool some ideas/ potential partnerships moving forward.

Cam Jimmy · Answer

@Eric Giovannucci As a local investor I haven't noticed any depreciation in Anchorage. I've actually noticed some appreciation these last 2 summers (At least in the $200k-350k range of houses). Realtors continue to push for higher listing prices on the houses in that range. I'm not sure if they are actually selling for those higher prices, but I've definitely noticed slightly higher list prices.

Chris S. · Answer

I started off in Anchorage house hacking because it was all I could afford at the time. I bought for cashflow, and it has worked out really well in my case.  But I am a very hands on manager and seriously enjoy it.

That in mind, I am now looking to invest out of state as well (unless a super deal comes up) mainly because of the strange things our government keeps doing with laws, budgets, etc....

There has been a slow but steady population decline in Anchorage and a rapid growth in drug users, mental health issues, and thefts etc... resulting from that. Of course this is an issue in any city, but it seems to be more and more prevalent lately. Heroin and meth are a huge epidemic. Good for mental health and hospital jobs though that's for sure.  All the hospitals/clinics are always hiring.

However. Anchorage houses are expensive, especially for the median household income which leads to a lot of renters. Add in JBER and if you have a decent place at a decent price you should never have any issues keeping a unit filled. I dont even in my low income areas and I am very picky with tenants.

My biggest fear with Anchorage is that Alaska in general is so heavily based on oil prices. Thus why I am looking at checking out other areas. Sorry if I'm babbling its midnight.

Antonio Chavez III · Answer

Im in Anchorage as well! just looking to get my first duplex to house hack and will be moving in AZ in a year. Just to get my feet wet.

Mike Taylor · Answer

I am diversifying my risk by investing outside of the Anchorage and Alaska. Appreciation will be minimal at best, I think? The oil industry is the main economic driver here. Buy smart and being efficient works best here. I use taxes to my advantage.

Anchorage - appreciation?

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