The Current Real Estate Market
in Fairbanks Ė March 2011
Everyone is curious about our local real estate market and what is currently happening.
Four years ago this Fall, our market had a small crash. It was nothing like most areas of the Lower 48 experienced. So, most of what you may read about real estate and prices simply isnít applicable to Fairbanks. Lending practices everywhere have tightened, so buyers who previously may have purchased a home for zero down (except for Veterans) or those with marginal credit normally cannot do so anymore. This is a good thing; however for sellers, it has limited the buyer pool, which can affect the prices of homes.
The small crash in North Pole was entirely different than in Fairbanks. Builders in North Pole had responded to the militaryís request for 3- and 4-bedroom rentals (not sales) and they built many homes and put them up for sale. Unfortunately, since the demand was for rentals, the market was flooded with these homes. So, when our small crash happened, most lenders quit lending to builders who wanted to build spec homes in North Pole. Prices responded accordingly to the lack of demand and dropped quite a bit more percent-wise than Fairbanks homes. Since then, prices have been rising in the North Pole area, but in most cases arenít as high as they were before.
In Fairbanks and surrounding areas (excluding North Pole), decently-built small homes priced $175,000 and under are, and always have been, a hot commodity. No builder has been meeting the great demand for these homes, so the prices didnít drop like they did with other homes 3-1/2 years ago. Buyers in this price range and even more so as the price goes down definitely have to be prepared to act if a home hits the market as competition is extremely high.
For homes in the Fairbanks area over $175,000, buyers are still looking and acting but it isn't routinely as competitive as lower priced homes. The busiest season for sales starts now, in the Spring, and is strong up to late Fall. Up until last summer, I was still recommending to every seller who approached me to list that instead they considering leasing their home, as rentals command top dollar in Fairbanks. I prefaced that with: I do not have a crystal ball, but it was my guess that our market would still come back up to what it was 3-1/2 years ago. Buy Low, Sell High is a good phrase to remember. I no longer am routinely recommending sellers lease or rent their homes as the market has in most cases recovered nicely.