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Anchor Point, Kenai and Eagle River / Chugiak Most 'Affordable' Southcentral Communities

According to Recent Eleven-City Housing Study

Homer, AK – March 8, 2012. The community of Anchor Point, Alaska was the most “affordable” place to buy a home in 2011, according to a recent study of eleven Southcentral Alaska communities.

This study compared 2011 home sale prices and median household incomes in the communities of Palmer and Wasilla in the Matanuska-Susitna Borough, Anchorage, Chugiak / Eagle River and Girdwood near Anchorage, as well as Anchor Point, Homer, Kenai / Nikiski, Seward, Soldotna and outlying areas on the Kenai Peninsula. The Alderfer Group, a real estate and development firm headquartered in Homer, conducted the study.

According to Philip Alderfer, Broker/Owner of The Alderfer Group, this is the first-ever study of this type done at the local level:

“Our clients often talk about home ‘affordability.’ Not just what a home costs to buy, but how mortgage rates, homeowner’s insurance and property taxes will affect their family’s budget. We wanted to learn how those experiences differed across the communities we serve.

Because we could not find that information elsewhere we had to do the research ourselves. It was a great opportunity to compare the communities where our clients live—and good excuse to stretch our math skills.”

The Alderfer Group first identified median household incomes within each community using U.S. Census data. From it they calculated the maximum mortgage payment lenders would typically allow at those income levels. Next, they estimated the total monthly payment for each home sold within the eleven communities using 2011 home sales price data and average ownership costs.

By comparing these two figures, Alderfer calculated a Home Affordability Index (HAI) score that showed how many home sales in a community could have been purchased by a median-earning family.

“Anchor Point was the most affordable community we studied, with a whopping 82.8 HAI score. It was followed by Kenai / Nikiski at 81.3, Chugiak / Eagle River at 78.9 and Seward at 65.9.”

“Home affordability is a function of three things – sales price, household income and ownership costs. The study showed why they all matter. For example, the median home sales price in Chugiak / Eagle River was approximately $322,000 – which was second highest on our list. Homes of that price could rule out many potential buyers. But the average household income in that community was also quite high, at $94,000. As a result, our study showed that more than three-quarters (78.9%) of all home sales in the area could have been bought by—were ‘affordable’—to a family earning the median income.”

“Girdwood was at the other end of the scale. Though the median household income ranked third on the list at $68,000, the median home price was also quite high, $330,000 and it meant that only 32% of 2011 sales could have been afforded by a median-earning family. This is not surprising for a smaller community with so many second home and vacation home-type sales.”

In only two communities, Girdwood (at 32) and the unincorporated areas outside Homer (47.1) was the Home Affordability Score below 50.

Alderfer anticipates that the study will be duplicated next year.

“I am anxious to repeat this study and see how HAI scores change over time. We Alaskans have been fortunate to avoid the worst of the economic downturn and concurrent housing crunch. And I hope our run of ‘good luck’ will last. But we will undoubtedly experience higher interest rates in the future. If household incomes keep pace, Alaskans’ purchasing power should not be affected. The Home Affordability Index was designed to show us whether that is true.”

Philip Alderfer is the Broker/Owner of The Alderfer Group, a real estate and development firm headquartered in Homer, Alaska. He is a second-generation realtor and has worked in real estate and finance since 1996. He founded The Alderfer Group in 2001 and it is now the largest real estate firm in Homer with 35% market share, annually. He holds M.A. and Ph.D degrees from Michigan State University. He can be contacted at (907) 235-5299 or via Email at Philip@AlderferGroup.com

The study used demographic and financial data from the U.S. Census Bureau, local municipalities, mortgage lenders, and insurance brokers. Home sales figures were taken from the Alaska Multiple Listing System, a network of participating real estate brokers. A complete list of data sources is available upon request.

The full results of the study are provided below.

 

Table 1 -- Southcentral Alaska 2011 Home Affordability Index and Rankings

 

Community

Median Household Income

Median Home Sales Price

Home Affordability Score

Affordability Ranking

Anchorage

 $                       73,004

 $           285,000

58.4%

7

Chugiak / Eagle River

 $                       93,851

 $           322,000

78.9%

3

Girdwood

 $                       67,983

 $           330,000

32.0%

11

 

 

 

 

 

Palmer

 $                       54,706

 $           168,200

59.0%

6

Wasilla

 $                       52,014

 $           215,000

60.4%

5

 

 

 

 

 

Anchor Point

 $                       50,610

 $           144,000

82.8%

1

Diamond Ridge / Fritz Creek and Kachemak City

 $                       54,325

 $           249,200

47.1%

10

Homer

 $                       52,057

 $           212,000

53.6%

9

 

 

 

 

 

Seward

 $                       43,188

 $           131,460

65.9%

4

 

 

 

 

 

Kenai / Nikiski

 $                       52,701

 $           143,600

81.3%

2

Soldotna

 $                       46,548

 $           199,999

57.7%

8

 

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