Real estate (Residential).

• Author: Baer, Bob
• Position: 2006 Alaska Forecast

The year 2006 will bring continued growth and stability to the Alaska real estate market. Economic diversification has increased substantially in recent years, adding more demand for housing and discouraging large fluctuations in market values and that were experienced in the 1980s. While rising interest rates may discourage some buyers, moderate increases in rates from 2005 will still result in interest rates being in a historically low range.

Southcentral Alaska will continue to have moderate residential construction demand. Although total residential construction permits may plateau in 2006, population growth in Southcentral Alaska will continueto rise, encouraging homebuyers to share in Alaska's economic benefits. Many forthcoming construction projects, including the possibility of the trans-Alaska gas pipeline, will encourage population growth.

The shortage of land in the Anchorage area will continue to drive home prices upward, and will encourage home renovation, "tear-downs" and increased density. The number of residential single-family building permits issued in Anchorage will decrease again in 2006, caused by the lack of availability of residential building lots. There will be more emphasis on the building of condominiums and apartments.

The increased vacancy rates in rental units, experienced in the year 2005, was caused by low interest...