Sunshine on the home front.

• Author: Hamilton, Vivian
• Position: House construction market in Anchorage, AK

The residential housing market is anticipating healthy expansions despite lulls in the oil industry.

While Chicken Little is out crying "the sky is falling, the sky is falling" because of the drop in oil prices, the neighbors are busy shopping for a new house in Anchorage.

These optimists join a host of analysts and economists who say Anchorage has diversified enough to weather the oil-patch storm better than in previous lean times.

The state - Anchorage in particular - is healthier than it has been in decades. In fact, across the country, the economy is on a high note.

Economic Milestones

"Look at the interest rates and the economy nationwide," said Jon McCracken, economist for the Anchorage Economic Development Corp. "This is the lowest unemployment since the '70s. And it's the strongest economic boom since World War II. That's a significant milestone in America."

Likewise, Neal Fried of the state Department of Labor said Anchorage experienced record growth of 4 percent in 1998, which reflects a steady, incremental rise in the economy versus the boom-bust scenarios of the past. The outlook for 1999 is at least 2 percent.

"Last year was the best year for residential real estate in Anchorage since '86 and the biggest increase since '85," said Fried. The Anchorage housing market is expected to continue to grow in 1999, or at least remain slightly above last year's record numbers.

Interest Rates Contribute

One positive trend that has helped the residential real estate market in Anchorage has been low interest rates of 6 and 7 percent and special lending packages for first-time homebuyers. Low interest rates allow existing homeowners to upgrade, which stimulates movement in the marketplace and creates demand. Property values have also risen, which provides homeowners with equity to upgrade.

According to the Municipality of Anchorage, the number of building permits for single-family houses increased almost 12 percent in 1998 over 1997. And those permit valuations rose a healthy 17 percent over last year.

Overall, construction activity in Anchorage was up in 1998, with the total number of permits for both residential and commercial properties as well as new and remodeled structures increasing 5 percent over the previous year. The construction valuation of those permits was most significant, though, rising nearly 30 percent over the previous year to more than $500 million.

"Even though petroleum remains a primary force in our economy, we have a...