Alaska Housing Least Affordable Since 1992
6 January 2008Each quarter the Alaska Department of Labor and Workforce Development compiles the Alaska Affordability Index. This index assesses three economic factors in a given area: the average sales price of a home, the average income, and average interest rate, then determines the number of average wage earners required to obtain a mortgage on an average-priced house. An index of 1.0 means that income from one person is required to afford a home; a higher index means that income from more than one person is necessary.
The December 2007 issue of Alaska Economic Trends, a publication of the Alaska Department of Labor and Workforce Development, details the most recent findings in the article, “Housing Affordability in Alaska.” State-wide, the average index value is 1.46, ranging from 1.23 for Anchorage area workers who buy a house in the Matanuska Susitna Borough to 2.11 for residents of the Bethel area. Anchorage has an average index value of 1.51.
Until the second quarter of 2004, it seemed that during periods of less affordability, external factors contributed to stabilizing housing costs. For example, when housing prices were high, interest rates decreased. On the other hand, when housing costs were lower, external market factors increased overall housing costs.
However, no significant correction to skyrocketing sales prices has been observed in over three years. When combined with slow to moderate wage growth and increasing interest rates, the index values indicate that housing is at its least affordable since 1992 when the index was created.
JY
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