Neal Fried, on the Mat-Su Economy for 2008
Neal Fried, an economist with the State of Alaska recently gave a presentation on the Matanuska-Susitna Borough’s economy. All the slides in this post are from Neal. They are all thumbnails, just click to expand.
The valley’s population grew at a much faster rate than any other part of the state. Certain portions of the valley have had huge increases in population. The Knik-Fairview area is not a town or a community, it is just the populated area to the West and South of Wasilla. As you can see, it grew by 74% in the last 6 years.
Many more people move to the Valley than they do to Anchorage. The Mat-Su is still dependent on Anchorage since more than 30% of the valley work force commutes to Anchorage for jobs. The primary reason people live in the valley is because of housing.
House prices are almost 30% lower in the Mat-Su Valley compared to Anchorage. In addition, not only do you get more house for your money, you also get a larger lot. Anchorage has a shortage of land whereas the Mat-Su Valley still has a surplus. When you buy a house in the Mat-Su, you normally get about one acre, or perhaps 1/2 acre if you purchase in a subdivision with community water.
Things are not all rosy however. The new construction real estate market has slowed considerably. As you can see, there was a significant job loss in the construction industry. We still do have new homes being built and sold, but not nearly as much as in 2004–2005. For example, out of the 689 homes on the market as of today, 98 of them are new or under construction. Three years ago, that number would have been closer to 200.
As I keep saying, it all comes back to oil. Until we figure out some other way to make a living in our great state, oil will call the shots. And as the chart shows, we better start thinking because production is declining. Terrence Cole, Alaskan Historian, said, “The balance sheet of Alaskan History is simple: One Prudhoe Bay is worth more in real dollars than everything that has been dug out, cut down, caught or killed in Alaska since the beginning of time.”
Even though production is declining, oil patch employment is up. That is likely because of the high oil prices. Companies are exploring and developing more marginal fields. I hear rumors of completely new oil fields being explored. But I haven’t heard any rumors of a Prudhoe Bay sized discovery.
If the oil prices stay high our economy will probably get by in the near future. We will have to do without as many federal dollars and a weaker construction industry, but we shouldn’t worry too much about a crash caused by Alaskan based calamities. The global economy is out of out control.
As today’s Monday Market Memo shows…real estate activity is picking up for the spring. This is the time to get your house on the market. Give me a call if you would like more information on our consulting model for real estate sales…it can save you thousands.