Wasilla, Alaska, market doing well with affordable homes

— -- Since Alaska Gov. Sarah Palin became the Republican vice presidential nominee this month, her hometown of Wasilla has been under a spotlight. Until now, few people in the Lower 48 states knew much about it. But in Alaska, Wasilla is popular and thriving.

Mat-Su Valley, the borough where Wasilla is situated, "is really the only place in Alaska that you can say has been growing very rapidly over the past decade," says Neal Fried, an economist at the Alaska Department of Labor.

Between 2000 and 2007, as the state's population grew 9%, Wasilla's surged 29%, and Mat-Su Valley by 35%, Fried says. The city, with a population of about 7,000, is essentially a bedroom community, about 40 miles north of Anchorage, the state's largest city.

One reason Wasilla continues to flourish is that homes remain more affordable than in Anchorage. "You can get a lot more for your money," Fried says. "You can get bigger lots, and it has more of a country feel to it."

Wasilla's real estate market hasn't suffered very much from the fallout from subprime loans and foreclosures, as did many cities in Florida and California. "We didn't have a big market correction," says Brad Cole, president of the Mat-Su Valley Board of Realtors. "Our prices have been very stable."

Still, sales have dipped. In particular, high-price homes are selling more slowly now.

That's happened because in recent years, many new homes were priced at $300,000 or higher. "We just don't have the financial base here to afford those homes," Cole says. "The high-end market was saturated."

To make matters worse, higher gas prices have held back some buyers who work in Anchorage. "There are families spending more for fuel to drive back and forth to work than they're paying for their mortgage," Cole says.

Of course, not everyone in Wasilla works in Anchorage. In Mat-Su Valley, which is as big as West Virginia, there are jobs in tourism, health and retail, Cole says. As the retail center for the valley, Wasilla has many big stores, including Home Depot, Lowe's and Wal-Mart.