Sunday's Anchorage Daily News (Sept 16) featured a front page real estate story:
"Shift in housing market, Higher-priced homes are being slashed, but less costly are few," it headlined. It ran prominently on page 1 and jumped to fill most of the back page of Section A.
The day after the story ran, the on-line edition of http://www.adn.com/ was listing the story as "most e-mailed". The Daily News provides a comment link on its stories; these appear at the end of the on-line edition of the story.
This link will take you there: http://snipurl.com/1qtjg.
Reporter Elizabeth Bluemink (crediting me with some statistical assistance) describes the current market and shows how Anchorage's more active years of this decade have slowed to a pace that feels more like the "normal market" years of the 1990's.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Monday, September 17, 2007
Monday, August 27, 2007
NY Times Documents National Decline in Home Prices
The New York Times lead story Sunday reported on an anticipated small decline in home values nationwide. http://snipurl.com/1pzzw. The on-line version includes many links to source material, and a video summary by the reporter.
An interesting comment at the very end is by the National Association of Realtors® former chief economist. He acknowledges being late to join the bears in believing home prices could decline. But he adds that the pessimists were much too early when they cried chicken little at the beginning of this decade.
The report also notes that for most people a fluctuation in the value of their home in any particular community won't have much impact on a single family's household economics. The real significance is that a leveling of home values nationwide will be a drag on consumer spending that has in the past been driven by borrowing against increasing home equity.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
An interesting comment at the very end is by the National Association of Realtors® former chief economist. He acknowledges being late to join the bears in believing home prices could decline. But he adds that the pessimists were much too early when they cried chicken little at the beginning of this decade.
The report also notes that for most people a fluctuation in the value of their home in any particular community won't have much impact on a single family's household economics. The real significance is that a leveling of home values nationwide will be a drag on consumer spending that has in the past been driven by borrowing against increasing home equity.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Thursday, August 16, 2007
Anchorage Market Tilts Gently Toward Buyers
Signs have emerged that we are in a market that has become tilted toward buyers in the past 18 months, but not dramatically so. The continuing evidence is in statistics from Alaska MLS, Inc. from July just published.
Inventory stands at 1378 homes for sale, more than any July since 1999 but consistent with inventory levels through the 1990 decade.
Inventory for 347 homes in the price class of $350,000-$500,000 rose from 6.4 months to 7.4 months in just the past 30 days. In the next bracket, to $750,000, inventory rose from 8.6 to 10.2 months. Less costly homes have less inventory. There is a larger supply of more expensive homes, with the million-dollar properties showing two years and four months supply.
Total reported closed sales are down 7.0% compared with the first seven months of last year, and down 15.1% from two years ago, same time period.
But the average sales price through seven months is 4.75% above last year's 12-month average value. This means prices are up about that much from this time last year. That is certainly less appreciation than 7.88% from 2005 to 2006, and double-digit inflation in each of the two years prior to that.
So prices are not falling, but sellers with unrealistic expectations are adjusting, or dropping out the market. "Price reduced" is the theme of our market. This adjustment of expectations is also evidenced by the gap between the last listed price and ultimate selling price. It has increased from 0.7% to 1.7%.
Market times of sold homes year-to-year '06 to '07 rose from 42 days to 62 days.
The world is not ending, contrary to what's being reported from Wall Street, but we have a normalizing market in Anchorage:
Inventory stands at 1378 homes for sale, more than any July since 1999 but consistent with inventory levels through the 1990 decade.
Inventory for 347 homes in the price class of $350,000-$500,000 rose from 6.4 months to 7.4 months in just the past 30 days. In the next bracket, to $750,000, inventory rose from 8.6 to 10.2 months. Less costly homes have less inventory. There is a larger supply of more expensive homes, with the million-dollar properties showing two years and four months supply.
Total reported closed sales are down 7.0% compared with the first seven months of last year, and down 15.1% from two years ago, same time period.
But the average sales price through seven months is 4.75% above last year's 12-month average value. This means prices are up about that much from this time last year. That is certainly less appreciation than 7.88% from 2005 to 2006, and double-digit inflation in each of the two years prior to that.
So prices are not falling, but sellers with unrealistic expectations are adjusting, or dropping out the market. "Price reduced" is the theme of our market. This adjustment of expectations is also evidenced by the gap between the last listed price and ultimate selling price. It has increased from 0.7% to 1.7%.
Market times of sold homes year-to-year '06 to '07 rose from 42 days to 62 days.
The world is not ending, contrary to what's being reported from Wall Street, but we have a normalizing market in Anchorage:
- It will take some mental adjustments by sellers to accept that selling a home is going to take a more normal amount of time, and will only happen with pricing that positions a property to be the best value of its type.
- Buyers, while they are pleased to encounter more seller flexibilty and available choices, still have to accept that property values are rising and that they cannot dictate a deal on their terms alone.
Friday, May 18, 2007
Home Values up 8.1%
Home values for sales reported to Alaska MLS, Inc. through April 30 show the average sales price is 8.1% higher than the sales during the same period last year. This is a comforting contrast to news of housing issues in parts of the Lower 48.
The number of homes sold is off 6.6% and inventory stands at 1014. This is about twice as many homes as were for sale during the last five years of a housing shortage, but still short of the more normal market of the 1990 decade.
Market times are longer, and now more normal, 71 days. Last year it was 48 days for homes sold in the first four months of the year.
The gap between "last-listed" and selling prices is also back to normal: 2.1% as opposed to 0.6% last year.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
The number of homes sold is off 6.6% and inventory stands at 1014. This is about twice as many homes as were for sale during the last five years of a housing shortage, but still short of the more normal market of the 1990 decade.
Market times are longer, and now more normal, 71 days. Last year it was 48 days for homes sold in the first four months of the year.
The gap between "last-listed" and selling prices is also back to normal: 2.1% as opposed to 0.6% last year.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Monday, April 16, 2007
Anchorage Home Price Increase Continues
The price of an Anchorage home continued to rise in the first quarter of 2007. Statistics issued last week by Alaska MLS, Inc. shows an average selling price of $320,787. That's 1.92% over last year's average.
Prices hovered just above and below $300,000 during the last half of last year, ending at $310,132 with the December sales reports.
The appreciation rate for last year was 8.16%, according to updated reports that picked up sales recorded late in 2006 but not reported until this year.
That home prices are continuing to rise is interesting in light of a 7.5% decrease in the total number of sales reported in the first quarter, compared with last year's first quarter. I'm not surprised to see this decline, given the cold months of November and December, which would have been the source of sales reported closed in the first two months of 2007. I take away from this that the winter buyers were still motivated and willing to pay more, given the supply of homes.
These buyers negotiated price more assertively, however. The gap between the last price a property was listed for in the first quarter, and what it sold for in the first quarter, compared with the first quarter of last year, increased from 0.74% to about 2.59%.
This means that even with more price negotiation taking place, values in 2007 are continuing to increase, and at about the same rate as last year. The appreciation rate is only about 2/3 the rate of the first years of the current decade. But it's two to three times the rate of price inflation during all the 1990's.
That there is more price negotiation squares with an increase in the average selling time of Anchorage homes from 49 days to 73 days, first-quarter '06 compared with '07 . Sellers used to hearing about quick sales in recent years get nervous after two months and are more willing to negotiate. Buyers, driven in part by negative press about real estate issues in the Lower 48, have been pressing their offers harder, too.
A final factor in this price escalation is inventory. I wrote you last fall to report that the inventory of homes for sale had increased to about 1200. That followed several years of about half as many or fewer homes for sale. This chronic shortage was a major factor in the higher rates of price appreciation in the 2001-2005 years.
Last fall I was quick to say that 1200 homes for sale, while headline grabbing at the time, hardly represented a "glut". All through the 1990's we typically had 1300-1400 homes for sale, and then a smaller population base and lower total housing unit count.
My other observation last fall was that a substantial number of the 1200 homes for sale consisted of what I called the "wanna-be seller". This is the household that was saying "gosh, if my home is worth that much, maybe I'd be willing to move". That wished-for price was often 'way above-market and produced a listing I believed would never sell.
As I predicted, those wanna-be's didn't sell, and dropped out of the market over the winter. I foresaw an inventory decline to about 2/3 of then-prevailing levels. That prediction proved right-on: the September count dropped from 1234 to 855 at the end of the year. As of the end of March the total inventory of new and resale homes stood at 933.
To summarize:
For full property searches, virtual tours and many other Anchorage real estate resources, visit http://www.reals8.com/.
Prices hovered just above and below $300,000 during the last half of last year, ending at $310,132 with the December sales reports.
The appreciation rate for last year was 8.16%, according to updated reports that picked up sales recorded late in 2006 but not reported until this year.
That home prices are continuing to rise is interesting in light of a 7.5% decrease in the total number of sales reported in the first quarter, compared with last year's first quarter. I'm not surprised to see this decline, given the cold months of November and December, which would have been the source of sales reported closed in the first two months of 2007. I take away from this that the winter buyers were still motivated and willing to pay more, given the supply of homes.
These buyers negotiated price more assertively, however. The gap between the last price a property was listed for in the first quarter, and what it sold for in the first quarter, compared with the first quarter of last year, increased from 0.74% to about 2.59%.
This means that even with more price negotiation taking place, values in 2007 are continuing to increase, and at about the same rate as last year. The appreciation rate is only about 2/3 the rate of the first years of the current decade. But it's two to three times the rate of price inflation during all the 1990's.
That there is more price negotiation squares with an increase in the average selling time of Anchorage homes from 49 days to 73 days, first-quarter '06 compared with '07 . Sellers used to hearing about quick sales in recent years get nervous after two months and are more willing to negotiate. Buyers, driven in part by negative press about real estate issues in the Lower 48, have been pressing their offers harder, too.
A final factor in this price escalation is inventory. I wrote you last fall to report that the inventory of homes for sale had increased to about 1200. That followed several years of about half as many or fewer homes for sale. This chronic shortage was a major factor in the higher rates of price appreciation in the 2001-2005 years.
Last fall I was quick to say that 1200 homes for sale, while headline grabbing at the time, hardly represented a "glut". All through the 1990's we typically had 1300-1400 homes for sale, and then a smaller population base and lower total housing unit count.
My other observation last fall was that a substantial number of the 1200 homes for sale consisted of what I called the "wanna-be seller". This is the household that was saying "gosh, if my home is worth that much, maybe I'd be willing to move". That wished-for price was often 'way above-market and produced a listing I believed would never sell.
As I predicted, those wanna-be's didn't sell, and dropped out of the market over the winter. I foresaw an inventory decline to about 2/3 of then-prevailing levels. That prediction proved right-on: the September count dropped from 1234 to 855 at the end of the year. As of the end of March the total inventory of new and resale homes stood at 933.
To summarize:
- We have a normal market, one that is stronger and more healthy than some markets outside Alaska that are correcting after a period of intense speculation -- and even fraud -- that we did not experience.
- The market is somewhat stronger than what we considered "normal" through the 1990's. It might normalize somewhat further toward those levels as the year goes on.
- The 2000-2005 market, while go-go by Alaska standards, still lagged many Lower-48 markets. Today an average home is closer in price to the average US home: we aren't a high-cost market by comparison with at least half of the rest of the country.
- A seller today, given longer selling times, should plan a measure of patience in the marketing plan. When prices are rising, one doesn't have to panic if there isn't an offer on the property in the first month. Be prepared to compromise more in the eventual negotiation, however.
- The buyer who waits to make a purchase, thinking wrong-headedly that "prices will continue to fall" will end up paying more later this year, or next year. Rising interest rates will compound that higher cost of home ownership for these shy home buyers.
For full property searches, virtual tours and many other Anchorage real estate resources, visit http://www.reals8.com/.
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