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.
Friday, May 18, 2007
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/.
Saturday, October 07, 2006
Homes-Listed Inventory Levels
The number of homes listed for sale in Alaska MLS Inc stood at 1202 at the end of September. This is the fourth month in a row that the inventory has come to rest at this same level.
There was a surge of new inventory beginning in late spring. The number of homes for sale has doubled. Everyone's been talking about it. We are still a couple hundred listings below what was "normal" in the decade of the 1990's, however. I would characterize the current decade as an abnormal market.
A reporter asked me yesterday, in connection with the interview I did for Channel 2 news, if there are more buyers than sellers in the market. I'm not sure how to measure that. But I would interpret the leveling of the inventory as a sign that buyer demand and seller supply are back in balance.
There's usually a decline in inventory during the winter. There are a fair number of "wanna-be" sellers with overpriced property listings out there. If they don't achieve their unrealistic objectives this month, many will give up.
Sellers who want to create a sale face less competition during the dark months. Buyers at that time of year can expect to find good values then, too.
Right now is actually a good time for the value-conscious buyer. Good properties are still available; not all the best properties have been chosen. A buyer who deals with a seller who is committed to creating a sale before winter can be pleasantly surprised.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
There was a surge of new inventory beginning in late spring. The number of homes for sale has doubled. Everyone's been talking about it. We are still a couple hundred listings below what was "normal" in the decade of the 1990's, however. I would characterize the current decade as an abnormal market.
A reporter asked me yesterday, in connection with the interview I did for Channel 2 news, if there are more buyers than sellers in the market. I'm not sure how to measure that. But I would interpret the leveling of the inventory as a sign that buyer demand and seller supply are back in balance.
There's usually a decline in inventory during the winter. There are a fair number of "wanna-be" sellers with overpriced property listings out there. If they don't achieve their unrealistic objectives this month, many will give up.
Sellers who want to create a sale face less competition during the dark months. Buyers at that time of year can expect to find good values then, too.
Right now is actually a good time for the value-conscious buyer. Good properties are still available; not all the best properties have been chosen. A buyer who deals with a seller who is committed to creating a sale before winter can be pleasantly surprised.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Saturday, September 16, 2006
August MLS Reports Show Balanced Supply/Demand
August reports just published by Alaska MLS Inc. document the continuing trend toward normal market conditions.
The number of sales contracts inked for existing and new construction homes and condos is off 6.5% compared with last year. This represents a return to historic levels of property turnover since the current long-term market recovery began in 1990.
The number of homes for sale (not including condos) stands at 1197. Inventory was at 1100-1300 all through the 1990's.
The existing inventory is fresh. Much of the increase from the chronic short-inventory levels of the past six years -- when only 500-600 homes were for sale in most months -- came to the market this summer. This is evidenced by the current listing inventory showing only 60 days marketing time, compared with last year's 610 homes for sale showing 96 days-on-market.
How long it actually takes a home to sell is what's important to sellers. That has hardly changed in recent years: 46 days for year-to-date sales in 2004 and 42 days for the same time frame last year and so far this year. Homes that experience exessive marketing time, over 90 days, miss the market's enthusiasm for fresh listings and become shopworn.
With demand relatively constant, and supply returning to normal levels, price appreciation has moderated accordingly. Compared with double-digit appreciation rates in recent years, 2006 is showing signs of about 6%-7% inflation. (Nothing suggest a decline in value.)
The average home in Anchorage now prices at about $325,000. Absorption calculations compare the amount of inventory with the rate of sales. For homes priced at the average low-$300,000 level, MLS estimates there is about a five month supply.
Supply of four to six months is an indicator of a balanced market. More than that -- such as the eleven-month supply of homes priced above $500,000 -- suggests a buyer's market. Less supply -- such as the 2.4 month supply of homes priced under $250,000 -- indicates a buyer's market.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
The number of sales contracts inked for existing and new construction homes and condos is off 6.5% compared with last year. This represents a return to historic levels of property turnover since the current long-term market recovery began in 1990.
The number of homes for sale (not including condos) stands at 1197. Inventory was at 1100-1300 all through the 1990's.
The existing inventory is fresh. Much of the increase from the chronic short-inventory levels of the past six years -- when only 500-600 homes were for sale in most months -- came to the market this summer. This is evidenced by the current listing inventory showing only 60 days marketing time, compared with last year's 610 homes for sale showing 96 days-on-market.
How long it actually takes a home to sell is what's important to sellers. That has hardly changed in recent years: 46 days for year-to-date sales in 2004 and 42 days for the same time frame last year and so far this year. Homes that experience exessive marketing time, over 90 days, miss the market's enthusiasm for fresh listings and become shopworn.
With demand relatively constant, and supply returning to normal levels, price appreciation has moderated accordingly. Compared with double-digit appreciation rates in recent years, 2006 is showing signs of about 6%-7% inflation. (Nothing suggest a decline in value.)
The average home in Anchorage now prices at about $325,000. Absorption calculations compare the amount of inventory with the rate of sales. For homes priced at the average low-$300,000 level, MLS estimates there is about a five month supply.
Supply of four to six months is an indicator of a balanced market. More than that -- such as the eleven-month supply of homes priced above $500,000 -- suggests a buyer's market. Less supply -- such as the 2.4 month supply of homes priced under $250,000 -- indicates a buyer's market.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Monday, September 11, 2006
ADN Real Estate story -- Reaction from Ken Gain
Ken Gain is a respected long-time real estate licensee who has just about every credential one could imagine. Here's his reaction to the Daily News story published yesterday, posted here with permission:
"What I see is what statisticians refer to as "reversion to the mean". The market is still very strong and in my opinion is a much healthier market because it is forcing both buyer and sellers to negotiate and use sound judgment. Balanced markets are, in my opinion, always better than buyer's markets or seller's markets. I was somewhat concerned over the last several years where people who really understand little about real estate or markets in general were wrapping them selves in the cloak of infallibility by pronouncing that "you can't go wrong with real estate". Fortunately, we didn't see a huge upsurge of investor purchases of homes that occurred in many markets. You can be certain that when properties are purchased only in anticipation of flipping them in a short time, rather than occupying or renting them, that a significant correction is only several years away. A market based upon the "greater fool theory" is a dangerous market. In summary, I believe that the recent cooling of the market is very good for everyone."
Ken Gain, PresidentCA$H NOW Financial Corp.Phone (907)279-8551Fax (907)274-7630 Website--http://cash4you.net
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
"What I see is what statisticians refer to as "reversion to the mean". The market is still very strong and in my opinion is a much healthier market because it is forcing both buyer and sellers to negotiate and use sound judgment. Balanced markets are, in my opinion, always better than buyer's markets or seller's markets. I was somewhat concerned over the last several years where people who really understand little about real estate or markets in general were wrapping them selves in the cloak of infallibility by pronouncing that "you can't go wrong with real estate". Fortunately, we didn't see a huge upsurge of investor purchases of homes that occurred in many markets. You can be certain that when properties are purchased only in anticipation of flipping them in a short time, rather than occupying or renting them, that a significant correction is only several years away. A market based upon the "greater fool theory" is a dangerous market. In summary, I believe that the recent cooling of the market is very good for everyone."
Ken Gain, PresidentCA$H NOW Financial Corp.Phone (907)279-8551Fax (907)274-7630 Website--http://cash4you.net
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Sunday, September 10, 2006
Anchorage Daily News Real Estate story
Here's the link to the page one story about the Anchorage real estate market that ran in today's Anchorage Daily News. I thought it was a fair and balanced report: http://www.adn.com/news/alaska/story/8178223p-8071036c.html
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Wednesday, August 30, 2006
Are foreclosures on the increase in Anchorage?
I have been wondering whether foreclosure rates are rising. In recent months I seem to be receiving more properties from institutional owners after they foreclose on them. It could be another sign of a market that is making a transition to more normal conditions.
I'm not seeing a glut of foreclosures. A small proportion of any loan investor's portfolio will fail to perform, no matter how strong a market is.
None of these properties is from Alaska Housing Finance. They are a more conservative investor, with a reputation for higher property standards. Delinquency rates for homes financed by AHFC, an early indicator of the health of any loan portfolio, rarely top four percent. AHFC only forclosed on 19 properties through July this year, compared with 18 for the same seven months of last year.
AHFC's multifamily loan portfolio, by contrast, showed a 3.70% delinquency at the end of July, compared with 2.07% in July, 2005. All through 2005 loan delinquency in the AHFC multifamily portfolio was at the low two percent level. This year it's been over three percent in four of the first seven months of the year.
Other more adventuresome lenders, by contrast, may have more of their loans getting into trouble. That could explain why I'm marketing more foreclosed homes and small income properties now.
By the way, I publish upcoming listings, including foreclosures, on the front page of my web site at this URL: http://www.reals8.com/index.html#comingsoon. There are some asset management sites that show me as the upcoming marketing representative on their properties, too. This is often weeks and sometimes months ahead of the property being cleaned, appraised and otherwise made ready for market, with a list price and available for offers.
So I make it my practice to note the names and phone numbers or Email addresses of anyone who wants to know about these properties on the first official listing day. I'm diligent about this. Such people have taken the trouble to let me know of their interest, so it's just professional courtesy, I believe, to see that they get the earliest opportunity.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
I'm not seeing a glut of foreclosures. A small proportion of any loan investor's portfolio will fail to perform, no matter how strong a market is.
None of these properties is from Alaska Housing Finance. They are a more conservative investor, with a reputation for higher property standards. Delinquency rates for homes financed by AHFC, an early indicator of the health of any loan portfolio, rarely top four percent. AHFC only forclosed on 19 properties through July this year, compared with 18 for the same seven months of last year.
AHFC's multifamily loan portfolio, by contrast, showed a 3.70% delinquency at the end of July, compared with 2.07% in July, 2005. All through 2005 loan delinquency in the AHFC multifamily portfolio was at the low two percent level. This year it's been over three percent in four of the first seven months of the year.
Other more adventuresome lenders, by contrast, may have more of their loans getting into trouble. That could explain why I'm marketing more foreclosed homes and small income properties now.
By the way, I publish upcoming listings, including foreclosures, on the front page of my web site at this URL: http://www.reals8.com/index.html#comingsoon. There are some asset management sites that show me as the upcoming marketing representative on their properties, too. This is often weeks and sometimes months ahead of the property being cleaned, appraised and otherwise made ready for market, with a list price and available for offers.
So I make it my practice to note the names and phone numbers or Email addresses of anyone who wants to know about these properties on the first official listing day. I'm diligent about this. Such people have taken the trouble to let me know of their interest, so it's just professional courtesy, I believe, to see that they get the earliest opportunity.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Wednesday, August 16, 2006
July Market Data: More Homes, Constant Demand
Alaska MLS, Inc. published its July reports today showing that 1105 homes were for sale at the end last month, more than any July since 1999.
Through the '90's we had about 1200-1400 homes for sale. In recent years the housing shortage has given buyers only about 600 homes to choose from.
Demand is relatively constant, however. Closed sale reports year-to-date are down only 4.6% compared with last year, and 6.3% under 2004.
Prices continue their upward trend. The average sale price this year $309,824. This is about 6.5% above the average at this time last year. Higher mortgage rates -- 30 year loans are pricing about a half-percent above last summer -- have added to the cost of home ownership.
Mortgage costs and purchase price are combined with utilities by the US Labor Dept. for the housing component of the Consumer Price Index, which they reported this week went up 4.2% in Anchorage last year.
So consumer demand seems constant but the cost of home ownership continues to rise. With more homes to choose from, however, buyers may take longer and the time it takes to sell a home may increase somewhat. So far that's not happened: 43 days is the average selling time for the 1720 sales so far this year, the same as last year and four days less than two years ago. Nationally marketing times of 60-90 days are considered normal.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Through the '90's we had about 1200-1400 homes for sale. In recent years the housing shortage has given buyers only about 600 homes to choose from.
Demand is relatively constant, however. Closed sale reports year-to-date are down only 4.6% compared with last year, and 6.3% under 2004.
Prices continue their upward trend. The average sale price this year $309,824. This is about 6.5% above the average at this time last year. Higher mortgage rates -- 30 year loans are pricing about a half-percent above last summer -- have added to the cost of home ownership.
Mortgage costs and purchase price are combined with utilities by the US Labor Dept. for the housing component of the Consumer Price Index, which they reported this week went up 4.2% in Anchorage last year.
So consumer demand seems constant but the cost of home ownership continues to rise. With more homes to choose from, however, buyers may take longer and the time it takes to sell a home may increase somewhat. So far that's not happened: 43 days is the average selling time for the 1720 sales so far this year, the same as last year and four days less than two years ago. Nationally marketing times of 60-90 days are considered normal.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Tuesday, August 08, 2006
Fear Reaction to BP Prudhoe Bay Closing will be Brief
The news of BP closing Prudhoe Bay oil fields while the firm replaces corroded feeder pipelines will startle the real estate market here, at least briefly. Uncertainty always first triggers a fear reaction. In real estate this means buyers will hold back from the commitment of investing in a home, or making a decision about commercial property.
Then things sort themselves out. In the interim, demand just builds. People die, change jobs, get married or divorced, retire, have kids. Businesses expand, contract, or change mission. Their housing needs and business real estate requirements are still there.
So at some point everyone gets going again, and makes their purchase, or business leasing decision. Those become very busy weeks for us real estate folks.
I would predict the impact of this news from BP will be brief. People will quickly appreciate that economic activity and corporate spending that impacts the Alaska economy is good for the real estate market. BP's new project at Prudhoe Bay will be a very significant reinvestment of capital.
As one of my friends within the oil industry, puts it, "Once the market recovers from the initial shock of the news, I think you'll find that there is going to be significant activity. Replacing the oil feeder lines at Prudhoe Bay is no small task and will require an army of workers together with some high powered help from the Engineering contractors. That together with the rest of the Alaska activity is going to keep the economy strong for some time to come."
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Then things sort themselves out. In the interim, demand just builds. People die, change jobs, get married or divorced, retire, have kids. Businesses expand, contract, or change mission. Their housing needs and business real estate requirements are still there.
So at some point everyone gets going again, and makes their purchase, or business leasing decision. Those become very busy weeks for us real estate folks.
I would predict the impact of this news from BP will be brief. People will quickly appreciate that economic activity and corporate spending that impacts the Alaska economy is good for the real estate market. BP's new project at Prudhoe Bay will be a very significant reinvestment of capital.
As one of my friends within the oil industry, puts it, "Once the market recovers from the initial shock of the news, I think you'll find that there is going to be significant activity. Replacing the oil feeder lines at Prudhoe Bay is no small task and will require an army of workers together with some high powered help from the Engineering contractors. That together with the rest of the Alaska activity is going to keep the economy strong for some time to come."
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
Thursday, July 20, 2006
Anchorage homes for sale top recent records
Anchorage’s summer market sees more homes for sale at this time of year than any year since 1999. Although the number of reported sales has declined year-to-date by 4.8%, prices continue to rise.
The average selling price of a home in Anchorage crossed the $300,000 line in April, a first for Anchorage. The average sales price in June was a whopping $340,175!
Homes are still selling in 45 days, about the same as the past four years. The average gap between the last listed price and the closed sale price is the narrowest it has ever been: 0.56%.
These facts suggest that market appreciation may still achieve double-digit levels this year. It’s been 9%-12% in each of the years 2001-2005. So far this year our average price is 5.95% above the end of last year. We can’t have short market times and homes selling very close to list and not believe that demand still outstrips supply.
It is refreshing, however, to see more inventory. Total homes listed for sale through MLS have been in the 500-600 range since late 2000, even dropping below 500 a few times. Now we have just seen a surge of 654 new listings in June to bring the month-end total to 963.
If there is a soft spot in the market, it’s upper-end homes. The million-dollar home used to be unusual: now there are 25 for sale. But with only one or two a month selling, this inventory constitutes a 21 month supply. The inventory of homes from $750,000 to $1 million is 14 months. By contrast, under $250,000 there is only a two month supply.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
The average selling price of a home in Anchorage crossed the $300,000 line in April, a first for Anchorage. The average sales price in June was a whopping $340,175!
Homes are still selling in 45 days, about the same as the past four years. The average gap between the last listed price and the closed sale price is the narrowest it has ever been: 0.56%.
These facts suggest that market appreciation may still achieve double-digit levels this year. It’s been 9%-12% in each of the years 2001-2005. So far this year our average price is 5.95% above the end of last year. We can’t have short market times and homes selling very close to list and not believe that demand still outstrips supply.
It is refreshing, however, to see more inventory. Total homes listed for sale through MLS have been in the 500-600 range since late 2000, even dropping below 500 a few times. Now we have just seen a surge of 654 new listings in June to bring the month-end total to 963.
If there is a soft spot in the market, it’s upper-end homes. The million-dollar home used to be unusual: now there are 25 for sale. But with only one or two a month selling, this inventory constitutes a 21 month supply. The inventory of homes from $750,000 to $1 million is 14 months. By contrast, under $250,000 there is only a two month supply.
For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.
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