Anchorage Home Sales Setting Records

Anchorage residential sales are on track to set several records this year, according to reports published today by Alaska MLS, Inc.

The average price for properties sold this year through October is $337,320. This tops the 2007 high of $327,070 by three percent. Home values never suffered here: the average price hasn't been below $321,000 since 2007. Before that year, values were rising 8% to as much as 13% per year.

The pace of sales has been brisk, too. The total of homes sold so far this year is eleven percent above the first ten months of last year. The number of homes sold each month this year has exceeded the comparable month of all but two months of 2010.

With more sales in a rising price environment, market times are predictably getting shorter. It's been taking on average 59 days to sell a home this year, compared with 70 days last year.

This much market activity has depleted the inventory in virtually all price ranges. Divide the number of homes for sale by the number of sales in a year and one sees that there's only a two or three month supply in every price range, up to $500,000.

There's a five month supply from there to $750,000. A 5-6 month supply is considered a balanced market. So the 10-month supply of homes $750,000 to a million and the three-year supply over the million dollar mark represent the only soft part of the Anchorage market today.

Nothing suggests any significant change in this trend. If you are looking to make a purchase, now is the time to lock in the most favorable interest rates any of us have seen in our lifetimes. This ensures your most affordable cost-of-ownership going forward.

And if you have a property to sell, bring it to market now during this time of shortage and when prices are going up! You face less competition now than you will in the spring, and will capture these buyers who are faced with limited selection, and who are motivated by the knowledge that interest rates can only rise from current levels.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Home Sales Up Nationally, Favorable for New Alaskans

Many Alaskans have been unable to make a home purchase here because they have been waiting for their homes in other states to sell. This is a not-uncommon scenario for new Alaskans. They are often forced to lease their former residences when unfavorable market conditions disfavor a sale.

So it came as favorable news yesterday from the National Association of Realtors (NAR), our industry's trade association, that its leading indicator of purchase agreements signed in January rose to the highest level since April 2010. That's when a federal tax credit was about to expire, producing a surge of sales, mostly to first-time buyers.

Use this link to read the news account from NAR, and download the report, http://snipurl.com/22eeek6realtor.org.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Anchorage Home Prices Steady 2011 Year-End

The average selling price of a home in Anchorage last year was $322,280. This is the fifth consecutive year of average prices coming to rest in the $320,000-$330,000 range. In the ten years prior to 2007, home prices doubled. Given what's happening in so many other markets, Anchorage has much to celebrate!

Alaska MLS Inc. published year-end statistics today. The reports (http://www.reals8.com/statistics.htm) document the continued stability of the Anchorage housing market.

But for a flood of negative housing news coming from Outside, one would expect home prices to be rising here, given supply and demand factors. A total of 2367 homes sold last year, a two percent increase over 2010.

More sales happened during a time of a record low rate of new home construction. The market absorbed inventory, and by the end of December there was only a little over three months' supply of homes for sale. A balanced market is one with five or six months' supply. Where there is a shortage, market forces usually drive prices higher. Low interest rates also should have sparked higher prices. But headline-driven lower consumer confidence levels countered these traditional market forces.

For the last half of last year the total number of homes for sale ran below comparable months of 2010. Only at the $500,000 price level and beyond is there an adequate supply of homes for sale. There's five months' worth from $500K to $750K, ten months in the next $250K bracket, and something over two years of million dollar homes for sale.

Homes sell in about 71 days, and for 95% of their initial asking prices. The pattern is for many homes to have one price reduction of about 3% if they don't sell in a month. That price adjustment usually brings the home within striking distance: the gap between selling prices and where homes are priced at the time of sale is less than 2%. The corollary is that buyers ignore homes priced more than just a few percent above market and don't even make offers on them.

Condo prices have also been stable, with the average selling price in the $190,000 range for four years. Last year's average, $198,855 was almost four percent above 2010. However, lending standards tightened during the year, making financing for some condo projects harder to obtain. This explains fewer sales, a 15% decline, in the face of rising prices. There is only a four month supply of condos at present.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Moving Up to a Better Home? Watch for Bargains This Fall!

If you live in an older home that's not meeting your needs, this fall may be a great time to upgrade. Signs are developing in some market segments that bargains will appear.

Price and value have everything to do with supply and demand, as we all know. So look for value in market segments where there is an excess of supply and weak demand. If one of those market segments has the type of home you want, your timing is fortunate.

Your timing couldn't be better as to the cost of your mortgage loan. Interest rates are still at at historic lows. (How the US handles its debt issues and how bond markets respond could drive the cost of borrowing higher very soon, however.) The interest rate of your loan can affect your cost of homeownership far more than the price you pay for a property. The take-away these days is to corral as much cheap mortgage money as your comfort level and overall financial picture permits.

If you want to move this fall, now is when you need to see your mortgage banker. Moving up is not as easy as it used to be. The bank is going to want to know what you are doing with your present home. You might not want to sell it and have to be out not knowing where you are going to live next. And no seller will pay attention to you if you make an offer asking the seller to wait for your home to sell. So if you are keeping your home, the lender is going to look at how much equity you have in it. And, they will want you to qualify for that payment, as well as the payment on your next home. And, the lender may want you to make a large down payment on that next home. And, after all that cash commitment, the lender may still want to look at how much money you have left in reserve, such as in retirement accounts and other savings and investments.

So see your banker now. You must have that financial plan in place before you shop. You won't have the luxury of figuring out how you are going to pay for that next home when the opportunity presents itself.

Assuming you and your banker have comfort with each other, where are bargains? That's the "excess-supply-weak-demand" formula. And this fall it's possible that the kinds of homes that many local homeowners would choose for a move up are going to be in their sights.

These homes are often owned by people whose employers move them around regularly. They are in Anchorage for three or four years, then it's back to Lower 48, or overseas. These same employers give them financial incentives in the form of cash payments to get their homes sold. That gives them an edge on the market, enabling them to price their homes aggressively.

Another employee benefit can be the employer's promise to acquire the home if it doesn't sell. When that happens, the employer's third-party relocation service provider puts the home back on the market as an "inventory property".

If this fall market develops as I believe it might, the bargains will be the alignment of three stars that explain weak demand and excess supply.

This summer we are seeing the usual transfers of corporate employees out of Anchorage. It's not "last one out turn off the lights". Just normal activity. That's the first star. 

The oversupply would develop because of weak demand. Second star: not as many corporate transfers into Alaska appear as would be required to purchase the homes of those who are leaving.

Third star: because of tighter financing requirements for local upgraders -- that's why I want you to see your banker now -- many Anchorage homeowners can't afford to move into one of those homes. Fewer buyers explains weak demand.

If those stars align as I believe they could this fall, and you are prepared with your financing plan, you could be very pleased at the prices of some of the homes. A corporate seller, for instance, is not going to want to keep an inventory property over the winter. It will be priced for a very prompt sale. When it is, you won't have long to react. At the right price, no matter how weak the demand, anything will sell. If you are ready, you will benefit before the next folks.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Are Foreclosures a Good Deal?

People often begin a home search saying "I want to buy a foreclosure". What's really meant is "I want a good deal". So what constitutes a "good deal"?

That may depend on how you define the phrase. Sales hype sometimes uses phrases like "below market". To me that's silly. "Market" is the price that willing sellers and buyers who are not under duress will agree. "Unexpected" might be the better word for a price that seems low.

Foreclosures sometimes seem priced unexpectedly low. But there's a reason the market will pay less for these properties. Usually it's condition. A homeowner being foreclosed on is hardly going to leave a home staged for optimal showing. I've seen far worse: on the way out the door an angry homeowner has been known to take a sledge hammer to the place. I'm in the premarketing stage on one where the bid to trash out the place is $12,500!

Sometimes the property is in such poor condition that no bank will finance it. When you see a home with a tax-assessed value of $250,000 being offered for $175,000 that's usually the situation. You have to write a check for the whole price. And, have the additional cash to fix the place. There can be an opportunity in that. If you have that kind of financial depth, and repair skills, you could profit when you resell it.

Even when a foreclosure will qualify for financing there's a market discount associated with simply being a bank-owned property. It's like the kind of stigma that sometimes attaches to a home that has been a crime scene, or is close to commercial development. The discount isn't much in the Anchorage market, perhaps 10%-15%. Lenders would prefer that it not be disclosed that their property is bank-owned, but at present Alaska MLS requires its members to check the box that says it's a foreclosure.

That market discount is not without logic, however. It's just generally true that an institutionally-owned property is often cosmetically that much (maybe 10%-15%) below the standard that most private owners offer. You can buy a foreclosure for less, but if your tastes are like most people you'll be spending as much or more of the difference when you make improvements.

So, yes, foreclosures can be a good deal. If fun for you is playing with your home, go for it.

Yet when you start your search, don't limit your consideration to bank-owned homes. Alaska has one of the lowest foreclosure rates in the nation, which explains our stable market. (See the blog post immediately below this one.) There aren't a lot of foreclosures. Keep your search broad. Focus on all the homes that show some potential for meeting your needs. As you narrow the search you'll form opinions you can trust about which ones represent the best value. Or, "good deal" as you might define the phrase for yourself.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

"Normal" is Good in Anchorage Market

Anchorage home prices doubled in a ten-year period from the late 1990’s. In 1997 the average sales price was about $160,000. Residential prices settled in the mid-$320,000 range in 2007 and have stayed there since. We have become accustomed to "normal" while many markets in the Lower 48 and Hawaii have cratered.

The average sale price for the first half of 2011 was $323,914. What about the first six months of last year?

The first half of 2010 was a market driven by a Federal tax incentive of up to $8000 for first-time home buyers and others. Anchorage prices rose slightly as a result. This year prices have retreated 2.5% to about the same level as the previous three years. It's back to "normal" this year.

Our condo market enjoyed a similar surge in sales in the first half of last year, with close to 120 properties per month sold in the second quarter. The norm is about 80. Prices remained stable, in the $190,000 range. The average selling price for the first six months of this year was $196,489.

The number of residential properties sold annually in the first six months of the past four years has been about 25% below the rate of sales during the seven prior years, beginning in 2001. This year has seen 1030 homes sold through June. That’s 8.5% fewer than the 1126 sold in 2010, which was fueled by the tax-credit. This year exceeds 2009, however, which had only 998 sales. Earlier in the decade, the first half sales rate was between 1400 and 1500.

Strong demand and many sales early in the last decade played beside insufficient new home construction. A shortage developed, with fewer than 700 homes for sale being the norm for about six years. In the past four years, by contrast, inventory has returned to historic levels that exceed 1000 in most months. At the end of June this year there were 1120 homes for sale, close to the average of the prior four years.

Comparing the number of homes for sale with the rate of sales per month is another way to consider housing availability. A balanced market has about six months’ worth of homes for sale. Lighter inventory means sellers have an edge. Buyers enjoy an advantage when there is more than six months’ supply. The chart to the left shows how Anchorage is a seller’s market up to about $400,000, with buyers having more bargaining power in the upper-middle and higher price ranges. Condo supply, as shown on the last line, has increased after last year’s strong absorption that was due to tax credit sales.

There are early signs of weakness developing in the market this summer. The number of new (pending) sales reported in June was somewhat below historic norms for the month. Homes have taken longer to sell, 76 days during the first half of this year compared with 65 days last year. There were only 74 pending condo sales this June, where the norm has been closer to 100 in that month.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

August 2009 real estate sales surpassed every single month since June 2006, a just-released report from Alaska MLS, Inc. shows. There were 317 sales that went pending (not yet closed) in a month.

The $8000 tax credit boosted market activity. There is also a feeling of optimism among home buyers and sellers. The Alaska economy and job markets are stable. There are 516 more children than expected in the Anchorage school system, necessitating 53 new hires, http://www.adn.com/news/alaska/ap_alaska/story/935302.html.

Nationwide there are signs of economic stabilization. The risk of further declines, or disastrous setbacks, seems lower than continued recovery. People now talk about how quickly or slowly we will get well in our economic lives; and less about how maybe life as we know it might be coming to an end.

Even the cash for clunkers car program may have played a role in inspiring Anchorage's property sales. All these stimulous measures seem to breeding a sense that it's OK to invest money in property, historically something safe and sound over the long term.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Anchorage ranks 5th in a recent study of the potential for home price appreciation by the chief economist of Moody's Economy, as reported in this week's issue of US News and World report, The Top 10 Housing Markets for the Next 10 Years" - http://snipurl.com/kdcib.

"House prices should grow at the rate of household income," says Mark Zandi of Moody's.

1. Bremerton-Silverdale, Wash.: 5.22 percent
2. Glens Falls, N.Y: 4.71 percent
3. Fort Collins-Loveland, Colo.: 4.06 percent
4. Corvallis, Ore.: 3.95 percent
5. Anchorage, Alaska: 3.8 percent
6. Duluth, Minn.: 3.74 percent
7. Sandusky, Ohio: 3.66 percent
8. Santa Fe, N.M: 3.57 percent
9. Pittsfield, Mass.: 3.51 percent
10. Decatur, Ill.: 3.44 percent

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Newest MLS reports discussed at Anchorage Lions Club

I was the speaker at the Anchorage Lions Club last week. What follows is the outline of the presentation, in the form of a quiz. Answers appear below. The statistics are current as of the latest report from Alaska MLS, Inc., published October 10.

1. At the present rate of sales, how long will it take to sell the 40 homes for sale that are priced over $1,000,000?
a) one year b) 18 months c) two years d) three years e) five years

2. What is the gap between the asking price of a home this year when the sellers accepted an offer, and the price they got?
a) 2.5% b) 4.5% c) 7.5% d) 9.5% e) over 12%

3. How many homes were for sale at the end of September?
a) 275 more than the prior year b) about the same as the prior year c) 275 fewer than theprior year d) More than any time in the past 15 years e) fewer than any year in the 1990 decade

4. The average price of homes sold so far this year compared with 2007 is
a) 10% lower b) 5% lower c) about the same d) higher than last year

5. The average 2008 sales price of homes in Anchorage compared with the year 2000 is
a) 25% higher b) 50% higher c) 75% higher d) double e) 150% higher

6. The number of sales of Anchorage homes through September is
a) off 5.5% b) off 9.5% c) off 15.5% d) up 5% e) about the same

7. What is true about marketing times of homes in Anchorage?
a) It’s taking longer to sell a home this year, and homes now for sale have been on the market longer than last year
b) Home this year have been selling in less time but the existing inventory is experiencing longer market times
c) It has taken longer to sell a home this year but the existing inventory has not been on the market as long as homes that were for sale last year

8. Historically, what factors have had the biggest influence on Anchorage home values?
a) Price of oil
b) Jobs and population
c) Party in power in Washington
d) Realtors and mortgage lenders
e) Interest rates

9. What caused the real estate crash in Alaska in 1985-6?
a) Price of oil
b) Completion of Project ‘80’s
c) Tax Reform Act of 1986
e) All of the above
f) Something else: ______________________________

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Answers: 1(d); 2(a); 3(c) and (e); 4(c); 5(c); 6(b); 7(a); 8(b); 9(e)
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For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.

Alaska publishes new disclosure form

If you have a property on the market at present you'll need to replace the Alaska Real Estate Commission property disclosure form with the updated version published over the weekend. New listings will use the new form hereafter.

The basic form is largely unchanged. Housekeeping and modernization were needed. Examples include adding solar panels, wind generators and swimming pools to the list of items one can check to say something is wrong with them.

Perhaps the most substantive change is the requirement to disclose if you know of any murders or suicides at the property in the past three years, and whether the property contains any human remains. While not explicitly stated, it would appear that the scattered ashes of a deceased should therefore be disclosed.

The phrase "mildew or mold issues" appears as a new required disclosure. This may be hard for some to answer with confidence. Mildew and mold are very common in damp places like bathrooms, crawl spaces, attics and the backs of closets where air movement doesn't take place and cold walls can host some condensation. It takes testing by a specialist to conclusively identify what's there. Alaska's disclosure law does not require independent testing, however, so it should be enough for homeowners to simply say whether they know of mold or mildew in the home.

EPA guidelines say that mold and mildew -- they are much the same thing biologically -- require continuous moisture. The common remedy therefore is to identify the source of moisture and dry out the area. Then the dead mold can simply be wiped down with Kilz and painted over.

The new disclosure form states in the instructions that Alaska law requires amendment of the disclosure if a seller comes by new information about the property. If a buyer is under contract at that time, amending the disclosure gives the buyer the right to back out without penalty within three days. That's not new, although the language pointing this out wasn't in the instruction set of the old form.

What is new, however, is the statement that any inspection report the buyer obtains is "automatically" a new disclosure of the seller, thus triggering a three-day right to cancel at that point. The purchase and sale agreement widely used by Alaska MLS, Inc. members has long read this way. The new disclosure form in effect codifies a common practice for a great majority transactions where the the MLS form is used.

The requirement to disclose old engineer and property inspector reports has been expanded from two years to five. The new form has a yes/no question as to whether the homeowner "to best of your knowledge" is aware of reports that are as much as five years old. The old form had a check box in a section called "Documents . . . the seller has available for review" for reports "completed in the past 24 months". The time line in that checkbox has been deleted on the new form. This may enable a homeowner to truthfully answer that he or she is aware of past inspections but not have to dig around to find the report itself if it has since been lost.

There are a few other new questions. One asks about freeze-ups and the use of "heat tapes, heat lamps, or other freeze prevention devices". Another asks about water contaminents. There are more detailed questions about flooding and flood zones. The question about soil conditions has been reworded to require only disclosure of conditions "that affect the improvements of the property".

The new form was some time in the drafting, review and approval process. It contains many consumer-friendly and litigation-avoiding improvements. It also steered away from some of the objectionable things that appeared in earlier drafts, such as one question that could have been read to require disclosing if there are ghosts in the home.

For full property searches, virtual tours and many other Anchorage real estate resources, visit RealS8.com.