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.

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.

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.

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.

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.

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.

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.

Upper End Inventory in Oversupply

As of today there are 76 homes for sale from $700,000 to $1.5 million. In the lower half of this range the rate of home sales for the past 12 months has been three per month. Above $1 million the average is one per month.

This works out to available inventories of just about 17 months and just over two years, respectively. By comparison, the supply of mid-range homes, $350K to $750K is about six months. Below that range, the supply is only one to three months at best.

The good news is that the upper-end homes that have sold have enjoyed relatively brief marketing times, often under 90 days, and less than a month in several cases. This means that a large portion of the inventory is not reasonably priced. However, the home that is priced at market will sell.

Those that languish will end up selling for less than they would if correctly priced at the outset. Sadly, some other more optimistic sellers will altogether withdraw from a market that has rejected their properties.

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

Property Tax Payment Due June 15

This year my wife and I won't forget to ask each other whether one of us paid the first half property taxes! Judith and I did forget one year, and to our chagrin learned that the penalty is 10% of the payment amount, several hundred dollars in our case. There's interest on the unpaid amount, too.

Most people have their property taxes paid from their lender's escrow account, so no worries. But if you don't have an escrow, you have to remember to pay that first half tax bill with a check mailed by midnight next Thursday, June 15. (They don't have to receive it, just have it postmarked by then.)

If over the years you have built up a substantial equity in your property and there is still in place an escrow for taxes and insurance, consider asking your lender to excuse you from it. Assuming you are a good money manager, pay these bills yourself when they are due. Otherwise you are simply making your lender an interest-free loan of more than enough money to cover these expenses!

If you closed a purchase or sale this year it is likely that the taxes were paid for the year at that time. There would have been a proration between buyer and seller. Don't forget to write off your share when you do your taxes next year.

Don't bother with the options of paying by direct debit, or credit card. They charge 3%, more than the cost of just buying airline miles, if that's your motivation.

These and other FAQ's are on the MUNI's web site at this location.

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

Niel's Web Resources Enhanced

I'm offering enhanced resources for sellers, as well as buyers, on my web site. "What's My Home Worth" is especially popular. Owners can get an EMail valuation. The Seller-oriented page is here.

The equivalent page for Buyers is here.

People tell me the Anchorage Real Estate Podcast, a short on-line radio interview on market conditions, is a first for Anchorage real estate information. And the push-to-talk-to-me button is popular: even my mother in Vermont uses it.

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