February 2007
Monthly Archive
No Real Estate Bubble In Alaska
I attended a presentation at Evangelos Restaurant in Wasilla by Ted Jones titled “Bubblettes and the Economy”. He is the chief economist and senior vice-president of Stewart Title Guarantee Company.
Here is the gist of my notes, I just wrote down the parts of the talk that interested me so the points do not really string together.
- Investment or speculation. If you are buying a house with the hopes of making money it is only an investment if the property will pay for itself. The house should rent for about 1% of it’s market value. If you are purchasing it with the hopes of making money because of appreciating values you aren’t investing, you are speculating. Jones says there are two new Latin words for speculators…Californian and Floridian.
- Now is the time for a fixed rate loan. The interest rate difference between a fixed rate loan and an adjustable rate loan, (an ARM), is extremely small. Yet, 21% of current mortgages are still ARMs. He blames some lenders for encouraging ARMs because they make more money on them. He says many of these are time-bomb loans because they will blow up in a few years and result in a massive increase in foreclosures.
- Interest rates will increase to 7% by the end of the year. Some economists believe the interest rate will remain at about where it is now…the low 6’s, but Jones thinks the rates will likely be close to 7% by years-end for 30 year fixed rate mortgages. If you are waiting and watching before you buy think about what that 1% will do. It will increase the monthy payment for a $200,000 loan by about $130 per month. Multiply that times 60 months, (five years), and you just payed $7,800 more for your house because you waited to buy. Of course, he could be wrong. Interest rates may go down, but no one is betting on that.
- Oil prices have not risen because of greed. They have risen because of the devaluation of the dollar. 75% of our oil is purchased from overseas. Most of the dollars we spend for overseas oil is changed into euros which have gained in value compared to the dollar. So the Saudis and others need to charge more for the oil to maintain the value.
- 79% of home buyers begin their search on the web. I am convinced that an even higher percentage of Alaskans use the web for real estate. Yet, Realtors and sellers still spend most of their money on print advertising. I am moving most of my marketing efforts to the web for this reason. I noticed long ago that I receive more from online advertising than from print media.
- Land costs are high in Alaska. Compared to the rest of the US, the cost of land here is high in relation to the total cost of building a house. The cost of land has risen much faster than the labor and materials cost to build a home. That is the reason many builders keep building homes because they need to get some return on the land that they purchased.
- Job growth in the Matanuska Valley is much higher than the national average. The growth of jobs in Alaska is significantly higher than the national average, and the growth in the Palmer and Wasilla areas is almost twice the national average. Increasing jobs means an increasing population and the need for more housing.
- We do not have a real estate bubble in Alaska. Because we did not have the huge increases in real estate prices seen in other parts of the county, we are not seeing a correction. Real estate prices may not increase like they did in 2005 but because of the continued need for housing, they will not decrease either. Some areas of the country ARE seeing huge decreases in real estate values…namely parts of California and Florida. But Ted Jones does not expect to see prices in Alaska to go down.
More on the economy in Alaska and the Mat-Su Valley.
Monday Market Memo26 Feb 2007 09:33 am
Wasilla And Palmer Real Estate Statistics for the week of Feb 19-26, 2007
The following numbers show the statistics for the Matanuska-Susitna Borough from Trapper Creek all the way through Wasilla and Palmer and then out the Glenn Highway as far as Lake Louise. Of course the bulk of the real estate action takes place in the core areas from Palmer to Big Lake.
| |
|
Average Price |
DOM |
| New |
58 |
$269,260 |
|
| Total Active |
746 |
$292,448 |
109 |
| Pending |
26 |
$226,271 |
90 |
| Closed |
23 |
$239,900 |
89 |
You will notice that I am using the average prices rather than the median prices. I do this because it is difficult to find the median price on Alaska MLS system. I can find it easily on the Valley MLS. The median price is the price at which 1/2 of the houses sold above and 1/2 sold below. That is not the same as the average price because very high priced homes skew the average much higher than the median.
The median price of the 26 pending sales this week is only $202, 450. That means that 1/2 of the sales are below that price. Folks, only 1/4 of the total amount of homes for sale are below that number. That means that anyone with a house above $202, 450 is part of the 3/4ths of the homes competing for 1/4 of the buyers.
Since I belong to both the Valley Board of Realtors MLS system and also the Anchorage Board of Realtors MLS, I try to compare the numbers each week to make sure they are realistic.
This week the numbers are a little skewed because the Valley MLS shows only 664 total active listings and the Alaska MLS shows 746. Normally they are pretty close. The funny thing is, the Valley MLS shows more pendings, more new listings and more closed sales. So for the first time, I went with the Alaska MLS total numbers and the Valley MLS on everything else. There probably is a little bit of play in the system somewhere, but it’s the best I can come up with using the numbers that I have.
Healthy Homes24 Feb 2007 07:30 pm
Why Scents May Not Make Cents When Trying To Sell Your Home.
A Wasilla Real Estate News reader who works in the Environmental Health Field has contributed the following article. We look forward to adding a “Healthy Home” category on this site soon.
For many home sellers who believe the TV commercials that claim chemical sprays “sanitize” the air, plug-ins “freshen” the air and fragrance emitting devices actually clean the air, well…this may not be good news.
The savvy home buyer has added chemical fragrances to their list of what they don’t want to smell when they are looking to buy a home. These chemical fragrances are now listed right next to mold, cigarette smoke and animal urine by many home buyers.
Home buyers today are more educated than ever. Even inexperienced first time home buyers understand that fragrances do not clean the air, they contaminate it and more often than not make people very sick. They have kids with asthma and allergies. They themselves might suffer from migraines, anaphylaxis or fragrance sensitivity. Read the rest of this entry »
Closing Costs23 Feb 2007 06:21 pm
Who Should Pay For The Appraisal?
Closing costs always seem to be a mystery. Most people say we will just split the closing costs 50/50. But it’s not that easy! There are certain costs that are traditionally seller’s costs, and certain that are traditionally buyer’s costs. In some loan programs it is mandatory that the sellers pick up certain costs. Here are the costs usually paid by the buyer:
- All Loan Fees. These include commitment fees, origination fees, points, credit reports, and lock fees.
- Mortgage insurance. Or VA funding fees, or rural development fees if required.
- Reserves account. This is to pay the taxes and insurance as they come due.
- Lenders title insurance. This is not the Owners Title Insurance paid by the seller
- Home owners insurance
- Inspection fees. For their home inspection
- Flood review Read the rest of this entry »
Hiding From The Wind In Palmer Alaska
It’s -1 degree this morning in Palmer. Wasilla is reading -15. Forecasts today are for winds to 20 mph with gusts to 40. That Matanuska Wind really magnifies the cold. Hey, it’s clear and beautiful outside! There is always a bright side.
I don’t mind the wind or the cold until it gets really cold, like -20 or more. There are some advantages to being built like a walrus. The cold and wind remind me that we haven’t tamed everything, and that’s a good thing.
Since people often say they like Palmer but don’t like the wind, I thought I would tell you how to live in Palmer and stay out of the wind. But first let me say that the wind blows in Wasilla too. If it’s gusting to 60 mph in Palmer, the gusts are probably hitting 40 in Wasilla. So just because you don’t buy a house in Palmer doesn’t mean you are avoiding the wind.
And, the wind doesn’t blow as much as people imagine. It’s just that you remember it so well when the roof blows off. We have serious wind storms only a few times a year. I’m going to guess 5–8 wind storms that last 3 days or so. I’m no geophysicist so don’t hold me to that. I’m just giving my best guess after living here for 35 years.
OK, where can you get away from the wind.
Read the rest of this entry »
My Listings22 Feb 2007 01:03 am
Beautiful Building Lots Between Wasilla and Palmer
Hart Lake Estates is located in the heart of the Mat-Su Valley. Just about 1/2 way between Palmer and Wasilla.
Some lots have beautiful Mountain views, others are covered with birch trees, and a select few have water frontage on Hart Lake.
Hart Lake Estates is a neighborhood with paved streets that wind through a birch forest. Underground utilities ensure that the views will not be blocked by unsightly power lines.
Wells have proven to be at a relatively reasonable depth with plenty of water. Here is one example. While wells cannot be guaranteed, so far, everyone has found plenty of water without having to go over 200 feet. In fact most wells are under 100 feet. Here is the info for a few more wells in the subdivision:
- Block 3 Lot 7, 76 Feet, 8 gallons per minute
- Block 3 Lot 11, 76 Feet, could not read gallons per minute
- Block 3 Lot 12, 81 feet, 20 gallons per minute, static water level 49 feet
- Block 3 Lot 15, 81 feet, 20 gallons per minute.
The above four wells were all installed by the same well driller. The identical depth is interesting. I talked to the current home owners in lot 7 and lot 12 and they report pretty good water with a little calcium.
Here is data on 19 soils tests the subdivision. This is a very large file so if you don’t have high speed access, don’t click on it…otherwise click here.
The covenants are reasonable, striking a balance between personal freedom while protecting the property values of the neighborhood. Click here to read the covenants. Speaking of neighborhood , the homeowners are already joining forces to have the post office install cluster boxes. These will be individual locking boxes that will be very convenient for all concerned. Homes in the neighborhood range from $250,000 on up to $500,000 or more.
Hart Lake Estates lot prices are in the $40,000 range for good building lots while the water front lots are considerably more valuable. Click on the map on the left to see the prices. Remember, these price are subject to change, the developers reserve the right to raise the price at any time. Right now the prices are extremely attractive. The prices on the map will be kept current. Here is the plat with the actual lot measurements.
Directions: Parks Highway to Wasilla, Right on Main Street which becomes Wasilla-Fishhook Road up Wasilla-Fishhook to Right on Pamela, Right on Frost and you are there. Click for a map, you will see Hart Lake in the center, (the Hart Lake Roads are not on the map, but the access roads are all correct).
For Buyers21 Feb 2007 08:38 am
5 Ways To Buy Smart
The last few years have seen increases in residential home values at about 10% a year or more in Wasilla and Palmer. Other parts of the country had appreciation as high as 33% per year, but the Mat-Su Borough had a more reasonable rate of increase.
It was generally possible for about 3 years to buy a house in January and make money on it by June. In fact, with some new construction homes, between the time the contract was signed to build the home and the time the home was actually finished, the buyer could immediately sell it and make money. That is because the price was locked in with the builder some months before hand.
Here are ways to make sure you buy smart:
- 1. Buy in a good location. Remember, 35% of our population commutes to Anchorage for work. If you buy in a bad commute area, you are eliminating 35% of the buyers when you sell.
- 2. Practice due diligence. Check that house out before purchasing. Have it inspected, look at the well and septic information. Paying for unexpected repairs after purchasing makes it hard to make money on a house.
- 3. Plan ahead. How long do you expect to stay in the house. If you only plan to stay for two years or less it may be better to rent. You may feel that you are throwing money away, but hey, that’s better than losing money.
- 4. Check out the neighbors. If the neighbor has a pig farm and you are from Iowa it might smell great! But your future buyers will only drive by.
- 5. Don’t over pay. Look at enough houses to feel comfortable with your purchase. Talk to your realtor about the price. Compare the price to similar homes. You must do this yourself. Almost always the appraisal will meet or exceed the purchase price.
Check out Deals Of The Week for some good prices. Also see Wasilla Real Estate Statistics.
The cabin in the photo is for sale on five acres.
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New Construction21 Feb 2007 12:47 am
New Home From Scratch In Less Than 90 Days…$209,900
This is a real nice floor plan, nice enough that when my parents saw it they had one built for themselves. It has vinyl siding, a covered porch, vaulted ceiling, beautiful kitchen and an extra-large garage that is actually finished.
I do not represent Byler Contracting, he is represented by IEC Realty, but I really like this particular plan. I would love to help you with this home, I know of several options that can add to it’s functionality. My parents really enjoy their home, they like the open floor plan in the living room, dining room, and kitchen.
Byler Contracting has a lot in Amberwood Subdivision on which he can build this home for $209,900. He really can build it in 90 days. You won’t see any down time on these homes once the framing starts. They are scheduled very tightly all the way from the floor joists to the final walk-through.
Click on this map to see the location in Amberwood. If you don’t like this location, Byler can build on any lot in the valley. Just let me know and I can help you find a good lot on which to build this house. If you would like a walk-through of this model give me a call.
I enjoy helping buyers with new construction. We can pick and choose among a large group of builders in the valley.
Deals of the Week20 Feb 2007 08:32 am
Wasilla and Palmer Deals Of The Week
Here are the deals of the week for Feb 20, 2007 in Wasilla and Palmer. I reviewed last weeks deals and several are already pending. I only have 7 for this week and I’m sure several of them will be gone by next week.
Here they are.
- 3520 N Wolverine…$169,900…assessed at $256,000…RE/MAX of Wasilla
- 5090 W Northern Rose…$217,000…RE/MAX of Wasilla
- 6370 S Settler’s Bay…$223,000…RE/MAX of Wasilla
- 2141 N Midtown Drive…$224,900…RE/MAX of Eagle River
- 8293 N Iditarod…$180,000…Next Home Real Estate
- 4981 Kipling…$265,000…Prudential Vista Real Estate
- 8935 Gold Pan…$159,900…Fixer…RE/MAX of Wasilla
I didn’t purposely choose mostly RE/MAX listings. I looked through over 100 listings to find these ones and this week…RE/MAX stood out. That’s good because I work there.
Call me for more info on any of these. I know almost for sure that at least two of these will not last the week. 907.232.7900
Market Trends19 Feb 2007 10:44 am
February 19, 2007 Monday Market Memo
This report is for the Mat-Su Borough including the Wasilla and Palmer Real Estate areas for the week of February 12 to February 19, 2007.
The statistics are beginning to show our normal spring time rush.
The graph below is for all the residential realestate on the Multiple Listing Service for the Matanuska Susitna Borough for just this past week.
| |
|
Average Price |
DOM |
| New |
51 |
$271,413 |
|
| Total Active |
734 |
$275,228 |
129 |
| Pending |
31 |
$217,986 |
119 |
| Closed |
23 |
$275,452 |
133 |
In every category, the number of listings are up. There were more new listings, more pending listings and more closed listings this week. In addition, there are more listings all together.
The average price of all the listings on the MLS dropped a little this week which is a response of the market to the need for more lower priced housing. The increase in home prices has out-paced the increase in incomes so that it is more difficult for lower income people to purchase a home.
Most of the builders I talk to this year are planning to meet the demand for lower priced homes. They will build the higher end homes when one is specifically ordered but not on speculation.
Contact me for info on new homes coming on the market. I search the MLS several times a day to see if any of the new listings meet our clients needs. The good deals, and the special homes sell very quickly.
My cell phone number is 907.232.7900
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