Monday Market Memo for the week ending May 5, 2008.  These are the statistics for the Mat-Su MLS for this week.

Well we went over 800 for our total inventory for the first time since last summer.  That was to be expected.  I think we will stay above this number for the rest of the summer.

There were only 24 pendings this week which is less than I expected.  This weekend has been very busy with a lot of showings.  I expect this activity to turn into pendings this week.  I was surprised at how many high end houses were shown over the weekend.  People were writing offers on these $400K+  houses as well. 

The sun is out, the real estate market is warming up.

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Building lot sales are an indication of the amount of future growth in an area.  If you are going to build a new construction home, you will need to have a lot.

While new construction is a significant portion of the total market, land sales have dropped off faster than has new home building.

Here are the numbers for lot sales for the first 4 months of 2006–2008.  These statistics are for the Palmer-Wasilla Core area.

Here is what I think is going on.  You will notice that while the smaller lot median prices have dropped by almost 50%, the larger acre sized building lots have not seen a significant median price drop.  

The speculative building boom has stopped.  Most of the speculative building was happening on the smaller lots.  There still are bunches of these lots out there waiting for the next boom.  Bankers are not loaning on specs.  They want the builder to have a buyer lined up.  Even then, they generally want the builder to front a larger part of the project. 

When a buyer is in the picture ahead of time, they are opting for the larger lots.  They are turning to the acre plus sized lots for their new home.  They know they are paying a little more for the total package but the difference is not much in comparison to the total cost of the project.

The two largest builders are doing most of their work on their own lots.  Since they already own the lots, they don’t show up in the lot statistics even though a new house sale does hit the books.  These two builders are Hall Quality Homes and Spinell Homes.  

So the development boom in the Mat-Su valley is at a pause.  Growth is not over because the Mat-Su is the place to go in Alaska.  But we have enough empty lots for awhile and we need to fill them up with houses before we develop more.  If you are planning to make your killing developing subdivisions, I would wait for a more opportune time.

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Jay and I have been showing a lot of homes in the $175,000–$200,000 price range in Wasilla and Palmer over the past few weeks.

It has become obvious that new construction is a pretty good buy in that price bracket.  We have sold several new homes in the $175,000–$200,000 this year that are really great buys.  The new owners end up with a home with all new appliances, a new roof, new paint…everything new.  And they they paid less than the asking price on many of the 20–30 year old homes on the market.

The downside is that they generally have to wait a little longer to close, usually 4–5 months instead of one or two.  They also have to plant grass for a yard in the summer. But that is a great trade-off for a brand new home that comes with a warranty. 

For example, we are working with a builder that is ready to build a nice ranch style home, just under 1,300 square feet real close to Colony High School.  This house has a two car garage, a split floor plan, (master on opposite side from other two bedrooms), two baths and a two car garage.  Price…..$195,000. 

The house in the above photo is listed with Saundra Hutchins of RE/MAX of Wasilla.  It is 1,384 square feet on a lot off of Spruce near Lucille in Wasilla.  This house is to be built by Goy Construction.  It is a great house for the money…only $188,000.

Than there is Steve Orr Construction.  We have sold lots of his homes over the years.  He specializes in homes that are finished on one floor and unfinished on the other.  A great example is his Maple model.  It’s 2,240 square feet for $177,600.  This is brand new, with a lot, well and septic included.  You can pick your own lot and he will buy it as part of the deal.  There is a $35,000 lot allowance included in the price.  He is represented by Joe Cassidy at RE/MAX of Wasilla.

No matter who the builder is, we represent you…the buyer… in getting your house built to meet your needs.  Just give a call at 907–232–7900 to talk about new construction.

Right now in this price range, new construction is more than 25% of the whole market.  You can see why, many of the smaller builders are putting out a great product for the money. 

If you would like a list of new construction houses that are currently on the market just drop me an email telling me the price range you would like to view and I will send it on to you.

Click on the contact link in the right column to send the note.

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I often have people question the need for title insurance.  They feel that they can easily go down to the state recording office and find out any thing they need about a property.

I would never want to purchase a property without title insurance.  There are so many ways to cloud a title that I am constantly learning about new ones.  After 17 years in the business, I still find out about new title issues. 

Here are some of the possible problems that title insurance will protect against:

• Invalid Deeds…I once talked to a couple who purchased a property as husband and wife even though they weren’t married.  They did not go through a title company and did not have insurance.  Of course, I declined to list that property knowing that the only way to clear the title was for them to admit to fraud. 
• Unknown Easements:  Often easements will be granted across a 160 acre homestead that is later subdivided.  Will you recognize that the 50 year old easement now runs along your one acre lawn if you do the search yourself? 
• Incorrect Legal Description: It is not uncommon for a property to transfer with an incorrect legal description.  A title company will catch that and help to correct it.

Those are just a few problems, there are many potential pitfalls in the transfer of title that a title policy helps to avoid.  Here is a list of 27 possible nightmares.

Mat-Su Title in Wasilla has an informative website.  They also include some helpful forms.

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Wasilla Real Estate News Statistics for this week show a little life in the real estate market.  I have been waiting all spring for our normal jump and it started to show up this week.

Most of us have been experiencing more calls, more showings, and generally more activity in the market for more than a month but this has not been showing up in the statistics.  Just because people were looking, there wasn’t an increase in pendings and closings. 

This week both of those categories are up more than 30% over last week and over most of the previous 6 weeks.  If this new level of activity continues we will have a pretty healthy market.

I expected to see the total inventory top 800 this week, but with fewer new listings, and and increase in pendings the inventory actually dropped…a little. 

Foreclosure activity does not appear to be driving the market.  I just sent out my new Motivated Sellers list to the subscribers and was surprised at the small amount of foreclosures.  There are only 18  this week out of the 795 total listings.  But those foreclosures are selling.  The lenders are experiencing pain in some outside markets and they don’t want to hold on to foreclosures.

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Dave Johnson of Fishhook Realty questions my weather forecasting abilities in his comments on my last post officially announcing spring.  Look at them, the geese, cranes and ducks are still there under about 4 inches of fresh snow on the Palmer Experimental Farm fields.  It really is spring!

If that doesn’t mean it’s spring, I don’t know what does.  But I will admit that I’m glad I still have my studded tires on.  By the way, we are supposed to take our studded tires off by May 1.

I could barely see this flock of geese glide in for a landing through the snow.  They must be flying on instruments, no VFR for them.  I’m always impressed by the amount of migratory birds that appear each spring. I haven’t seen the swallows yet.  They usually arrive right after the cranes.  Hopefully they don’t go off course in this snow storm. 

So, buck up, this has got to be the last snow fall of the year………doesn’t it????

You have to love living in the Mat-Su Valley, we are so close to Alaska…We get to see things like these two moose munching on the willows in my front yard Tuesday morning…when it still felt like spring.

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Wasilla Real Estate News market statistics for the week ending April 21, 2008.  This includes Palmer and the rest of the Matanuska Susitna Borough.

It is amazing that this week is almost identical to last week.  We had almost the same amount of everything except total active listings.  Those were up by about 20 and will probably go over 800 by next week.

I keep expecting to see a surge in sales for the spring.  That would be a surge in pending and closed listings.  But this hasn’t happened.  They have stayed almost steady at 30 and 20 respectively. 

The average price for pending sales is down this week primarily because of about 4 places that sold for 50–60 thousand.  Don’t worry, they weren’t screaming deals, they were worth just about what they sold for.

I did notice several from the Motivated Sellers list on the pending sheet today.  Some of the motivated sellers haven’t become motivated enough to get their price right yet.  They will, they are going to sell eventually.

I wrote and offer today on a house and received an offer on one of our listings.  There is still a market, we just have to be “in the market”…not “on the market”.  You will know you are “in the market” if you are getting showings.  If you aren’t getting very many showings…you are only “on the market”. 

Just remember, there are about 30 houses selling per week.  And the average price is in the low $200s.  The vast majority of homes that are selling are under $300,000.

If your house is in the $300s or more, you are fighting with over 240 other sellers over 3 buyers a week.  You need to be the among the best 3 out of 240 other houses.  Sorry for the tough news, but you might as well know the truth.

We had one of our $300+ homes pend last week.  These sellers got serious about selling and lowered the price down to where there were finally people looking.  We went from almost no showings to several a week and finally an offer.  That is what motivated sellers do, they get it sold.

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A couple weeks ago I announced that spring had come.  Since then we have had temperatures down to 10 degrees and several good sized snow storms.

So much for my weather forecasting abilities.

But now, someone else has made it official.  The geese are on the fields in Palmer. 

We look forward to the geese arriving there every spring on their way to the nesting grounds and also note the huge flocks passing through in the fall on their way south. 

Take a drive out to Palmer just by the airport to see for yourself.  It really is spring.

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In Wasilla and Palmer, new construction homes still have a large share of the real estate market.  I have been noticing quite a few new houses in the closed sales list every week so decided to take a look at the numbers…here they are.

First lets look at the whole Palmer Wasilla real estate market.

In 2007 for the first 3 1/2 months of the year there were 336 homes sold compared to 245 homes sold in the same period this year.  That is a significant reduction in volume.  Obviously, there are fewer buyers this year.  These fewer buyers have a greater selection. 

In addition, the median price of the sold homes dropped from $213,260 down to $204,675 for this same time period.  The median price is different than the average price and is not skewed by a few very high end sales. 

Now lets look at the new construction market.

In 2007 there were 124 new homes sold in the first 3 1/2 months of the year.  This was almost 37% of the market at the time.  This year 78 new homes were sold to equal about 32% of this years market. 

It is interesting to note that the median price of new construction stayed essentially equal.  In  2007 it was $231,100 compared to $231,300 this year.  Building costs have increased in the last year, but builders have cut some of their profit, and buyers have moderated their expectations so that prices remained the same.

Serious sellers are still selling their homes. Pretty much the only people who are selling right now are the ones who really need to sell.  A lot of  people are holding on to their homes in anticipation of a future price increase if gas line talks result in real progress.

I update a list every week or so that I call my motivated sellers list.  I cannot post this on the web because of MLS rules, but I can email it to you.  If you would like to receive this just send me an email asking for the motivated sellers list by clicking on my contact link above right.

The data above was taken from the Alaska MLS system.  Please see their disclaimer below.

 AlaskaMLS disclaimer…“This representation is based in whole or in part on data supplied by, and to, the subscribers of Alaska Multiple Listing Service, Inc. (AK MLS, Inc.). AK MLS, Inc. does not guarantee nor is it in any way responsible for its accuracy. Data maintained by AK MLS, Inc. is for its own use and may not reflect all real estate activity in the market. “

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The Mat-Su Borough says it’s going to raise taxes this year.  Rindi White wrote this piece in the Anchorage Daily News alerting us to this new hole in our pocket.  Surprisingly, the borough claims that the budget will decrease, but they need more money.  I’m not sure how that works.

What they don’t say is that they have been raising taxes almost every year since 1990.  When your assessment value on your house increases, your taxes increase.  So without having to increase the mill rate, the borough has been raking in more and more property taxes every year. 

In addition to that, the growth in the valley has increased the amount of houses from which they can gather taxes.  Raising the value of an empty lot that is valued at $30,000 to $230,000 with a house on it increases the change into the boroughs till by 6 times.  Of course, new homes equals a higher population, which does increase the work load for the borough…they need to hire more people to collect the money. 

Seriously, I do recognise that a higher population means that the borough needs more money.  But they should be receiving that money already with the increased property valuation of those new homes.  I am having a hard time understanding why taxes will need to go up this year unless they are in fact going to spend more money. 

I have a call in to the borough finance office and also to the employment office.  I hope they can help me understand why they want to raise taxes.  I’ll update this post when they help me clear the tax fog in my brain.

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