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The Return of the Condo

by Connie Yoshimura

    The Anchorage real estate market turned on a spring day last May and has been growing stronger every month as a result of pent-up demand from the prior four years of recession.  And with this turn-around the Anchorage condo market has sprung to life once again.  For the first two months of this year compared to last year the number of condos sold jumped 42% and the days on the market decreased 46%.  What a change from the sale of only 36 condos in January 2012.  Plus, this February the average condo sold for $205,558 compared $170,889 just a year ago. 

    The condo hot spot is between $224,999 and $249,999 where there are only 15 condos for sale within the Municipality of Anchorage and where over 10 sell per month, putting the supply of condos in this price range at less than one and a half months.  So, if you’re in the market for a condo, you had better hurry before summer starts jump the prices up 7%.    

     But, whether you’re an experienced home buyer getting ready to make the down-size move or a first time homebuyer, the purchase of a condominium requires some extra care and reading. Condominiums are part of a common ownership community and they come in all sizes and shapes.  There is no easy way to physically recognize a condo. A condo can be a single family home, half of a duplex or an apartment style unit with common hallways.  They can be stacked, side by side or totally detached and in any price range. 

    To find out what you’re purchasing you must read the public offering statement which is a required condition of approval for every purchase. A public offering statement is issued for every new condo.  A resale certificate is issued for one that is being resold. Either one will describe the physical limitations of the property you are purchasing.  Particular attention should be paid to the budget.  Is the association self-managed or is it professionally managed?  How are the cost for water and sewer allocated per unit?  I once had a realtor make an offer on behalf of a buyer who wanted to snow plow his own driveway to reduce his dues.  Dues are fixed costs and are never negotiated as part of a purchase and sale agreement.  Dues are reviewed and established on an annual basis by the board and property management company.     

    Older condo developments may have future assessments for roof repair, asphalt, exterior painting, landscaping.  Unless they are already a pending assessment, they will not be identified in the budget so a buyer should read the prior twelve months of the board minutes where these items will be discussed prior to assessment.  Reading the minutes of the board will tell you whether or not there is conflict within the association and what additional costs may be levied in future months or years.

    One final note about resale certificates and public offering statements.  Make sure that they are current with all amendments.  The most reliable resale certificates are prepared by either a professional property management company or an attorney. The cost of a resale certificate or public offering statement is between $250 and $350 per issuance.  It is well worth the cost paid by the seller to insure that it is current and up to date with all the appropriate information, including a budget, all amendments and current phasing plan. 

Alaskan Real Estate News March 2013

by Connie Yoshimura

    The Dow Jones Home Construction Index, which tracks seven publicly traded builders, is up 178% since it hit a two year low in August 2011.  Alaska doesn’t have any publicly traded builders but our local building permit activity indicates similar gains in new home construction.  Through February, there were 37 single family permits vs. 28 a year ago and 18 duplex permits vs. 4.  Although our numbers may be small, they’re a far improvement from the past few years. At this rate, single family permits should hit 400 by the end of 2013, almost double from two years ago.

    But it’s not all good news.  Second quarter lumber prices are due for a substantial price increase.   The Wall Street Journal reports prices have climbed yearly 40% since late September.  Three of the main factors are Chinese buying, recovery of the U.S. housing market and the limitation of supply.  Alaskans may be geographically isolated but what happens in other parts of the lower 48 and the world has a dramatic impact on our housing.

    So, too, when it comes to mortgage financing.  FHA recently increased their mortgage insurance rates by 7.5% and the popular HUD 184 program is now temporarily out of funds.  Historically low interest rates are fluctuating almost daily but the trend is clear for a slow creep upward as are the prerequisite credit scores for home mortgage buyers.  If you bought a brand new home last year, or have one under contract with lumber still in the yard, give yourself kudos, for committing at the bottom of the market.

    The resale market tells the same story.  Multiple offers on single family homes under $400,000, particularly if they were built after 1990 when Anchorage’s building codes began having major structural and energy saving updates.  Last year home values increased 4% and this year, without some major economic downturn, that increase should be  6 to 7 percent.  That’s good news for home sellers who’ve waded through the trough of sluggish home prices the past four years.  It’s not such good news for home buyers trying to enter the market for the first time who are caught between rising rents and increased costs for both resale and new construction homes.  New three bedroom apartment rentals are going for as much as $2,150 per month + utilities and renters are lucky to find one.

    There are a lot of small investors currently in the market for duplexes, triplexes and four-plexes, either as investor property or as owner-occupant.  This is what I’m hearing from buyers:  “We qualify for more but we don’t want to live just for our house payment.  I need to provide an apartment for my parents. I want them close (but not too close). Why not live in a four-plex and let tenants help with the mortgage?”  There’s been a change in the mindset of the Alaskan consumer.   Yes, there is still the buyer who wants the big house, the trophy room, literally and figuratively.  But this past recession, and all economic indications are we can put ‘past’ in front of the noun, has changed the way we think about how we’re going to live in the future.


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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503