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Finding Your Way Home

by Connie Yoshimura

     Welcome to my newly formatted article on Anchorage housing. I hope you will enjoy this latest version which will include new listings as well as market trends and a more personal perspective on housing.

     Over the years, several readers have asked me, “Where do you live?” I began my real estate career while living in a basement apartment in Spenard on Barbara Street. The first home I owned was a Lakewood Terrace Townhome. I remember the listing broker called and asked if I wanted to spend $10,000 more and purchase a lakefront unit which had just come back on the market. I wasn’t smart enough to say, “Yes” at the time. If I had, I might still be living there.

     I lived on the hillside off Port Oxford until I backed my station wagon into a snow berm and slid down the hill. Next, I owned a four-plex on O Street. Then, I moved to a Petersen Towner condo which had a fabulous view of the mountains, but I was always envious of those units which were showered with sunlight and western exposure. And having grown up in Iowa where I lived above a bakery for the first five years of my life, it didn’t seem quite right coming home on an elevator; and so I built a home designed by the architect, Dale Porath, at the entrance to Resolution Pointe, which remains one of my favorite homes in Anchorage.

     From there, I moved back downtown to the South Addition, where I currently live in a duplex off 15th Street that looks like a two-story shoe box. I am only five minutes to work down C Street and seven minutes home north on Arctic, which used to be five minutes, until the city changed the Arctic road configuration. I migrated to the downtown area because of its eclectic housing types, although if you’ve ever walked down a South Addition alley, you know it’s mostly full of junk and overgrown bushes.
Although I advocate that every home should have a neutral décor of textured white, taupe and gray, my home has a purple ceiling, red accent walls and a speckled paint job that required six coats. It is virtually impossible to repaint the chipped corners, and so I’m thinking about using a magic marker on the corners.

     My advice to all home-owners is no custom paint jobs or fancy textures unless you understand you will be the only one who likes it, and will need to neutralize it in order to sell. I recently dismantled five orange pendants over the kitchen island after I discovered that neither I, nor my husband, liked them. (It was the interior decorator’s idea.) This past January, I was dismayed to learn at the International Builder’s Show that the number one request in a new home is a full-fledged laundry room. I have the smallest stack washer/dryer ever made stuck into a closet, and we put our laundry basket in the unused Jacuzzi.

     What I have learned from these multiple home ownerships is that no home, regardless of the size, value or location, is going to be perfect forever. How, and where, you live is going to depend upon your changing financial circumstances (for better or worse depending on how you fared during our real estate recessions) and personal life cycles related to marriage, birth, death, divorce and job change. Alaskans move every five to seven years, and that’s just fine with me as a realtor and residential land developer. I’d move tomorrow, but my husband believes when you own a home you should live there forever. We’re still discussing that philosophy as I have my eye on a beautiful new homesite.

Understanding Real Estate Business Practices

by Connie Yoshimura

    People who are eligible to list and sell real estate as a business and profession are licensed in the state of Alaska. They must pass a general knowledge test on real estate as well as a portion on real estate laws specific to Alaska. However, none of the knowledge they are required to have deals with the intricacies of buying and selling real estate as a business practice. Two circumstances come to mind which create confusion with the consumer, as well as those who practice. The first is how to manage a back-up offer on a property that already has a pending sale. A pending sale is a contract with an agreed upon purchase price. In most cases, particularly for pre-owned homes, it is contingent on a home inspection and agreed upon repairs, an appraisal meeting for exceeding the purchase price, a buyer’s mortgage approval and, in some instances, with a buyer’s minimum down payment, private mortgage insurance approval. If one of these conditions is not met, the normal business practice is that the buyer who may have posted as little as $1,000 ‘earnest’ deposit, will be entitled to his deposit back. The seller, meanwhile, has had his property off the market for as long as 60 days and has paid and accrued principal, interest, taxes and insurance, as well as having paid for the appraisal and agreed upon repairs. With all these contingencies, taking a back-up offer would seem like a wise financial choice, but it is rarely a successful strategy. Buyers and sellers almost always act in good faith and after a sale is agreed upon, there are many entities that want to keep it together including the mortgage originator, the listing and selling licensee and their respective brokers as well as the buyer and seller. So when it comes time for an extension of the contract or additional repairs, most sellers are willing to make some additional concessions to keep the current deal together unless it is out of their control. Back-up offers create disappointment as well as anxiety for both potential buyers. Although licensed real estate professionals are obligated to present all offers, even back-up ones, rarely has the back-up offer been successful in my experience.

     Upon occasion, anxious buyers who have difficulty making a decision as to which property to purchase, will make simultaneous offers on two different properties. Although there is no legal obligation to disclose to all parties that the buyer is making multiple offers, it is, in my opinion, an unusual business practice when it comes to buying real estate in Alaska and should be disclosed, if not in writing, at least verbally. In fact, this disclosure might even be to the buyer’s advantage because the sellers would know they are competing for the buyer’s purchase. Although this practice may be appropriate in more urban areas in the lower 48, it is unusual in Alaska. A better business practice is to make one offer at a time and, in the case of a back-up offer, wait for the property to come back on the market. That way, all parties are dealing in good faith with full disclosure of the circumstances.

Rising Home Prices Across the Country

by Connie Yoshimura

     A recent article in the Wall Street Journal recapped rising home prices in the United States. Recovering from the housing recession of 2008, home prices in Denver are up 29%; Houston 43%; Seattle 32%, and even Phoenix and Las Vegas, which had a plethora of vacant and foreclosed properties not that long ago, have seen home prices rise 48% and 52%, respectively. Contributing to these increases is a recovering national economy and limited inventory in some select areas. Also, a growing fear that our near historic low interest rates of 3.85 percent for a 30 year fixed rate mortgage, will increase in October 2015, is propelling home buyers to act now. After all, it is not the purchase price of a home, but rather the long term cost of the mortgage that is the defining financial commitment. Buyers should be less concerned about negotiating with a seller over $5,000 than the potential increase in interest rates which is sure to come in the near term.

     Limited inventory is a major factor in rising home prices and short days on the market. The number of days on the market is a good indicator of how tight a local housing market is. In Denver, homes are snapped up in 8 days. In Seattle, the median number of days on the market is 22 days. Portland Oregon is 31 days. Some sellers are holding out for even higher prices in certain metropolitan areas. Other homeowners who purchased at the top of the market are still not ready to sell, hoping for a break even after closing costs. Another factor contributing to limited inventory is the lack of new construction homes. Nationally, building permits rose 6.4%, and in the west, starts rose 15%. However, this increase doesn’t seem to fulfill buyers’ demands for more housing.

     So, how does Alaska’s housing market compare to the lower ’48? Statistically, ‘stabile’ might be the best adjective to describe it, but underlying currents and trends point to rising prices and frustrated buyers. On the ‘stability’ side of the equation, prices in south central Alaska, at least according to MLS statistics, have actually declined; albeit, less than 1%, but nevertheless it points to stability in the marketplace as far as pricing is concerned. Much of that ‘stability’ can be attributed to our aging housing stock, the majority of which was built prior to 1986. These homes which are now almost 30 years old have reached not only cosmetic obsolescence, but functional as well. Those little used rooms called the formal dining and living rooms are definitely out for the millennial buyer, as well as the aging baby boomers looking to simplify their life.

     However, buyers are frustrated by lack of inventory which continues to hover in the lower 400’s in Anchorage. In 2007, the number of available homes was over 1000 for this time of year. And then, we have our continual dilemma of lack of housing starts, which no administration seems willing to cut through the red tape to solve. Single family building permits, the preferred choice for over 85% of all home buyers, has actually declined year to date over last year and has hit a record low of only 79 permits through the month of April 2015.

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Dwell Realty
3230 C Street Suite 100
Anchorage AK 99503
907-646-3600