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A Real Estate ‘True Confession’

by Connie Yoshimura

I have been listing and selling real estate in Anchorage for almost forty years. It’s a job I love and will continue to do in the future. You would think after all those years of experience I would not make a simple mistake but I did. It has haunted me for the past several weeks and so in order to get it out of my psyche, I need to share it with you and also others in the business so that we can all learn from it and be reminded of our professional vulnerabilities. 

The vast majority of residential real estate offers are written on an MLS purchase and sale form (PSA) which is a legally well-written document. When properly filled out, the PSA has specific dates and times for performance of various contingencies and acceptances, including such items as the time to order a preliminary title report; the home inspection and buyer’s request for repairs; the time to order the appraisal and the closing date. Most importantly, any offer or any counteroffer has a specific date and time for a response. I missed a counteroffer deadline. The lesson I learned is that my email response of acceptance which was seven minutes past the stated deadline is not a legal counter. I knew that, of course, but under most circumstances the email would have been ‘good enough’ but this was a sought-after property with multiple offers. The legal DocuSign acceptance on an MLS form arrived approximately two and a half hours later but by that time the seller had accepted another offer which was their legal right to do so. I lost a sale but more importantly my buyer lost a significant opportunity. 

The lessons learned here are many. Emails, texts, PDFS and DocuSign have made our industry a bit sloppy. We have no control over when DocuSigns are going to arrive in an inbox. Two weeks ago, the internet carrier that most Alaskans use was down for several hours. Some people lined up at other carriers’ stores just to buy a second phone so that business could continue. But that is not my excuse. I was late in writing and sending the acceptance, whether seven minutes or two and a half hours. It is also a cautionary tale for buyers and sellers who are busy people. Make sure your realtor tells you when you must respond by. Voicemails, emails left on buyer, seller or realtor devices are not binding contracts.

As a broker, I review files on a daily basis and even a missing initial, if push came to shove, can void a contract. Many of us do business with family in addition to repeat buyers and sellers who become friends and/or long term professional associates. Twenty percent of all realtors do eighty percent of all sales so it is easy for us to forget, take for granted or make assumptions about business relationships that may not always be reciprocal in intent but the bottom line is this: follow the contract.       

2017 Market Surprises

by Connie Yoshimura

Due to lack of inventory, the 2017 residential market remained almost identical to 2016 with only a slight dip in single family sales and an average sales price of $366,000+ virtually identical to 2016. Even the condo market held study with an average sales price of $211,000 and a single digit dip in sales. However, there were some definite surprises hidden in some of the statistics. Eight new construction four-plexes sold for $775,000 while older, much older, four-plexes sold for $300,000 less. Buyers who were worried about the high cost of maintenance and repair bought new. They also wanted a garage. A total of 85 four-plexes sold in 2016—a surprising number given the reported softening of the rental market. 

Another market surprise was twenty-five homes over $1 million sold during 2017 compared to only 12 in 2016. There was definitely some concession in terms of final purchase price—sometimes as much as 7% but that doubling of million dollar home sales was a surprise to all of us. And I predict that market will remain strong in 2018, despite the new tax code which will cap interest deduction at $750,000 purchase price. Few buyers in this price point care about interest deductions or interest rate.

As I’ve mentioned before, nearly 500 ranch homes sold in 2017. This was also a market surprise. Most of us didn’t even know there were that many ranch homes built in Anchorage over the past 30 plus years. Expect more ranch homes, both as single family and attached condos, to be built in 2018, ranging in square footage from 1,250 to 2,400.  

Finally, the Eagle River market broke the $1 million dollar barrier with approximately three new home sales. Eagle River, with its’ scenic mountain and inlet views, is where many newcomers think Alaska is all about. 

With 75% of all homes built between 1970 and 1990, the Alaska Housing Finance Corporation has an innovative loan program for renovation of our aging housing stock. You must be an Alaskan resident in order to be eligible. The loan program is for owner-occupied single family residences, duplexes, triplexes, four-plexes, condos and some manufactured homes. Improvements to a home you already own are up to $200,000 with an alternative evaluation and up to $318,075 with an appraisal. The program had a modest beginning with only $12 million in loans but most recently has jumped to $20 million. I predict that loan program will quickly jump to $30 million as owners and buyers become more aware of it.

 

Unique Factors Still Impacting Alaska Housing Market

by Connie Yoshimura

Before we can predict the future of Alaska’s housing market, we need to remind ourselves about some of the unique factors affecting our market. One dominant factor is that seventy-five percent of Alaska’s housing was built between 1970 and 1990. A home built in the l970’s is now 48 years old—way past its functional and cosmetic life. Even one built in l990 is now 18 years old with ineffective energy standards. This aging inventory is why there has been and will continue to be a spike in AHFC’s renovation loan programs which include purchase renovation, refinance renovation and second mortgage renovation. When first introduced in 2015, AFC financed $12.8 million.  Loan volume grew to $20.6 million in 2016 and should exceed $30 million in 2018.

A recent article from Zillow declared there are 12 percent fewer homes to choose from nationwide than there was a year ago and 51 percent of for sale properties are in the top one third of home values which are out of reach for first-time home buyers. The national average price for a single family home is $234,000. In Anchorage, last year the average price of a home was $366,000, the same as in 2016.    So not only does Alaska have a much higher sales price it is also following the national trend with 46% of our current active inventory priced over $400,000.   

Inventory shortages will continue to plague our local housing market in the affordable price range as well as the middle up range well into the year 2020. Last year there were only 196 single family permitted in the MOA—only six more than in 2016, a dismal showing for a community of almost 300,000 even taking into consideration Alaska’s mild recession. Permitted duplex units almost doubled from 2016 to 104. Builders sold each side as a condo. Buyers can expect that trend to continue as it helps fulfill the affordability needs of millennials as well as down-sizers. Developable land shortages will create higher density housing styles. 

Alaska continues to have one of the lowest delinquency and foreclosure rates in the nation despite our mild recession. On a statewide basis Alaska’s delinquency rate was 0.60 in 2016 with little change in 2017. The national foreclosure rate is double Alaska’s. Due to the shortage of housing, the fed rate hikes expected in 2018 should have little impact on our local housing market. Prices will remain stable and properties in excellent condition and amenity packed locations will begin to sell at a premium.

 

What Are Home Buyers Looking For?

by Connie Yoshimura

The National Association of Home Builders recently published a book on Home Buyer Preferences based upon age, income and other factors. So whether you’re thinking about buying a new home or remodeling, here’s a quiz to keep you up to date on what buyers are looking for.

1. It’s all about the kitchen so rank these four features by their desirability.

A. Central Island    B. Granite/Natural Stone Countertop    C.  Walk-In Pantry    D. Table Space for Eating 

 

2. Kitchen features to avoid:

A. Laminate Countertops (in expensive kitchens)    B. Wine Coolers (in modest homes)    C. Glass Front Panel    D.  Trash Compactor

 

3. All buyers would like to have what features in their kitchen?

A. Double Sink    B. Walk-In Pantry    C. Drinking water filtration    D. Recessed cans

 

4. What type of cabinets do buyers prefer?

A. stained wood cabinets    B. Contemporary Styled Cabinets    C. Traditional Style Cabinets?

 

5. Next on any remodeler’s or builder list is the master bathroom. What are the ‘must-haves’ for master baths?

 

6. Moderate income buyers want the following—yes or no?

A. Both Shower Stall and Tub in Master Bath    B. Linen Closet    C. Double Vanity    D.  Ceramic Tile Walls   

 

7. High income home buyers (over $150,000 income) want the following—yes or no?

A. Whirlpool tub      B. Dressing/make-up area       C. color tub, toilet and sink        D. skylights

 

8. So now you’re finished with the kitchen and master bath. What are the other most essential decorative features?

A. Ceiling Fan    B. Exposed Beams    C. Window Seats

 

9. Do buyers prefer a wood burning or gas fireplace?

 

10. What room do 94% of all home buyers find most desirable?

A. Laundry Room    B. Breakfast Nook    C. Two Story Entry Foyer

 

11. What percentage of home buyers in all income levels prefer the following:

A. Dining Room    B. Great Room    C. Living Room    D. Home Office

According to the national survey, 48% of home buyers in all income ranges want a mud room. In Anchorage, I bet that number jumps up to 100%. Not all builders and remodelers can do everything identified in the survey.  Everybody has a budget to work with so my advice is to start with the kitchen countertops and replace them with quartz or granite, add a ceramic wainscot in the master bathroom and a cool haiku ceiling fan in the living/great room. 

 

 

 

 

 

 

Making the Case for the ‘Rancher’

by Connie Yoshimura

Over the past few weekends at open houses, I’ve visited with several ‘boomers’ who are considering downsizing to a ranch style home. They’ve told me stories of friends falling on stairs and breaking bones and are concerned it might happen to them. However, boomers with potential mobility issues are not the only buyers considering a move to a ranch. In a recent survey published by Builder online magazine, 65% of Americans actually prefer a ‘rancher’ as they are called in the lower 48. In Anchorage, MLS reported 384 ranch homes sold in 2016. That’s 13.05% of the total reported sales of 2016. That was a surprise to us and we had to check those stats twice. 

So if you’re a fitness fanatic and love to climb stairs either at the gym or home, why buy a ‘rancher’? According to an HVAC system source, heating a ranch is less expensive. That makes sense since there is less open air and vertical space to heat. If you’re concerned about quiet, there’s no noise from above. The best ranch style home separates the master bedroom from the secondary bedrooms either by the great room or bathrooms. A ranch is also easier for exterior maintenance. No ladders necessary when cleaning gutters!

Finding lots in Anchorage to build ranches on is a challenge for buyers and builders.  Many newly developed lots are only fifty feet wide and the handful of wider lots that are available require homes that are 2,000 to 2,400 square feet. Plus, new ranches are more expensive on a price per square foot than two-story homes. Even the older ranch homes that sold in 2016 had an average price per square foot of $214. Only 13 new ranches sold with an average price per square foot of $263, a 20% bump up for brand new.   

It’s a given that two story homes are more cost-effective and can fit on a lot with a smaller footprint. The MOA allows a 40% lot coverage ratio for ranches versus the 30% lot coverage for two-story homes but even that 10% increase is not enough to accommodate most ranches on small lots, let alone one with a triple car garage —the #1 wish list item for almost all new home buyers.

Dwell Realty has six new ranch homes either under construction or coming out of the ground in the next few weeks. They range in price from $339,900 to over $750,000. Check them out at www.dwellrealty.com or give us a call at 646-3600. 

Test Your Real Estate Knowledge

by Connie Yoshimura

Welcome to 2017!  There’s lots of opinions about the local housing market but facts are always better than opinions.  Take this quiz and learn the facts.

1. What was the average MLS sales price of a single family home in 2016?

A.  $260,000

B.  $306,000

C.  $366,000

D.  $406,000

 

2. Was this more or less than in 2015?

A.  More    B.  Less   C. about the same

 

3. How many single family homes were available in MLS the first week of January 2017?

A.  418      B.  518     C. 618        D.  718

 

4. Average residential sale in the last half of 2016 had what percent discount from the original list price?

A.  1%      B. 2%    C.  4%     D.  5%

 

5. What was the average price of an Anchorage condo in 2016?

A.  $175,000   B.  $203,000   C.  $213,000    D.  $245,000

 

6. Was this more or less than in 2015?

A.  More    B.  Less   C.  About the same

 

7. As reported in MLS, how many homes sold in 2016?

A.  950      B.   2,250       C.   2,800     D.  3,200

 

8. How does this number compare to 2015?

A.  Dramatically more    B.  Considerably less    C.  About the same

 

9. How many new construction homes were built in 2016?

A. 200     B.  300      C. 400      D. 650

 

10. What subdivision had the most single family building permits?

A. Resolution Pointe     B.  Huffman Timbers       C. The Terraces       D. Potter Highlands

 

11. The recent interest rate increase on a $400,000 to 4.25% increases the monthly payment by how much?

A.  $60       B.  $120    C.  $160        D.  $185

 

12. Approximately how much more does an applicant need to earn per month in order to qualify at the higher rate?

A. $200    B.  $400    C. $600    D. $750

 

13. How does the inventory of homes in 2016 compare to the inventory of 2008 real estate recession?

A.  15% more inventory    B.  15% less inventory     C.  About the same

 

14. How do the number of sales compare in2016 vs. 2008?

A. About the same    B. 17% more       C. 17% less

 

15. Based upon the information above what is your opinion on the 2017 residential real estate market?

A. Stable     D.  Slight decline of 2-3%          C.  Increase 5%

 

Answer Key:

1. C  2. C  3. A  4. D  5. C  6. C  7. C  8. C  9. A  10. A  11. C  12. C  13. B  14. B  15. A


Interest Rate Jump Wakes Up Anchorage Buyers

by Connie Yoshimura

This month’s mortgage interest rate jump up to 4.125 % has sent buyers scampering to find a new home. The week before Thanksgiving forty-five homes pended in Anchorage compared to twenty-seven in 2015. That trend continued into Thanksgiving week when six additional sales were reported compared to 2015. These sales occurred in all price ranges but particularly noteworthy were five new sales between $650,000 to $750,000.

Mortgage rates have hovered in the mid- three percent range for so long that buyers have taken them for granted but not anymore. On a $400,000 mortgage, the rate increase amounts to $170.21 per month. Plus, a buyer needs to have approximately $680 in additional monthly income to qualify for the same mortgage. Rate increases are projected to continue in December and into 2017 as the economy adjusts to inflation and price increases for materials, goods and services. It’s a dual dilemma for buyers—less home for the money and a higher mortgage payment. Millennial first time home buyers, in particular, are going to be impacted by these increases. Already frustrated because of unrealistic expectations, they may opt out of the market and rent, even though rental rate increases are bound to occur. The second big bulge of buyers in the market are the boomers who may opt to just stay put in their aging home, particularly if they were smart and refinanced at the three percent plus mortgage rate. Already challenged by the price per square foot for new construction, more and more will opt to simply remodel.      

It is always hard to identify the bottom of any market. Usually, when it occurs we acknowledge it only in past tense. In Anchorage, I believe that bottom has just passed us by. Last week’s active inventory was only 575 homes. New construction building permits continue at historic lows. Only 175 single family building permits were issued for the first ten months of this year. Only eight Anchorage builders were issued permits for more than five single family homes. Despite the concerns over the state’s economy, buyers are motivated by personal housing needs related to marriage, birth, death, divorce and job change. The job loss we experienced in 2016 resulted in some good relocation buys in suburban areas of Anchorage which were readily absorbed into our market. 

If you’ve been waiting to buy a home, now is the time.             

Is the Longer a Home on the Market the Less it’s Worth?

by Connie Yoshimura

That may be the case in our local housing market. There are less than a thousand single family homes on the market with an average sales price of $370,000. They’ve been on the market an average of eighty-nine days. However, the average sales on the market for sold homes in the last thirteen months was forty-seven days and the average days on the market in the last six months was forty-five days or fifty percent less than current standing inventory days on the market. Sellers need to be aware that if your home is not under contract in forty-five days, it is undoubtedly, at least statistically, over-priced.

The percent sales price to original list price also confirms this trend. Today, the average home is discounted 3.5% from original list price. Once the home has been reduced, it still sells for 1.2% less than list.  Price the home right and you’re going to have a sale in 45 days or sooner. But, price the home above market, the longer the wait and the greater the discount. Anecdotally, we see this play out in our market on a weekly basis.  Some for sale homes receive multiple offers within a few days. Others sit for three months or longer. Yes, the condition of the home plays an important role and so does the first photo of the home that pops into MLS and gets circulated through IDX channels to the world through Zillow and Trulia. Today’s buyers shop online and a bad photo and mundane description can easily destroy a home’s perceived value at first glance.

Realtors want to get the highest and best price for a seller and thus may have a tendency to initially over-price a home for sale. It takes a strong willed realtor, backed up with statistical information, to tell a seller his home is not worth what his neighbor’s sold for a year ago. Perhaps, today’s market can best be categorized as fickle and trending downstream.

For many buyers, it’s still all about location whether it’s being in a particular school district, near the grandkids or just having a direct and short commute. With our aging housing stock, sellers are taking a gamble when it comes to remodeling before putting their home on the market. Neutral is still the best bet when it comes to interiors. Home owners should put their favorite colors in their home furnishings, accessories and personal possessions. Take the aqua with you when you move rather than leaving it on the walls or floor.

Inventory On Rise, But Hesitancy Emerging Among Buyers

by Connie Yoshimura

The 2016 Anchorage residential market could best be described as having had a minor fender bender, not the fatal crash so many naysayers predicted for the housing market. Thousands of owners have not turned in their keys to the bank like they did in the 1980’s. In fact, Alaska continues to rank in the bottom three states for foreclosures. Values have remained constant with minor pockets of decline due to aging housing stock and in some geographical areas. Transportation and the medical field continue to bring new residents to Anchorage. The military and oil industry continue with their in and out migration.

There are, however, some minor dents in the market. Homes that are thirty years old and in need of maintenance and remodeling are not appreciating and in some instances, depreciating in value from their original purchase price from five or ten years ago. Two of Anchorage’s most expensive areas, downtown Anchorage and DeArmoun/Potter Marsh, have seen a modest decline in average sales price while the rest of the market has remained flat with virtually no appreciation in the average sales price of $362,000 from a year ago. Area wide average days on the market has increased by only a modest six percent. 

But, what has increased is inventory. Buyers have a much wider selection than they did at the beginning of the year. September had 999 active listings compared to 569 in January. While some of this increased inventory is seasonal, this September had the highest inventory of for sale properties since 2011 while at the same time sales dipped to 275 from the previous month’s 325. More inventory doesn’t mean more buyers. Quite the contrary. There is definitely emerging a hesitancy in the market place. Buyers appear to be distracted whether by the somewhat electrifying presidential election or the state and local concerns over the economy. For whatever the reasons, buyers are taking their time in making a decision. But, as inventory begins to fall which it does every winter and the long anticipated Fed increase rate occurs in December, buyers will begin to feel the pinch.  Current thirty year fixed rate mortgages are at 3.5%. We’ve heard the threat of a rate increase for the past two years but this time, whoever wins the White House, it is almost a certainty. Motivated buyers would be wise to take advantage of the wider selection and current mortgage rate before more change occurs. 

Buyers looking for a new home are going to continue to be frustrated by a lack of finished inventory. New home starts remain at historic low levels while at the same time prices continue to increase. Winter construction costs for heating and tenting will exacerbate the price disconnect between new and resale even more. Now is not the time for buyer hesitancy if you’re in need of a home.

Open the Door to a New Home

by Connie Yoshimura

Visit the Parade of Homes Sept. 10-11 and open the door to thirty-one new homes. This year’s crop of new homes range from a Hultquist Home townhouse style condo in IronTree at $242,000 to a luxury hillside home perched on a ridge in Potter Highlands with an unobstructed inlet view on over an acre lot for $895,000 by Crown Pointe. In between, there is a new ranch plan by Hagmeier Homes in Huffman Timbers, Anchorage’s newest home community, conveniently located at the corner of Lake Otis and Huffman and in the popular South High School district. Builders in Huffman Timbers include Hultquist Homes, John Hagmeier Homes and Harding Homes. Ranches and triple car garages—two of the most wanted items in a new home-- are or will soon be available.

Be sure and open the door to three new homes in Resolution Pointe by Crown Pointe, John Hagmeier Homes and Merit Homes. Resolution is Anchorage’s most popular new home community.  Homesites are still available and range in price from $129,000 to $146,000 in the newest phase which will be completed this fall. In this community, all builders and private parties are welcome.

This year Anchorage homebuilders have worked hard to keep home prices steady and reasonable, but there is still a fairly wide disconnect between the cost per square foot for new construction vs. resale. However, what you can’t get in a resale is energy savings. All new homes are now built to a five-star energy rating. With most Anchorage homes over 30 years old, energy efficiency savings are a significant financial benefit to new home buyers.

When we consider buying an older home, most of us think of replacing countertops, flooring, light fixtures, cabinets and appliances. What we don’t think about is retrofitting--the wiring, roof/shingles, furnace, windows, et cetera. Those are the items that can be costly, inconvenient and time consuming and do not add value to a home. At best, retrofitting is done to sustain value and prevent functional obsolescence.

Plus, there are other benefits to opening the door to a new home.  First, you get to select your plan and all your interior finishes. In today’s market, even the entry-level condo becomes a custom home for first time homebuyers. After all, why not have the wall color and flooring of your dreams? Thanks to Houzz and Pinterest, it is all there in vivid color. Today’s new homes are some of the most attractive entries in several years with craftsman style exteriors, daring interior color blocking, custom interior trim, designer or handcrafted mirrors, kitchens with long islands and built-in pantries, nine foot high ceilings and painted garages.

Dwell Realty is proud to be part of the residential construction and land development community. Give us a call when you’re ready to open the door to a new home. We’ll help you select the right plan and location to make opening that door a smooth transaction and a dream come true, whether you’re a first time buyer or following your dream up the hillside.

Displaying blog entries 1-10 of 14

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503
907-646-3600