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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.


The ‘Heart’ of the Home

by Connie Yoshimura

     The International Builder’s Show in Las Vegas was brimming full of ideas for new designs and amenities. How much of that can be incorporated into Alaska home building is an open question, but there are some trends that just won’t go away that local builders should pay attention to. Let’s start with the “heart” of every home: the kitchen. It’s  not shoved into the back corner of the house any more. Instead, it’s wide open to other living areas. And an island is essential. They’re  no longer just a place to drop the groceries, but are the primary in- home dining location. Bi-level islands minimize the dirty dish view and add architectural interest. And pantries. Everyone wants one whether it’s an over-sized cupboard in the corner or a walk-in.

     Formal living rooms are dead — at least according to the interior designers at the home show. Instead, formal and informal living combine in a great room setting which offer a central social zone for activity and interconnection. In other words, when you come home from work, everyone gathers in the kitchen while mom or dad cooks at the island and everyone else gathers round the flat screen or slumps in a chair with their ipad in the open family room.

     Windows.  There are lots of them, and corner glass. Two windows joined at forty-five degree angles make smaller spaces feel larger and bring the outdoors in. I’m not sure about this trend in Alaska but in warmer climates, there’s lots of discussion about outdoor living as a way to add extra living space with courtyards, patios, decks, porches, even outdoor kitchens without a lot of added expense. One local builder has begun to cover his decks in higher price points which has received positive comments.

     Here’s my favorite trend: master bathrooms as spas. That means five fixtures (two vanities, shower, tub, toilet) all designed around lots of tile in cool colors. If the master bedroom is an ideal 14 by 18 feet, the master bath has become half that size. Here in Alaska, large five to six-foot showers with double heads and built-in bench is a growing trend. And if space allows, sitting areas and retreats are nice add-ons, even converting an adjacent bedroom for that particular use. Of special interest for families is grouping the secondary bedrooms away from the master by locating a bath in-between.

     The magic word at the Home Show was “flex” space whether it’s an extra bedroom/den/formal dining/home center. In fact, that almost obsolete dining room has become the perfect spot for “flex”. The move-up model home of a generation ago had three eating areas —  kitchen nook, island and formal dining room. Take your choice. One of those is now gone. New homes are now being designed for multiple uses in one space. Call the room a home center or a den, it’s  usually visually adjacent to the kitchen, the heart of the home. Regardless of whether you’re a novice chef or an expert on where to get the best take-out, you want that home center and big kitchen. And it’s wide open spaces where home buyers can define rooms by lighting, half walls, furniture, area rugs and ceilings. Look up, Alaskans, ceilings are becoming the “in” feature. Whether they’re painted an accent color, highlighted with sheetrocked beams, coffered or 12 feet high, they are “it”.

     But first and foremost, it’s all about the exterior look. Paint colors are more subdued — no highly contrasting trim or three color exteriors. Instead, they’ve become more monochromatic with simple changes in hue. Dark gray to light gray. Light beige to medium to dark to highlight the architectural details of the home. Home buyers shop with their eyes. If they don’t like the exterior elevation of a home, they don’t come inside to see how attractive the interior may be. Smart builders in Alaska already know this. Others have yet to learn it.

     It takes several months to build a home. It takes only ten seconds for a buyer to reject it in a “deadly” drive-by.

Should I Buy a Home Now?

by Connie Yoshimura

    I'm often asked if this is a good time to buy a home. Some clients are concerned that home prices may fall further than they have already. They are assuming that the best course of action is to wait for the bottom in the market and then buy. The problem with this approach is that you don't know where the bottom is until you see it in the rear view mirror, meaning until you've missed it!

    Home prices are one factor in determining your cost of ownership, but so are interest rates and financing availability. Even though interest rates have gone up in the last six months, they are still near historic lows. Since your monthly mortgage payment is a combination of paying down your principal and paying the interest owed, if home prices come down a little further but interest rates go up, it could cost you even more to service a mortgage on an identical home!

    While a home is a major investment, it is also the center of your personal life. It's important to live in a home that reflects your taste and values, yet is within your financial "comfort zone." To that end, it may be more important to lock in today's relatively low interest rates and low home prices, rather than to hope for a further break in prices in the future.

    Please give me a call if I can be of any assistance in determining how much home you can afford in today's market.

Insider Column on Alaskan Real Estate – Tips for Selling Your Home

by Connie Yoshimura

    Welcome to my ‘insider’ column on real estate where I’m going to share my thoughts and ideas with you in hopefully what will be an informative and frank discussion about real estate in Alaska. So how come it is that two homes with the same floor plan and square footage on the same street in the same neighborhood can have substantially different values? How can one home be worth $20,000 more than the other?
It’s the identical shingles on the roof, the same foundation, even the same builder. Well, the truth of the matter is that buyers buy with their eyes and if they don’t like the paint color on the walls, that spectacular chandelier that you spent an extra $500 over the builder’s lighting allowance for or your grey carpet, you may have just missed a sale and lowered the value of your home.

    The over customization of a home whether it’s a remodel or a brand new home is a big negative when it comes to resale. If you’re going to let your teenage son paint his wall three different shades of green then be prepared to paint it out before you put your home on the market. Ditto for the purple dining room wall and red kitchen tile. But, you say, I’m paying for all this and I want it to be ‘my’ home. Statistically speaking, Alaskans like to move around. We’ve had a very stable housing market compared to the lower 48 and chances are you’re only going to live in your home for five or seven years before you get the urge to change your nest. So be careful when it comes to your selections because it can have a very negative impact on resale. Neutral colors are best and that means boring beige. Add your favorite color to your furnishings and accessories but always create a neutral backdrop. Use color for accents, not permanent and costly items to replace like carpet, tile and countertops. Buy a red kitchen aid mixer at Costco but don’t put red on the floor or countertops—that’s too expensive to change out. Don’t put purple carpeting in the living room. Recover your sofa in a purple fabric instead.

    If you insist upon customizing your home, then be prepared to take a reduction in price. Trends change on an annual basis. There’s even an organization called Pantone that announces the ‘color of the year’. Last year it was orange. Remember all those orange jackets, shirts and blouses everyone was wearing? Last year, I insisted a builder paint an orange wall in a new condo. It sold but we were prepared to spend the $150 to paint it out if necessary. But, an orange countertop, or even backslash, would have cost two to four times that amount.

    Homes on the market get a certain reputation. Even though there are over 1,100 realtors in the Anchorage area, there are only about 750 that are actively engaged in selling real estate. And guess what? We all talk to one another, send emails, flyers of properties. Properties are like people, they get a certain reputation whether justified or not. An over customized home can actually end up having fewer showings. Buyers who walk into a home and are hit with a barrage of color become overwhelmed. The vast majority are just too busy to remodel because they’re working two to three jobs so that they can qualify for a mortgage. Sellers who make it easy for them by creating a neutral palette will get more showings and a higher price. Homes owned by relocation companies generally get it right. Before putting a home on the market, they not only go in and give it a professional cleaning but frequently replace carpet, paint and even countertops to create a neutral palette. If they don’t, they give it a substantial discount, 5 to 10%, to move it out of the market. Over the years, I’ve seen some lovely, well-built homes in premium neighborhoods that have been over customized and have sat on the market for a very long time and then sold for less than a comparable property down the street. And, unfortunately, that lowered sales can statistically follow that home for several years.

    It’s hard to say no to yourself and hold your personal preferences in check when remodeling or buying a new home. But just be aware you may end up paying twice for that favorite orange tile you just ordered for your kitchen backsplash.

Displaying blog entries 231-234 of 234




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