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Do You Live in a Common Interest Community?

by Connie Yoshimura

According to the Community Associations Institute’s report published in 2016, 68 million Americans  or the equivalent of 21% of the U.S. population live in a common-interest community. Fifty-three percent are Homeowner Associations and forty-four are Condominium Associations. Three percent are Cooperatives. Although it is difficult to determine the exact number of associations in Alaska, a public search of state records identifies 480 condo associations; approximately 420 homeowners associations; and 980 owners associations for a total of 1,880. That’s a lot more than I expected to find! And with Anchorage’s diminishing availability of residential land, condo associations, in particular, will continue to increase as Anchorage is forced to become a higher density community. So far this year, 908 buyers have purchased a condo with an average sales price of $208,459.  Many of these buyers are first time homeowners and are unaware they are purchasing one of the most sophisticated and complicated types of property ownership.  

 

The recent 7.0 earthquake has brought to the many owner misunderstandings and issues related to who is responsible for repairs and damages. The answers are in the public offering or resale certificate but, frankly, most buyers don’t read the two or three inch statement they are given to approve prior to closing. But a lot more owners are reading them now as a result of earthquake sheetrock cracks, broken windows, damaged door jams, et cetera. And condo owners are finding out there are significant differences in the description of what they have purchased and what their owner’s insurance and the HOA insurance covers.  

 

Not all HOA insurance covers the building structure if it is a site condo which by definition the building is enveloped in a defined air space. However, if you are not purchasing a site condo, you can expect the HOA to cover the structure of the building which includes roof and foundation and any party wall in a two or more attached configuration. One area of potential disagreement is cracked or broken windows. If a neighbor’s kid throws a baseball through your window, you can expect to replace it yourself. However, if an earthquake cracks your window as a result of the movement of an exterior wall, you may have an insurance claim to submit to your HOA. But not always because unit boundaries differ per community. As you can see it gets complicated, and so the best thing you can do as a condo owner is read your offering statement, read your declaration, read your personal insurance policy and your HOA policy.  

 

However, the important thing you can do as a condo owner is discuss with your insurance agent the addition of loss assessment insurance to your policy which will help mitigate any special assessments from the association as a result of an earthquake or any other casualty. That’s what I’m doing as a condo owner.        

Got Drywall Cracks? Here’s What You Need to Do

by Connie Yoshimura

 

The November 30th earthquake  was a big one, creating thousands of drywall  cracks  in hundreds of homes. According to national building standards, drywall cracks greater than 1/16th of an inch should be repaired. So if you’ve got drywall cracks in your home as the result of the earthquake, the first thing you should do is hire a home inspector.  Most inspectors are not engineers but they will be able to advise you whether or not you should also hire a structural engineer. A home inspector’s fee is approximately $500 while a structural engineer can cost anywhere from $800 to $1,000, depending on the time spent in the home to assess the degree of damage and write the report. Given the number of aftershocks we are still experiencing, you may want to wait another week or so before you call an inspector unless you feel that your home in structurally not safe. Aftershocks can create additional drywall cracks.  One general contractor told me that after the Friday quake, he had only one crack in a 2,800 square foot home but in a reinspection five days later there were an additional nineteen. All the cracks were cosmetic and at the seam which is where most cracks occur. Repair of drywall cracks vary, depending on the contractor and the painter. A little mud can hide a lot of cracks but some contractors will cut the drywall, mud, caulk and then paint. 


If you have your home listed for sale, we want to encourage you to get a home inspection and a structural engineer if the home inspector recommends it. Although buyers usually buy with their eyes and are not generally concerned about the number of tie downs, steel strappings around the garage opening, they are going to undoubtedly now want a third party opinion as to the integrity of the home. If you are in a buy/sell contract, you should reach out to your mortgage originator to see what their investor’s protocol is when dealing with a home that has experienced an earthquake.  Some credit union lenders are requiring a home inspection that they will pay for prior to closing in order to be assured of the home’s value.  Other lenders simply want a hold harmless agreement signed by the buyer and the seller. If the appraisal was done prior to the earthquake, most lenders are requiring a reinspection by the appraiser in order to re-establish the condition of the property which the seller is required to pay.     

 

If your home is a condo, and there is no earthquake insurance for the community, and your governing documents delineate your condo beginning at studs, and not sheetrock, you as an owner are responsible for any repairs. If you have substantial cracking or uneven floors, contact your management company immediately to report the damage. The HOA may be responsible for structural repairs. That would not be the case if it was a site condo.  


We have all been through a traumatic event. Congratulations to the Municipality of Anchorage for their disaster preparedness, fast and articulate communication and building code improvements since the 1964 quake which has obviously saved many lives. We thank you. 

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.       

What Can You Buy For $650,000?

by Connie Yoshimura

So although we bemoan the high cost of housing in Anchorage, it sometimes helps to put it in a little bit of perspective. In Austin, Texas, near the University of Texas campus, you can buy a 1,200 square foot renovated l950’s home for $635,000.  Taxes are $9,588.  In Philadelphia, you can purchase a former carriage house built in l932 with three bedrooms and two bathrooms for $650,000. It has 1,755 square feet.  Taxes were $5,851 in 2017.  In West Stockbridge, Mass. you can purchase a 2,381 square foot home priced at $273 per square foot.  Taxes are $5,637.  In Anchorage, you can purchase a new $659,900 home with 2,887 square feet.   Taxes are estimated to be $9,748 per year which may or may not have a slight decrease in the $300 to $400 range depending on whether or not Proposition 11 passes.   Regardless of the passage, however, Anchorage does appear to have some of the highest residential property taxes in the nation.

Currently, twenty-six single family homes in Anchorage are available through the local MLS ranging in asking prices from $609,500 to $699,900.  Six of these listings are ‘to be built’. In other words, there is currently no building permit for any of these homes.  They are place holders on lots and are marketing as a home that can be customized to a buyer’s tastes.  The twenty remaining homes range from 2,300 square feet for new construction to over 5,600 square feet for a home usually  built in the 1980’s.  Lot sizes range from 6,000 square feet to over 65,000 feet.

There is probably no better area of the market that demonstrates the disconnect between an older home with more square footage  compared to a brand new home with 2 x 6 construction and built to five star energy standards.   Buyers have to decide between more living square footage and ‘room to roam’  versus the benefits of brand new with no unexpected maintenance and repair costs.  Regardless of the decision of new vs. pre-owned, homes in this price bracket remain relatively affordable on a price per square foot basis.  Financing in this price range is also attractive. VA  loans allow 100% financing of the purchase price and closing costs amount to $14,000.  Ask a seller to pay for closing costs and a veteran with good credit can purchase  a $650,000 home without any out of pocket expenses except the cost of the Uhaul.   Other loan programs with a modest down payment will waive the dreaded mortgage insurance monthly premium. 

Here’s Why You’re a Frustrated Home Buyer

by Connie Yoshimura

Chances are almost 100% that if you’re an Anchorage home buyer, you’re frustrated with your hunt for a new home—whether your choice is either pre-owned or brand new. But, if it is any consolation, you’re not alone. In July 2007, the United States had 4,040,000 homes for sale. Ten years later, that number had dropped to 1,900,000. Inventory has decreased on a year-over-year basis in each of the past 29 months, according to the National Association of Realtors.  


The national standard for inventory in a well-balanced market is six months. Anchorage’s current inventory is 2.52 months, inclusive of all price points. Of the 568 homes for sale on February 8, 2018, 44% were above $400,000 while the average price of a sold home for the last six months was only $363,000. So not only does Anchorage have a lack of inventory it also has a lack of affordable home inventory.


We all know the reasons why we’re faced with this shortage. On a national level that trickles down to the U.S.’s largest state, we’ve had the California wildfires, Hurricane Harvey in the Houston area and Irma in Florida which is absorbing workers and materials. More than 130,000 residential and commercial structures were damaged in the Houston area and the California fires damaged more than 7,000 structures.  Alaska has always been at the tail end of the supply chain and that crunch will continue well into 2018. Locally, the rewrite of Title 21 has increased regulations, costs and time for approval for builders and developers.


So what’s a frustrated home buyer to do? First, get off Zillow. I know that’s a radical statement but sign up instead for a portal on Alaskarealestate.com which is the statewide MLS. There’s more and accurate information on that site than you’ll ever get from Trulia and Zillow. I’m not going to put all photos you find online in the ‘fake news’ category, but our job in marketing is to make all homes look good. Second, drive around! Except for going east on Tudor at 4 pm, you can still get almost anywhere in 30 minutes. Even from the intersection of Potter Valley Road and New Seward to E. 36th is only 14 minutes with no stop signs. Finally, visit the neighborhood where you would like to live at different times of the day and week. After all, you’re not just buying a home but a community. Let your family and friends know you are shopping for a home. Occasionally, a home does sell by word of mouth but more than likely, stay in touch with your realtor who is probably your best source for new homes on the market. Finally, once you find a home don’t nickel and dime your offer. A few thousand dollars is hardly going to budge your mortgage payment and the inventory shortage is going to continue for the foreseeable future in Anchorage.

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.

 

Continued Stability in Anchorage Housing Market

by Connie Yoshimura

While the housing market in the lower 48 is booming with new home communities and an active resale market with 6% to 18% appreciation, the Anchorage housing market remains stable, despite the state’s economic woes. Thanks, in part, to a continued lack of new home construction, the Anchorage market has lost less than 1% in value on single family sales in the past 18 months. A six month summary of building permits shows 300 new housing units permitted in 2017, but with two-thirds of them in the duplex and multi-family category. Only 95 single family homes have been permitted during the first six months of this year with an average value of $423,289. That number does not include the lot cost. If an average lot with public water, sewer and paved road costs $140,000 that puts the average new home around $600,000 compared to the MLS average sales price of $365,000.  That’s a mind boggling difference between brand new and pre-owned for buyers when doing comparable shopping. If you can find a new construction home under $500,000, my advice is to buy it! 

Four builders make up over 60% of the permits with each between 16 and 13 permits. Those builders are Troy Davis, Hultquist Homes, Spinell and the ever increasingly popular owner/builder who builds primarily on isolated lots on the hillside. Generally from the construction trades, these do it yourself builders hope to save a 6% profit which after it is all said and done is the hoped for profit from larger builders with a general contractors license and residential endorsement.      

Resale homes generally have landscaped and larger lots and a lower price per square foot even if they have been remodeled. In order for builders to compete with resale properties, they need to create a different product such as ranch homes or include the popular open two-story great room in their designs. Buyers for new homes are also requesting triple and even four car garages. Many of today’s new two-story homes get stretched to 3,000 square feet. Incremental square footage for bedrooms and living areas is relatively less expensive than kitchens and bathrooms—the two most expensive rooms in any home. Some buyers are willing to pay for a higher price per square foot to not have to worry about potential roof and furnace replacements in an older home. And for those of us who have remodeled, once you start you know it is hard to stop. The idea of a fresh coat of paint and new carpet suddenly makes those brass light fixtures look pretty dated.

On a weekly basis, Anchorage has about 100 more homes on the market than last year. Yet, prices have remained stable, although there is more negotiation between buyers and sellers. There is also a widening disconnect between original list price and final sale. That decline is 3.45 percent and does not take into consideration any seller paid closing costs on the buyer’s behalf. However, the real test of the market will be this coming fall buying season. Mortgage rates remain at near historic lows and well – maintained resale homes that are less than 20 years old are hard to find. Housing permits are at historic lows. So far, the state’s economic woes has had little impact on our local housing market and that’s my prediction for the end of the year. 

What I Learned in 2016

by Connie Yoshimura

What I love most about selling real estate is that every property, every buyer, every seller is different so it is never boring! Putting all those variables together to complete a transaction gives you a uber high of satisfaction. Every year also has a different set of variables and circumstances that set it apart. 2016 was no exception. This is what I learned in 2016.

Despite the strangulation in the state legislature as to how to manage the state budget shortfall, the Anchorage residential market held its values with less than a 1% decline in sales price. Year to date MLS sales are 2645 compared to 2750 in 2015 and 2619 in 2014 so despite everyone’s dire predictions, the market remained stable. Cartus and Brookfield relocation homes, priced below market for a quick sale, came and went with little impact on the market.  Builder permits limped along at historic lows. For the first eleven months of this year, only 182 single family homes were permitted.

Every week online and in print, I read about residential fires many of which are a result of our aging housing stock which is reaching functional and economic obsolescence. In many ways, our housing stock is just like an aging baby boomer. It requires a lot of maintenance to keep it going. Remodelers should rejoice as they are in high demand. What I also learned in 2016 is that low interest rates don’t last forever. Just this week, we had another bump up to 4.25 % for a 30-year fixed rate. A couple of months ago that rate was almost one point less, making any home purchase today considerably more expensive on a monthly basis.

At my open houses, I welcomed a lot of Hispanic and Asian visitors. Our home buying demographic is dramatically changing with multi-generational and blended families as well as minorities. New to America and Anchorage, these families crave the American dream of homeownership which was not available to them in a distant land. I also discovered the love for the return of the ranch home. And it’s just not for boomers. I saw many millennials at my open ranches because it was something different in the market and was easy living. I saw new smaller home sites due to the high cost of streets, water, sewer. Just less landscaping to maintain is my favorite response. More time for fun!

I listened to potential buyers talk about how they were tired of the drive in from the Valley. Some even wanted to move from Eagle River to Anchorage as they were tired of the pile-ups on the Glenn Highway. Being close to work became more of a priority in 2016. Also, close to family and familiarity with schools and shopping. Although we’re all connected online and with social media, physical neighborhoods seemed to take on more importance.  Buyers wanted to know who their neighbors were and not in a negative way but a positive. It was as if they were reaching out for a sense of community and belonging that only home ownership could provide.

At Dwell Realty, we’re taking a break from open houses to enjoy this holiday season with family and friends. But, like we all know, real estate is 24/7 so if you need some relief from all that holiday cheer, call, text or email. We’re here. And thank you to all our buyers and sellers for their trust and belief in what we do.

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.             

Displaying blog entries 1-10 of 14

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