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Connie Yoshimura

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How's the Condo Market?

by Connie Yoshimura

By any indication, the Anchorage condo market continued on its path of stability for the first four months of this year. The average sales price of $214,000 has fluctuated less than $1,000 since 2015. The 94 reported closed sales in April were comparable to the 95 sales reported in 2015 for the same month. Currently, there are 371 condos for sale in Anchorage ranging from $99,000 or less to $500,000 and above. On average, 84 condos sell per month with the most active price range being between $225,000 and $300,000.  

In the past, the condo has frequently been referred to as the first step in home ownership. Smaller, more affordable and usually in a location close to employment centers, the two bedroom condo appealed to young singles, students and travelling professionals. However, as they married, partnered and planned for a family they moved up to a single family home. Those buyers still exist in our local condo market but a new buyer has also emerged. Alaskan downsizing boomers are following national trends and giving serious consideration to the ‘lock and leave’ condo lifestyle. What they want in a home, however, is somewhat different than the two bedroom stacked condo. Most don’t want to go home on an elevator or down a corridor to their front door. Instead, they want a double car garage, a deck large enough to BBQ on and a small yard for the family pet or to plant some herbs and peonies. They still like to cook and need a kitchen with a pantry and a five burner cook top stove and canopy hood. Although they may still be active, they worry about their knees and hips and prefer a ranch style rather than a two-story or reverse two-story. They prefer new rather than a resale because they don’t want any maintenance or repair hassles even if managed by an association. 

Unfortunately, there are not a lot of choices for this type of condo buyer in Anchorage. The vast majority of our condos were built in the early 1980’s and consist of two bedrooms, one or two baths and if they have covered car storage may have a shared single stall garage. Some associations have done an excellent job upkeeping grounds, replacing roofs and exterior painting and others have not. Boomers, living perhaps on current or future fixed incomes, are wary of older condos which may require substantial increases in dues.  

Multi-family building permits in Anchorage are at an all-time low.  The new title 21 regulations, affecting four-plex buildings and larger, will increase the cost of new condo development whether townhouse style or stacked units. Because of all the rules and regulations governing a common ownership community, the price per square foot for a condo, whether taxed or a duplex townhouse style, is actually more expensive than the price per square foot of a single family home. Future condo buyers, whether millennials or boomers, can expect to pay more for that lifestyle by year’s end. The best condo buys, whether new or resale, are the ones for sale today.

Spring Anchorage Housing Update

by Connie Yoshimura

The first four months of this year have demonstrated a remarkable stability in the Anchorage housing market due to a continued lack of single family inventory. The Multiple Listing Service tracks listing and sales data from thirteen geographical areas from Turnagain Arm to Peters Creek and each one has had a decline of single family homes for sale. Overall that decline measured 17% when compared to the same time in 2016. Days on the market were reduced by 23% and sales by 2%.  When compared to the 17% inventory decline, the 2% reduction in sales is meaningless and shows that buyers are continuing to be active in the market. The average sales price remains steady at $360,000 but there is definitely some compromise in value with homes now selling at 98% of list price compared to 99% last year.   

But what these statistics don’t reveal is the buyer demands for home repairs due to our aging housing stock which is suffering from cosmetic and functional obsolescence. What you see on Houzz, Pinterest and HGTV is not what you’ll get in an Anchorage home that is thirty years old, even if it has been remodeled. Many of these demands stem from home inspectors who offer recommendations beyond health and safety requirements. These ‘recommendations’ can cost sellers several thousand dollars if they want to continue with the purchase and sale contract. Buyers, in particular, millennials, who generally lack funds for closing costs, are also asking for seller paid closing costs up to $10,000. Repairs, seller paid closing costs and the 1% decline in sales vs. asking price indicates a softening of values but not lack of sales. Buyers are actively looking and buying but want concessions. These concessions are hidden costs to sellers and are not reflective in the market data.     

One of the slower times of year for real estate sales is between now and the middle of July.  Buyers and sellers are busy with graduations, vacations, visiting family and friends, and enjoying the long summer days but the smart buyer will tear themselves away from all the sun filled outdoor activities and go home shopping. Mortgage interest rates bumped up an eighth of a percent last week and although it is anybody’s guess, I’m betting they will continue to creep up which increases the cost of any home financed purchase. Builders are expecting a 15% to 20% increase in lumber prices as a result of the tariff put on the import of Canadian soft lumber. Local residential building activity remains at record low permits and is likely to continue at that snail’s pace through the end of the year. However, lack of inventory is still the determining factor in the stability of the local housing market. As of last week, Anchorage had two hundred fewer single family homes for sale than a year ago at this same time.

What Is a Unit/Small Lot Subdivision?

by Connie Yoshimura

Working its way through the public process is a new land use concept which if passed by the Anchorage Assembly would allow for fee simple ownership of attached or detached homes on multi-family zoned land. Already vetted and passed by the Planning and Zoning Commission and the Platting Board, Assembly approval is the final step in what should help to by-pass the cumbersome financing requirements for condos. This new form of multi-family development on fee simple land should reduce financing costs for buyers and carrying costs for builders as they wait for sales in order to qualify for VA and FHA financing approval. Both VA and FHA approvals require a certain number of sales before project approval can be granted. FHA and VA financing is the most affordable mortgage financing for first time home buyers because they require minimum down payments.    

Shepherded through the public approval process by Seth Anderson, a local mechanical engineer and advocate for small multi-family development, this new land use ordinance is a good first step in creating more new housing opportunities, particularly for infill development in mid-town and downtown Anchorage. One concern and objection to the proposal harkens back to the 1980’s zero lot line ordinance which was allowed to sunset in the late 1980’s. At that time, most attached fee simple home communities had no covenants, codes and restrictions and even if they did no homeowner’s association to enforce them which is why you can still see these buildings where one side is painted green and their attached neighbor blue or any color of the owner’s choice. As a result, these homes have not maintained their value as well as communities where there is some attention paid to landscaping and covenants. The proposed small unit lot ordinance takes care of this concern by requiring a homeowner’s association. It is, therefore, like many condo communities which will require a board of directors. HOA fees will be similar but less, depending on shared or non-shared expenses for utilities, roads, driveways and common areas.  

In essence, the ordinance decreases minimum lot sizes and side yard setbacks to allow for creative townhome developments. It also maintains the underlying zoning density but a developer is not required to maintain that density. Parking requirements need to be met but not necessarily on the lot being developed. I applaud the efforts put forward by the AEDC and other organizations and individuals who have spent countless pro bono hours to bring the Unit/Small Lot Subdivision ordinance to its final step for approval. The Anchorage Assembly and the mayor should whole heartedly support this effort.  What should come next is a small lot ordinance for fee simple single family subdivisions. Current zoning requirements restrict the R1 zone to 6,000 square feet for a lot. Although that may seem small to some people, other innovative communities have allowed for a reduction in size to 4,000 square feet. If we truly want to create more affordable housing in Anchorage, that’s the next step.

How to Price Your Home in Today's Market

by Connie Yoshimura

When appraisers are asked to establish the value of a property, they primarily rely upon past sales data. When sellers try to determine the value of their home, they often refer to a price they find on a flyer they have picked up in the neighborhood. Homeowners also frequently refer to their current tax assessed value which may or may not have anything to do with market value but more to do with what the city needs to tax in order to pay its bills. And then, because of the online age we live in, sellers undoubtedly check out Zillow -- the behemoth of all things real estate with their multitude of algorithms which is undoubtedly the most inaccurate of all the methods mentioned above.

So when I am asked to price a home, I pretend to be a buyer and look at what other properties are on the market that might better catch a buyer’s interest. I don’t pay much attention to average MLS statistics even when I segregate those average sales prices within a $50,000 plus or minus price range of what my gut tells me may be the value.

I am also very interested in location and prefer to look within the subdivision or community because most of those homes will be built within a relatively short period of time — three to five years -- and most will have been built by only a handful of builders. They will all be time stamped with the same or similar amenity package. There are, however, nuances in every district. For example, in southeast Anchorage, homes east of Lake Otis in the Huffman area generally have higher values than those west of Lake Otis. That value may have to do with the streetscape or the subdivision layout or even the reputation of the primary builder in the subdivision. Homes north of Northern Lights have greater value than those on the south side. And then there is C street where homes to the west have far greater value than those located east of C. 

Pricing a home for sale is never an exact science. In today’s market, with the severe shortage of inventory, some homes may sell within a few days and have multiple offers while others may languish for weeks, with or without multiple showings. But remember, it is not the seller or the realtor who determines the final value of a home. It is always the willing and qualified buyer.

Why Interest Rates May Not Matter

by Connie Yoshimura

A few weeks ago, I wrote about rising mortgage interest rates. At that time the 30 year fixed conventional rate had risen to 4.3% and I predicted that interest rates would go to 5% by the end of the year. Well, this week that same 30 year fixed rate went down to 4% which has made me stop and think about whether buyers and sellers really make their decision based on interest rates. Over the years of selling real estate, I’ve discovered that there are five basic reasons that motivate buyers and sellers and it has nothing to do with interest rates but rather changes in their life. Buyers and sellers are propelled to make a lifestyle change when marriage, birth, death, divorce or job change impacts them. Obviously, some of these changes are positive and others not so much. I’ve often said I’ve had more babies in my office the past two years than the previous ten. When millennials marry and start a family, they move out of their two bedroom apartment or condo into a three bedroom single family home. A widow moves from her single family home with stairs and a big yard into a flat with a deck in a secure building. A divorced mother moves into a townhouse not far from her children’s school. A longtime middle manager oil company employee takes his retirement package and his home is purchased and resold by a relocation company. These are real life home buying and selling scenarios that have nothing to do with today’s interest rate.  

I’d now like to add a sixth to that list: age and health. Boomers have for the past three decades dictated and defined America’s consumerism. They have bought McMansions, art, fine furniture and cruises while at the same time helping their children through college. Some boomers have saved while others have overspent. How and where they live in the future is the talk of the residential real estate industry. Here in Alaska, every week I meet boomers who are trying to decide how and where to live. And none of them mention interest rates. I met one woman who decided to spend $30,000 remodeling her kitchen because she wants to stay in the neighborhood where she has lived for the past 25 years. I met a couple yesterday who spent the past year travelling all across the west to Sedona, Boise, Carson City and parts of California looking for a new home and community. Now, they’re back in Anchorage, Alaska. Another retired couple have decided to give up their hillside view of the inlet because they want to be closer to shopping and medical facilities. Many are paying cash for a new home while others put 20% down to avoid mortgage insurance or go to a 15 year mortgage. No one, however, whether a millennial, generation X or Y, or boomer makes their decision to buy or sell based upon the mortgage interest rate so perhaps it is just our industry that wants to define the market by the current interest rate. The one caveat, however, to any rising rate discussion is the first home homebuyer. A higher interest rate does downsize what a first time home buyer can afford but that, in itself, won’t stop them from buying. So for now, I’m going to stop discussing interest rates.

Why Interest Rates May Not Matter

by Connie Yoshimura

A few weeks ago, I wrote about rising mortgage interest rates. At that time the 30 year fixed conventional rate had risen to 4.3% and I predicted that interest rates would go to 5% by the end of the year. Well, this week that same 30 year fixed rate went down to 4% which has made me stop and think about whether buyers and sellers really make their decision based on interest rates. Over the years of selling real estate, I’ve discovered that there are five basic reasons that motivate buyers and sellers and it has nothing to do with interest rates but rather changes in their life. Buyers and sellers are propelled to make a lifestyle change when marriage, birth, death, divorce or job change impacts them. Obviously, some of these changes are positive and others not so much. I’ve often said I’ve had more babies in my office the past two years than the previous ten. When millennials marry and start a family, they move out of their two bedroom apartment or condo into a three bedroom single family home. A widow moves from her single family home with stairs and a big yard into a flat with a deck in a secure building. A divorced mother moves into a townhouse not far from her children’s school. A longtime middle manager oil company employee takes his retirement package and his home is purchased and resold by a relocation company. These are real life home buying and selling scenarios that have nothing to do with today’s interest rate.  

I’d now like to add a sixth to that list: age and health. Boomers have for the past three decades dictated and defined America’s consumerism. They have bought McMansions, art, fine furniture and cruises while at the same time helping their children through college. Some boomers have saved while others have overspent. How and where they live in the future is the talk of the residential real estate industry. Here in Alaska, every week I meet boomers who are trying to decide how and where to live. And none of them mention interest rates. I met one woman who decided to spend $30,000 remodeling her kitchen because she wants to stay in the neighborhood where she has lived for the past 25 years. I met a couple yesterday who spent the past year travelling all across the west to Sedona, Boise, Carson City and parts of California looking for a new home and community. Now, they’re back in Anchorage, Alaska. Another retired couple have decided to give up their hillside view of the inlet because they want to be closer to shopping and medical facilities. Many are paying cash for a new home while others put 20% down to avoid mortgage insurance or go to a 15 year mortgage. No one, however, whether a millennial, generation X or Y, or boomer makes their decision to buy or sell based upon the mortgage interest rate so perhaps it is just our industry that wants to define the market by the current interest rate. The one caveat, however, to any rising rate discussion is the first home homebuyer. A higher interest rate does downsize what a first time home buyer can afford but that, in itself, won’t stop them from buying. So for now, I’m going to stop discussing interest rates.

First Quarter Building Report Highlights Commercial Activity

by Connie Yoshimura

The Municipality of Anchorage has reported that the total value for all categories of building permits in the first quarter of 2017 has increased by $15.26 million when compared to the first quarter of 2016. This increase is directly related to commercial permits rather than residential permits which remain at historic low levels. New commercial activity for the first quarter of this year includes a $27 million plus permit for an ODOM Distribution Warehouse. Other permits include a veterinarian office/ER building at 2545 Tudor Road awarded to Watterson Construction; Hyatt Place Hotel at E. 101 Tudor Road for $16 million; $1.47 million for an office building in mid-town and AWWU’s new waste water facility on Artillery Road in Eagle River.

Several building/alteration permits also increased commercial activities. They included a $2.3 million Bristol Design Building Services permit for W. 111 16h Street; a Cook Inlet Elder Housing permit for $1.32 million on CIHA’s Muldoon campus and a National Bank of Alaska mid-town permit for $3.5 million. Davis Construction and Engineers has been awarded a contract for $2.5 million in the Providence Medical campus and the MOA has pulled a $7.4 million alteration permit at 8800 Bald Eagle for the Municipal Light and Power plant.  

Anchorage housing permits continue to dribble along at the bottom of the market with continued historic low numbers. For the first quarter of this year, only 27 single family permits were issued, just one more than last year. Only 12 duplex units were permitted—down two from last year. So far this year only one four-plex has been permitted. This lack of housing continues to be the sore spot in our local building industry.   

All commercial/residential/alteration and addition permit valuations do not include any land values. The permit value is the value estimated by the MOA to establish the cost of the permit and is also used to determine the tax assessed value. All builders and developers continue to grapple with the new title 21 regulations and the increased permit values may be due in part to these new regulations.

Anchorage's Housing Shortage Continues into 2017

by Connie Yoshimura

Today is the final day of the Spring Preview of Homes. Twenty-seven brand new homes in various stages of construction are open from one to five pm. I encourage all of you, whether you are a buyer looking for a new home, a real estate professional, a homeowner looking for remodeling ideas or a curious neighbor, to support our local home builders by visiting these homes. As these charts demonstrate, Anchorage has a housing crisis. For a city of approximately 298,000 to have less than two hundred new homes built in a year demonstrates a lack of civic responsibility. Not only by its financial institutions who have curtailed lending but also by elected officials who promise stream lining for development and building and have yet to deliver.

This week’s recently released permit figures for the first quarter in 2017 show the trend continues with only 27 new single family permits—one more than in 2016. Only 12 duplex units were permitted in 2017 compared to 14 in 2016 and no multi-family permits have been issued so far this year. While communities and builders in the lower 48 work to catch up with low inventory, Anchorage lags behind the rest of the nation. At this rate, Anchorage is not even replacing the housing units that are destroyed by fire.

Our local home builders, many who are born and raised in Alaska, work year round to create energy efficient new homes in a climate that requires more cost and supervision than in the lower 48. Let’s support them by showing our appreciation of their efforts by taking the time to visit their homes on a sunny afternoon. I’ll see you there.


Why Price Per Square Foot Is Not the Answer

by Connie Yoshimura

Next weekend on April 8 and 9th is the Spring Preview of Homes with 27 entries from Anchorage home builders. Unlike the fall Parade of Homes, entries may be in various stages of construction providing visitors an inside look at the framing, electrical, drywall and trim stages of homes. One frequently asked question is ‘What is the price per square foot of this home?’ Visitors may find prices between $186 and over $300 per square foot. So what can create almost a doubling in costs? First, let’s look at location. What is the difference in value and cost between a 6,000 square foot lot and an acre home site? How about well and septic systems on that acre lot versus public water and sewer that is already calculated in the price of the lot? Then, let’s look at topography and soils conditions.  Does the lot need gravel import and if so, how much? Will the septic system be for a three bedroom home with a den or a four bedroom? What about the length of the driveway? The minimum driveway setback in Anchorage is twenty feet but a pie shape lot requires the home to be set back further which adds cost for fill and asphalt. Some decks are only four by eight but even a small deck requires hand rails if it is more than thirty inches off the ground. A larger deck plus stairs and handrails can add over $10,000 to the cost of a new home without adding square footage. Some garages are only 20 x 20 and are not even large enough to fit a full size pick-up. Others may be 22 by 24 but both are considered a double car garage.

We all know landscaping in Alaska is expensive. Some new home communities are required in their MOA approval to top soil and hydro seed the entire lot. Others have specific requirements such as the type and height of trees and shrubs. Obviously, landscaping installed by the builder adds to the quoted square footage cost of the home. Leaving it up to the first homeowner to install reduces the cost per square footage but adds to the buyer’s out of pocket expense after the sale. Requirements for lap siding on all four sides rather than just the front of the dwelling also increases the quoted cost per square foot.

Two-story elements, whether in the foyer or great room, add to the cost of the home without adding to the square footage. All that’s missing in a two-story element is a floor. Ceiling height is another hidden cost. Most new homes now have nine foot ceilings in the main living level. However, eight foot ceilings on the second floor and basements are still standard. Increasing the vertical space increases costs. Count the number of windows included in any plan and you can increase or decrease the cost by $300 to $500 per window depending on its size.  

Then, despite all these differences in the lot and structure, builders also have different strategies when it comes to quoting a square footage price. Allowances for appliances, lighting, cabinets, flooring, et cetera may be lower to initially attract buyers but by the time all the selections are made the price per square foot may be as higher or higher than the competitor.     

So when you’re at open house today or next weekend’s Spring Preview, take time out to consider all the variables when it comes to judges the true value of a home. You might be surprised at what you discover.

 

Test Your 2017 Real Estate Market Knowledge

by Connie Yoshimura

Every year, every month, every week and every day brings new information and challenges to our local real estate market.  Test your real estate knowledge by taking this quiz.  You might be surprised by the answers!

 

1. How many single family building permits were issued in Jan/Feb 2017?

A.   6       B.  16      

C.   36     D.  56

 

2. How many duplex units were issued?

A.   24     B.   34     

C.   14     D.   4

 

3. How many multi-family units were permitted?

A.  0     B.  30     C.  40      

D.  More than 50

 

4. Based upon your answer, would you categorize the residential permits as an increase, decrease or about the same as YTD 2016?

A.  Same   B. Increase

C.  Slight Decrease

 

5. Inclusive of all price ranges, this past week how many single family homes were for sale in Anchorage?

A.  787     B.  687   

C.  587     D.  387

 

6. This number is an increase or decrease from the same week in 2016?

A.   Increase by 100     

B.   Decrease by 100         

C.   Stayed the same

7. Comparing YTD 2017 to 2016 days on the market have increased or decreased?

A.  Increased by 21%      

B.  Decreased by 21%        

C.  Stayed the same

 

8.  Have the number of closed sales increased or decreased when comparing YTD 2017 to 2016?

A.  Decreased by 5%       

B.  Increased by 5%      

C.  Decreased by 9%       

D.  Increased by 9%

 

9. How many homes over $600,000 have a pending sale YTD?

A.  9        B.  19       

C.  29      D.  39

 10. Low residential inventory is creating stability in the market.

A.   True        B.  False

 

11. Fear of higher mortgage rates is a primary motivator for buyers at this time.

A.   True       B.  False

 

12. What is the average sales price of a condo YTD in 2017?

A.  $192,000     B.  $202,000     

C.  $212,000     D.  $222,000

 

13. Have condo sales increased or decreased YTD when compared to last year?

A.  Increased   by 24%      

B.  Decreased by 24%     

C.  Stayed the same

 

14. How many years has Dwell Realty been in business?

A.  4 years       B.  8 years        

C.  10 years

 

15. Where does Dwell Realty rank in sales volume 2017?

A.  Top 10 brokerages          

B.  Top 20 brokerages        

C.  Top 50 brokerages


Thanks for taking this quiz and for supporting Dwell Realty. We are only four years old this month and rank number six amongst all the brokerages in the state of Alaska. We appreciate your business.


Answer Key

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

Displaying blog entries 1-10 of 136