There are many indicators that are tell tale signs of whether the market is improving, days on the market, average sales price, sales to list price ratio and housing inventory levels.  Housing inventory levels I believe are a key indicator.  So how do you know whether the housing inventory is normal in your geographic area?  The National Association of Realtors (NAR) indicates that normal inventory levels are 3.6% of the total markets occupied housing units.  In the Palmer Wasilla area of Alaska there are 21,015 single family occupied housing units.  Using NAR’s indicator of 3.6% a normal inventory level in our area would be 756 homes for sale.  As of October 29, 2008 there are 1803 homes on the market for sale.  That means we have a ways to go yet before our market is back to normal.  But as I have indicated before, there are some price ranges within our market that have normal inventories already.  So don’t let the overall number mislead you.  If your home is valued at less than $245,000 there is good news.  Almost all of the price ranges below $245,000 show a very normal housing market.  If you have questions about your home, contact me at Kristan@KristanCole.com or call me at 907-373-3575.

The Anchorage Daily News reported last week that property owners on Big Lake are being notified about dock permits.  Evidently permits have always been required, but few property owners have them.  They were either not aware, or disregarded the permit process. 

Big Lake is one of two lakes in the Matanuska-Susitna Borough that the Army Corps of Engineers regulates under an 1899 federal law as a navigable water body, meaning the water is used or could be used to transport foreign or interstate commerce per the Daily News article.

The Corps has indicated they are not out on Big Lake looking for problems or to penalize anyone in as much as they are just trying to get people to obtain a permit and come into compliance.  I also think they are trying to maintain safety (docks coming loose etc.) on Big Lake.  As we all know, there have been several accidents on Big Lake in the past few years. 

For the private landowner, new dock permits cost $10 and require a public notice period. New commercial permits cost $100.   Work on existing, permitted docks is generally free, as long as it stays within a certain size.

Well just when you thought you were up to date on land use requirements, you find out there's always more to know.  Kristan

Alaska Housing released a press statement August 4th about Alaska Home Buyers Confidence.  They stated Alaska home buyers remain confident in the housing market despite national decrease in consumer confidence.  A June 2008 study conducted by Dittman Research and Communications Corporation revealed that 59 percent of Alaskans have a great deal of confidence or quite a lot of confidence in the strength of the Alaska housing market.  This compares to the Conference Board's national consumer confidence index released in June, which fell to 50.4, the lowest reading since February 1992.  Most Alaskan's cite Alaska's strong economy and the fact that housing is a good investment as explanation for their confidence.  Low interest rates and a low number of homes on the market also positively impact this confidence factor.  Alaska Housing Finance Corporation's CEO/Executive Director Fauske explains, "housing and energy issues are of critical importance to all Alaskans.  These survey results are an indicator of the marketplace and send a positive message that despite national trends, Alaska's housing market remains steady." 

Here in the Palmer/Wasilla area our inventory of homes is higher than last year so we still have a ways to go before our residential market totally recovers, but it's steady as she goes right now.  Call me if you want to discuss the specifics of your home.  Kristan

Is the national housing crisis really a crisis? Dennis Kneale recently addressed the issue on CNBC.His message took on a positive spin regarding the real estate market. He demonstrated in the video that the housing crisis is really only a crisis at a micro level.  Here in Alaska we are fortunate; our current foreclosure rate is less than 1%.  We haven't been hit hard at all, but then we took our hits in the late 1980's.  Our future economic growth looks positive.  Tourism, oil revenues, a new prison, growth in the military, low interest rates, more retail store growth and job growth for starters.  While job growth slowed in 2007, it's still growing and I expect our employment growth rate to be between 2-3% this year.  This should help our struggling real estate market recover more quickly.  So while we haven't seen much sun this summer in Alaska, I think I am starting to see at least partly sunny skies in the future of our residential real estate market, and that's good news for everyone. Check out our Best Buy List if you are looking for a home or an investment property.  There's no sense driving around to look at property with gas prices over $4.41 per gallon.  You can see every listing in Alaska on my web site.  Interest rates are lower than ever----It's a great time to buy in 2008. Kristan

According to KTUU last night at 9:00 p.m. The Alaska State Legislature approved an energy relief package, just hours before its midnight deadline.

The package gives all Alaskans eligible for a Permanent Fund Dividend in 2008 an extra $1,200 as an energy resource rebate. The legislation also suspends the 8 cents a gallon state fuel tax and adds funding to the state's Power Cost Equalization program.

The bill will now go before Gov. Sarah Palin for final authorization and I am sure will be signed since it was her idea to begin with!  Kristan

The Housing and Economic Recovery Act of 2008 was just signed by President Bush with some amazing benefits for first time homebuyers.  When is the last time someone gave you a $7,500 loan, that has no interest, no payments for two years, and if you do not make enough profit when you sell, you do not have to pay back the loan?  That is what first time homebuyers get.  Call everyone you know who wants to buy their first home; this is too good to miss.

If you have not owned a home in three years, you are a first time home buyer.  If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for a credit.  Call your friends who just bought a home and tell them they may take $7,500 off their tax bill if they qualify.  It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500.  So, if the home costs $65,000, your tax credit is $6,500.  If the home cost $100,000, you would get a credit of $7,500.  This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit.  In other words, you take $7,500 off your tax bill.  What if your tax bill is only $5,000?  The IRS will send you the additional $2,500 as a refund.  When was the last time the IRS sent you a refund because you bought something?

The loan has no interest, and will be paid back over 15 years.  You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment.  You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year.  If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house?  You pay the balance back at the closing.  So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house.

What happens if you do not make enough money when you sell your house?  They forgive the rest of the debt.  In other words, get $7,500 now and pay back nothing if your house only breaks even, or loses money, at closing.  When was the last time you got a loan on a speculative venture where the person who gave you the loan forgave the rest of the loan if you did not make enough profit on the sale? 

The risk of loss in buying now is on the government.  In other parts of the country where real estate is going down in value, you can lose 10% of the value of the home (up to $7,500) and the loss is covered by the fact that you do not pay back the tax credit.  The Raleigh real estate that first time buyers can afford is going up in value, so we are not as worried about the risk of loss.  Even a bad buy that does not go up in value is covered by the tax benefit because you get $7,500 no matter what happens.

Similarly, if you die before repaying the debt, it is forgiven.  There are special rules for sales as a result of divorce or if the government takes your property by condemnation.

There are restrictions on the amount of income that you can make and still get the credit.  But the restriction is $75,000 per year for a single person and $150,000 for a couple filing jointly, so the vast majority of people qualify.   If you make more than that, you can still get some of the tax credit, but there are complicated rules about phasing out the credit as the income goes up.  If you make that much money, you can afford to hire someone to figure out the formula.

The restriction on the location of the property is minimal; it has to be in the United States.  Not too tough, huh?

What is the catch?  You have to buy your first house in three years before July 1,2009, not have super high income, not use bond financing and buy anywhere in the US,   Not too difficult, right?

If you know someone who wants to buy a home, call them and then have them call us and we will take exceptional care of them.  If they want to buy anywhere in the US, call us and we will find them a terrific agent anywhere in the US. 

The government gives tax credits to huge companies; here is one for the little guy.  Don't miss it.  (information posted with permission from my cyberstar Realtor friend Tim Burrell)

Positive News

 

H.R. 3221, the Housing and Economic Recovery Act of 2008 — which was passed by the Congress on July 26 and then signed by President Bush — allows first-time home buyers to take a $7,500 tax credit from the purchase of a single-family home, townhome or condominium.  This is great news for home buyers, but also great news for home sellers as this will excite and hopefully generate more buying!  If you have questions about this new tax credit, please email me at Kristan@KristanCole.com

Friday the Alaska Senate voted to award TransCanada a license to build the natural gas pipeline.  The legislation now moves on to Governor Palin for her signature.  This should boost confidence here in Alaska regarding our economic outlook. 

Our local news is positive too.  The new prison is slated to begin construction in 2009, Target is opening this fall, and it was announced this weekend that Costco is coming to town.  This should help our struggling real estate market recover more quickly.  That's good news for everyone.

Of course if you are looking for specific market information regarding your property, please email me or call me at 907-373-3575.

 

Did you purchase a newly build home with a 5 star energy rating on or after April 5, 2008?  If so, Alaska Housing has a $7500 REBATE application.  Call Alaska Housing at 1-800-478-2432 and ask for the rebate Program manager or call the Rebate Manager direct at 330-8183, or go online at www.ahfc.state.ak.us/energy  

You don’t want to miss out on this. 

Technically it is summer.  Summer solstice will be here next week and Father's Day is this weekend.  But, did someone forget to turn on the sunshine?  After a slow cold spring many of us convinced ourselves that sunshine would be just around the corner. 

Maybe the lack of sun is the reason record numbers of buyers have been on our website looking at homes this past week?  It's true there have been double the number of unique visitors on our site this week.  If they are interested in buying a home in the price range above $275,000 they will find a huge selection.  Take a look at the number of homes on in the Palmer Wasilla area that came on the market this week, versus the homes that pended and sold:

 Total Actives   New Actives this week   New Pendings & New Solds this week

       710                      60                               22                   20

When there are more homes being listed for sale than are pending and selling, we are gaining inventory.  This trend needs to change before we will have equilibrium in the market place across all price ranges.  As I have mentioned before the bright spot is under $275,000.  This price range continues to be a normal market with 2-3 months of supply.  Over $275,000 continues to be a challenging market with more homes for sale than there are buyers.  If you have questions about your home, email me at Kristan@KristanCole.com  or call 373-3575.  Kristan

There is one sign that our market is improving that we can’t miss, and that’s when our phone rings with new customers ready to buy or sell.  But there are other indicators—not including the familiar days on the market, new listings per month, and new contract activity.  Here in Wasilla we sold 34 more homes in April than we did in March; the number of days on the market came down from 126 to 98.  We still have more new listings coming on the market than typical which means in some price ranges we still have an excess supply of inventory. 

 

Bottom line is the market is making progress.  As long as builders continue to curtail their spec building in the $300,000 plus range our market will continue to recover.  As I have said before, sellers are in a pricing war and a beauty contest at the same time.  If you want to sell you have to "be the prettiest" and the "lowest price" as compared to your competition.

 

5 Signs of a Housing Market Pickup

Sign #1:  New Jobs vs. New Housing:  Historically one new home owner is created for every two new jobs, so if job creation continues in Wasilla and builders scale back on production, it’s just a matter of time before the supply and demand equation moves toward equilibrium. 

 

Sign #2:  Fewer Builder Concessions:  Look for new home builders to curtail their offerings of paying buyer closing costs, offering selling bonuses or other concessions they rolled out at the start of the downturn.

 

Sign #3:  Months’ Supply:  We had a 10-18 months supply (depending on the price range) of housing during most of 2007.  Currently in price ranges under $250,000 the supply of homes is 3-4 months.  Over $250,000 the months’ supply is still 7-9 months. 

 

Sign #4 Visitors per Listing:  Look at the visitor trends on web sites.  The more visitors looking at homes on line and the more pages they look at suggest buyers are getting serious. On my web site we typically have 135 unique visitors per day viewing over 1200 pages.  Friday we had 292 unique visitors on the site. 

 

Sign #5 Rising Number of Homes Under Contract (pending sale):  When the number of new listings per month is similar to the number of new contracts, we have equilibrium.  If the number of new listings outpaces new contracts per month, we still have a growing inventory of homes which will equate into greater supply than demand.  We haven’t reached equilibrium in our market in most price ranges yet, but we are moving closer each month. 

 

Will you regret not buying in 2008?  With low interest rates, motivated sellers, and reduced prices, will people look back at 2008 and wonder why they didn't take advantage of an ideal buying situation?  This is the beginning of my 25^th year in real estate.  I had only been selling for 4 years when the market declined to an all time low in 1988 through 1990.  Many of my friends later told me how they regretted not buying when the market was at the bottom.  The trouble then as is the trouble now, none of us knew until after the fact where the bottom was.  What I do know is we have low interest rates, motivated sellers and job growth making this a great time to buy.  Call me anytime with questions, 907-373-3575  Kristan Cole.

Blogger Asks Consumers: 'Will You Regret Not Buying?'

With low interest rates, motivated sellers and reduced prices in many parts of the real estate world, will people look back at 2008 and wonder why they didn't take advantage of an ideal buying situation? In 1988 and 1989 there were lots of good deals, but few took advantage of it.  A few years later, many found were kicking themselves in the pants wishing they had. Here is an article that was posted by Kelly Sibilsky with RE/MAX Unlimited Northwest on March 30, 2008.

 

Will 2008 be the year you wish you'd bought real estate?

With lower interest rates and plenty of homes to choose from, now may be the right time for you to purchase real estate. Today's lower interest rates may not be around when prices flatten out, so trying to time the market rarely works to your advantage. Another problem with trying to time the market is that it requires a rising market to know just where the bottom was ... hindsight is always 20-20, isn't it?

In many cases, purchasing a home may be cheaper than renting. In my market area, it is difficult to find a decent rental unit for under $1,300/mth. That's $15,600/year that could have gone towards your own mortgage, instead of paying your landlord's mortgage for him. Your landlord loves you, by the way, because you're making him rich. You are literally buying his property instead of your own. Think about it.

Then there is the distressed (foreclosure) property market. While many of these properties have condition issues and other challenges, in many cases they are priced below market value and offer opportunity for those willing to put in a little sweat equity to make a profit. If you are considering purchasing a distressed property, I suggest you consult a real estate agent who specialized in the foreclosure market to assist you. It can be tricky to navigate.

All investments carry some level of risk, and purchasing real estate is certainly no exception. This is not the time to make decisions that have not been carefully analyzed. What is a good purchase for an investor may not be a good purchase for a typical homebuyer. This is why you should always work with a real estate agent who can guide you in the right direction and provide the information you need to make an educated decision based on your individual circumstances.

Many people wish to wait "until next year, when prices may be lower" which of course, is a risk in and of itself. Prices may be lower, or may be higher. How many times have you waited for that special sweater at your favorite store to be marked down, only to discover that it was snapped up by someone else before you had the chance to purchase it? It may be a simple analogy, but the principle is the same: sometimes you snooze, you lose. If that's okay with you, then go ahead and wait it out. Hopefully you won't want to kick yourself a year from now.

The truth is, none of the experts can accurately predict the real estate market any better than the experts can accurately predict the stock market or what gas prices will be a year from now. If you purchased real estate in 2006 or 2007, you most likely got a great home at a terrific price with a low interest rate. Provided you stay in your home for several years (something I always recommend), you will benefit when property values eventually rise again.

I actually purchased my own home when the market was so hot that homes were selling in just days and for full list price. My home is now worth about $100,000 more than it was when I purchased it. Had I purchased a few years earlier, my home may be worth $25,000 more than that. Had I purchased just two years ago, my home may be worth about what I paid for it. That's the nature of real estate. Values go up, values go down, and when you purchase and sell makes all the difference.

For the typical homeowner, purchasing real estate should be a long term investment as well as a good little tax deduction, a place to live and make memories that will last a lifetime. Would I be comfortable selling my home in today's market and purchasing a new home? You bet your booties. In fact, I wish I could do just that, because I feel this market offers tremendous opportunities. The problem is, it's not the right time for me to do so because my youngest son has three more years of high school. If the market values are higher in three years, I will make more money on the sale of my home. Of course, I will also be paying more money for my new home. Therefore, I will not have gained anything by waiting and may actually lose money because of the higher purchase price on my new home and potentially higher interest rates. But that's life, folks. Sometimes you need to make decisions based on what is right for you and your family instead of making decisions based solely on the financials. So will 2008 be the year you wish you'd bought real estate?

First Quarter Marketing Report—The Good, The Bad, The Ugly

 

There is really no way around it.  The first quarter residential home sales were slow.  In the Palmer-Wasilla area the number of homes sales in the first quarter of 2008 as compared to 2007 was down 30 percent and the home sales volume was down 33%.  The total number of active homes for sale is higher than last year during the first quarter.  We currently have 737 homes on the market as compared to 666 last year.  What does all of this mean?  It means most sellers are in a pricing war and a beauty contest at the same time.  

                                    First quarter 2007          First quarter 2008        % change

Number of home sales              299                              209                  -30%   

Average Sales Price                  $229,090                     $221,507         -3%    

Appreciation                                                                 -3%                 -3%    

Average Days on Market          86                                110                   28%   

Change in interest rate               6.25%                          6.00%              -4%    

 

What can you do if you want to sell?  First, have your home STAGED.  First impressions can really make or break a showing.  With more properties on the market to choose from, we advise all of our sellers to make the most out of every showing opportunity.  And this is where staging comes in.  If a home is staged properly, then the seller has a much better chance of selling their home for more money and in less time.  Statistics bear this out.  In fact, one survey found that staged homes sold for almost 7 percent more than homes that were not staged, and sold in half the time! We provide this staging service for free to all of our clients.   Next, make your house SHINE! Everything must be spotless, including floors, walls, drapes and especially windows, and even door bell pads! ELIMINATE ODORS!  Bad odors can kill a showing quicker than anything.  Burn candles, bring in flowers, and display potpourri.  People really notice this, so sellers should take care here!
REMOVE CLUTTER: Remove excess furniture and knickknacks.  Only keep essential furnishings and focus attention on your rooms’ best features.  Personal property can distract from the overall showing experience.  And finally: Use COLOR!  Fresh paint makes a huge difference. Have carpets, countertops and cabinets in the latest styles and colors. Add flowers and upgraded landscaping to improve your home’s curb appeal.  By following these basic steps, a seller can do a lot to maximize their market opportunity and increase the perceived value of their home. If you would like more help with getting your home ready to sell, contact me at Kristan@KristanCole.com or 907-373-3575.

My good friends Dale and Robin Hamitt caught this 80 pound King Salmon a few years ago.  Sign up for our free King Salmon Fishing trip for two by emailing me and maybe you can catch one like this too.