How’s the Market?

And the answer is ‘It depends.” If you’re a single family home builder, the market has become a little bit better for you in 2011 year to date with 100 new single family permits issued.  As a builder, you may be breathing a small sigh of relief that you’re going to survive compared to 2010 and 2009 when the first four months of those years saw only 50 permits issued. Our local builders, it seems, are learning some survival lessons from the lower ’48 and eliminating a lot of the extras found in new home building the first half of the decade  and are now offering square footage without the flourishes. Buyers can now pick and choose the luxuries they want in a brand  new home and this new price sensitive philosophy seems to be working coupled with an active pre-sale market and stable lot prices.

From 2002 to 2007, Anchorage saw a 45% increase in residential values which was pretty impressive appreciation, although not as great as in the lower 48.  But, then, our fall from grace, has also not been so steep with only an average of about 3% depreciation in the past three and a half years which is minimal compared to what’s happened in California, Florida, Arizona, Nevada and even Texas, one of our sister oil states.  Total sales volume has decreased 7% year to date compared to 2010.

So Anchorage has some sweet smelling lilacs about to bloom but there are also some thorns in the summer rose bushes.  Although condominium prices have stabilized this year at around the $197,000 average  price point, there has been an approximately 25% decline in purchases compared to last year, due primarily to stricter financing guidelines and increased dues which are calculated into the monthly mortgage payment, making it more difficult for condo buyers to qualify.  It’s not unusual now to find dues hovering around $300 per month which means that the buyer has to earn an extra $1,200 per month into order to qualify.  The lowest dues are found in new condo developments because the reserves and maintenance can be amortized over a longer period of time because they’re brand new. New condo dues average between $200 and $236 per month. Despite all these issues, condo prices have actually increased from $191,358 in 2010 to $197,000 so far this year.  Condo buying is really the only option for first time homebuyers and empty nester downsizers and so this market should show continued stability.

Over the past year, the sold to list ratio has gone from 96% to 94% and the number of days on the market  has increased from 70  to approximately 100 in April 2011.  These two statistics indicate that sellers are not facing reality, i.e. the average 3% decline in values over the past couple of years. Perhaps, it is because many of them refinanced at the peak of the market and now may have to come out of pocket to sell, thanks to those aggressive mortgage brokers who made equity extraction so easy.  Whatever the reason, if you want to sell your property today, you need to take a hard look at the market and price accordingly.  Sellers who do that receive multiple offers.

Not all geographical areas of the market are the same, however, which is why sometimes average or median statistics can be misleading.  One previously hot geographical area  has had a 54% decline in sales activity while another area has had 66% increase.  Another area has had a 22% increase in sales volume and that area’s percent to list price is now over 100% which reflects buyers’ choices for new construction upgrades.  If you want to find out how your area of the market is fairing, catch this blog next week.  You’ll be surprised to discover where the hottest area for home sales is occurring.