Current Absorption Rates For The Matsu Valley's Real Estate Market Indicate a Seller's Market

The best barometer for a real estate market is a calculation called the absorption rate...and based on the current absorption rates for the Matsu Valley's real estate market, it indicates that it is a seller's market! 

As a general rule of thumb, an absorption rate of under 15% is an indicator of a buyer's market as homes are not selling very quickly.  Conversely an absorption rate of 20% or more is an indicator of a seller's market as homes are selling quickly. 

In calculating our 2018 market as we head into the spring selling season, the absorption rate for the entire Matsu Borough real estate market is 22.85% with Wasilla's absorption rate just slightly higher at 24.7%.  The Palmer's absorption rate is at a whopping 35.99%! 

Although these areas had less overall sales in 2017 than in 2016, most areas experienced a slight increase in average pricing year over year.

If you're considering selling in 2018 check out our website to get an idea as to what your home is worth in today's market.   

Feel free to call our office at (907)352-1828 to ask for a more specific report that's customized right down to your neighborhood to see what the outlook is for you. 

Greg Shepard
Jack White Real Estate Matsu

WHAT EFFECT IS THE FEDERAL RESERVE'S INTEREST RATE HIKE GOING TO HAVE ON HOME PRICES IN THE MATSU?

Many people are probably wondering, "What effect is the Federal Reserve's interest rate hike going to have on home prices in the Matsu?"

And as you might expect, the answer is somewhat complicated.  Mortgage interest rates are set by a number of factors, but a relatively good barometer is basing mortgage interest rates toward the 10 year US Treasury Bonds.  This link provides some insight to the 10 year Treasury and mortgage rate connection.  This week Forbes came out with an article discussing what is spooking home buyer's the most and the answer might surprise you. Here is a link to that article What is spooking today's homebuyers?

Since the Federal Reserve's announcement this week that they were raising their rate from 0% to .25%, the 10 year Treasury has actually went down slightly.  Stated differently, the increase in the Federal Reserve has not equated to an increase at all in mortgage interest rates.  Yet.

Treasury bonds are traded in the world market, and as such, are being compared to other country's bonds by investors. With the turmoil occurring in other regions of the world, particularly European countries, world investors seeking higher returns are looking elsewhere.

As a general rule of thumb, the Federal Reserve raising interest rates is a way to curb inflation which normally translates to higher mortgage interest rates.  So we'll continue to monitor this over the next year to see where this goes, but we expect a gradual increase in mortgage interest rates over this period.

In looking at the Year over Year numbers for home sales in the Matanuska Susitna Borough, there is something that jumps out as more of a factor for home prices into 2016 than an increase in mortgage interest rates.  The average price of home prices in the Matsu is up 6% Year over Year shown by the report below.

With an increase in the average sale price of 6% Year over Year, combined with an increase in mortgage interest rates of 1%, the monthly price difference is quite dramatic. Many home buyers are hoping for home prices to drop in order to get a better 'deal', but based on the report below, that train of thought results in considerable increased costs on a monthly basis, showing an additional cost of over $200 a month.  Over 7 years that equates to $17,623!

In addition to the loss by waiting, those renting in the Matsu might not know that the price of rent is usually much higher than actually owning when you take into account the added cost benefits such as principle reduction, appreciation, and income tax savings.  The worksheet below illustrates the difference between renting vs owning here in the Matsu Valley housing market.  

As you can see by the worksheet above, the actual cost of home ownership instead over renting actually results in an income to the home buyer of about $164 a month after the principle reduction, appreciation and income tax savings are factored in  Read that again...based on a very accurate model of the current Matsu real estate market, your home actually paid you $164 a month to live there given the example shown above!  

When you factor in the Cost of Waiting and Rent vs Own worksheets the total amount of money saved/earned is $198,929 over 7 years if all factors stay the same over that period.  

Can all of these factors change in future?  Unquestionably.  But based on the information that we are currently monitoring, this is a very accurate snapshot of what your housing needs would look like based on the averages currently found here in the Matsu Valley housing market. 

If you have questions about your specific housing needs, we can prepare a customized analysis for you based on your actual situation.  If you are in the market to buy, simply log on to our website to perform a search to see what the market is currently like.  If you have to sell your current home, you can log on to our website's selling page to find out more.  I will do a blog about that later in the week to show you what the differences in what doing that now looks like too.

You can always call our office to speak with us directly too at (907)414-9456, or email me at Greg@AlaskaHomeSellers.com

Have a great week!

Greg Shepard
Associate Broker/REALTOR
Jack White Real Estate Matsu Office

IS NOW THE TIME TO SELL MY ALASKA RENTAL?

Is it time to sell my Alaska rental home you ask?  Many homeowners over the last few years have opted to rent out their homes rather than sell them as they didn't have enough equity to sell without having to come to closing with a check.  For those homeowners that were 'upside down' or 'underwater', as it is commonly referred to, renting the home was an acceptable alternative.

 

If you have a home in Alaska and are curious about the value CLICK HERE for a fast easy evaluation. 

We at Alaska Home Sellers feel that there are a couple of things that you might want to consider.  If your goal was never to become a permanent landlord there are some timelines that you don't want to overlook.  And if you have lost touch with the current values of homes in the Mat-Su, it might be time to revisit the idea.

For many because they couldn't sell before they moved, they have been forced to rent at their new destination because they had always hoped that there would be equity in their home that they could carry forward to use to purchase their next one.  For many that have left the state of Alaska and have moved to the lower 48, they may also want to factor in what the appreciation rates are in their new state to help determine if selling here (albeit not as much as they hoped) might be a good financial move in order to to purchase sooner there.

For many that purchased at the peak of the market in Alaska in 2007-2008 and then tried to sell in 2011-2012, they found that their properties hadn't appreciated enough to cover the costs associated with selling.  Many then opted to rent it out and cross their fingers and hope that the market would come back.  If you have been wondering if now is the time to sell your Alaska rental, it could just be....but more on that shortly.

Did you know that the IRS has specific rules about the length of time that you can be out of your primary residence and still be excluded from a capital gains tax?  IRS Publication 523 has a wealth of information that you need to know about if you are one of those homeowners that rented out your home over the last few years.  In it there is a section regarding "Ownership and Use Tests" and that is the section that you might want to pay particular attention to.  It reads:

Ownership and Use Tests

To claim the exclusion, you must meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have:

• Owned the home for at least 2 years (the ownership test), and
  
• Lived in the home as your main home for at least 2 years (the use test).
  

What does that mean?  Here are some examples that it gives: 

Example 1—home owned and occupied for at least 2 years.

Mya bought and moved into her main home in September 2011. She sold the home at a gain in October 2013. During the 5-year period ending on the date of sale in October 2013, she owned and lived in the home for more than 2 years. She meets the ownership and use tests.

Example 2—ownership test met but use test not met.

Ayden bought a home, lived in it for 6 months, moved out, and never occupied the home again. He later sold the home for a gain in June 2013. He owned the home during the entire 5-year period ending on the date of sale. He meets the ownership test but not the use test. He cannot exclude any part of his gain on the sale unless he qualified for a reduced maximum exclusion.

Period of Ownership and Use

The required 2 years of ownership and use during the 5-year period ending on the date of the sale do not have to be continuous nor do they both have to occur at the same time.
You meet the tests if you can show that you owned and lived in the property as your main home for either 24 full months or 730 days (365 × 2) during the 5-year period ending on the date of sale. 

For a homeowner that rented out their home for the last couple of years because they couldn't afford to sell, now could be faced with a capital gains tax on the proceeds of the sale if they have waited too long and no longer can meet the Ownership and Use Tests.

Many homeowners may not have kept a close pulse on the real estate market in Alaska after moving and may not know that property values have been on the increase, and particularly so over the last year. CLICK HERE for a look at Sold vs. List Price.  We pulled up 99654 for this example.  To find out another area, simply change the zip code to find out info about the area you are interested in.

If you have a home in the Matsu Valley that you have rented out because you were upside down, the environment hasn't been better in years to reanalyze your position and determine if now is the right time for you.  If you are getting to a point where time is of the essence, you will also be happy to know that approximately 1/3 of the pending home sales have occurred within 10 days at the moment, as buyers are scrambling to purchase before someone else beats them to it. Take a look at current listing prices here.

If you are curious as to the current value of the property, you can fill out this short form to obtain an approximate idea as to what it's worth.

As it relates to tax matters, we always recommend discussing the tax ramifications with an accountant or other tax professional in order to find out how it will impact you. 

DO YOU KNOW WHAT THE COST OF WAITING WITH PRICES ON MAT-SU VALLEY HOMES AND RATES ON THE RISE?

Do you know what the cost of waiting with prices on Mat-Su Valley Homes and Rates on the rise?

We, at Alaska Home Sellers, have often broken down the opportunity that exists now for Millennials who are willing and able to purchase a home NOW... Here are a couple other ways to look at the cost of waiting.
Let’s say you're 30 and your dream house costs $250,000 today, at 4.41% your monthly Mortgage Payment with Interest would be $1,253.38.
But you’re busy, you like your apartment, moving is such a hassle...You decide to wait till the end of next year to buy and all of a sudden, you’re 31, that same house is $270,000, at 5.7%. Your new payment per month is $1,567.08.

The difference in payment is $313.70 PER MONTH!

That’s like taking a $10 bill and tossing it out the window EVERY DAY!
Or you could look at it this way:

• That’s your morning coffee everyday on the way to work (Average $2) with $12 left for lunch!
• There goes Friday Sushi Night! ($80 x 4)
• Stressed Out? How about 3 deep tissue massages with tip!
• Need a new car? You could get a brand new $22,000 car for $313.00 per month.

Let’s look at that number annually! Over the course of your new mortgage at 5.7%, your annual additional cost would be $3,764.40!
Had your eye on a vacation in the Caribbean? How about a 2-week trip through Europe? Or maybe your new house could really use a deck for entertaining.  We could come up with 100’s of ways to spend $3,764, and we’re sure you could too!
Over the course of your 30 year loan, now at age 61, hopefully you are ready to retire soon, you would have spent an additional $112,932, all because when you were 30 you thought moving in 2014 was such a hassle or loved your apartment too much to leave yet.
Or maybe there wasn’t an agent out there who educated you on the true cost of waiting a year. Maybe they thought you wouldn’t be ready, but if they showed you that you could save $112,932, you’d at least listen to what they had to say.
They say hindsight is 20/20, we’d like to think that 30 years from now when you are 60, looking back, you would say to buy now…
Agents: How are you preparing to help Millennials understand the opportunity available TODAY by become homeowners? Watch a free replay of our most recent webinar, "Spring Ahead in 2014: KCM's Action Plan for DOMINATING the Spring Buyers' Season" to find out the steps you need to take!

Wasilla Alaska Real Estate for sale... But don't blink or that home will be gone

Wasilla Alaska Real Estate for sale ...

But don't blink or that home will be gone

In keeping a watchful eye on the state of  the Wasilla real estate market, something has really stood out as of late.  Homes are selling....and fast.

We thought that you may like to receive an update on the Wasilla Market that doesn't appear in the Market Insider information that you receive, and that is the percentage of homes that are currently under contract and how many of them have sold within 10 days.  Of the 211 homes that are pending today, 20 of them sold in less than one day!  There are a lot of multiple offers on homes right now as a result of the frenzy that we are experiencing.    

Here is the breakdown as of 5-2-14:

        PRICE                     # OF PENDING SALES               % SOLD IN LESS THAN 10 DAYS

$100,000-$150,000                           18                                                       55

$150,000-$200,000                           43                                                       37

$200,000-$250,000                           54                                                       35

$250,000-$300,000                           34                                                       32

$300,000-$350,000                           26                                                       23

$350,000-$400,000                           21                                                       33

$450,000-$500,000                            7                                                        43

$500,000 and higher                           2                                                          0

Homes for sale in Mountain Ranch Subdivision, Wasilla, AK

Homes for Sale in Mountain Ranch Subdivision Wasilla, Alaska

Looking for a home in Mountain Ranch Subdivision?

If you are interested in finding a home for sale in Mountain Ranch Subdivision of Wasilla, AK please click on the link for immediate information about homes for sale.  If you would like to know a bit more about the neighborhood I have included a few facts and links that may be helpful for you. 

Why Do People Live in Mountain Ranch?

Mountain Ranch is a large neighborhood of single family homes. Situated outside the between the cities of Palmer, AK and located within a short distance of the Glenn Highway. The fair is close but not to close. This is very convenient when it is State fair time.

What's the Neighborhood Like?

The homes you would expect to find for sale in Mountain Ranch Subdivision are generally going to range between 864 and 3333 square feet. Most of the homes were built starting 2005 to 2014.  The typical configuration is mainly 2 to 5 bedrooms and 1 to 3 baths. The lots are approximately a little less than 1/2 acre.

What's Going on Nearby the Mountain Ranch Subdivision?

Mountain Ranch is conveniently located just off the Parks Highway between Palmer and Wailla, Alaska and it is an excellent commute location to Anchorage and JBER.  Mat-Su Regional Medical Center is close by as well as big box discount shopping areas, most chain fast food establishments, as well as the local movie theater within 10 minutes. In addition we have a wonderful collection of local favorite restaurants, including Locals.  Find out about The Ranch and the surrounding area's community information including banks, schools, shopping and what the community statistics are at my web page.

What Schools are nearby?

If you buy a home for sale in Mountain Ranch Subdivision of Wasilla AK, the local schools serving this area are Sherrod/Swanson Elementary School as well as Palmer Middle and High School. To get local school scores and more information about these schools check out the Palmer school reports on my website.
Because the area is in a growth phase sometimes school boundaries change, so you will need to reconfirm this.

Now You Really Want to Find a Home Here, Right?

If you are interested in the current homes and lots for sale in Mountain Ranch Subdivision of Palmer AK click on the link. Our 'for sale' property information is a direct feed from the Alaska MLS and is updated multiple times per day.

To Search for Homes in the Palmer, Wasilla, Houston and other areas please visit my site.

Homes for Sale in Wasilla Creek Commons Palmer Alaska

Homes for Sale in Wasilla Creek Commons Palmer, Alaska

Looking for a home in Wasilla Creek Commons?

If you are interested in finding a home for sale in the Wasilla Creek Commons of Palmer, AK please click on the link for immediate information about homes for sale.  If you would like to know a bit more about the neighborhood I have included a few facts and links that may be helpful for you. 

Why Do People Live in Wasilla Creek Commons?

Wasilla Creek Commons is a small  neighborhood of single family homes and there are still plenty of lots available for those that wish to build. Situated between the cities of Palmer, AK and Wasilla, AK off the Palmer-Wasilla  and Parks Highway.  As the name implies, Wasilla Creek runs on the outer edge of the development.  In the summer Salmon can be found running the creek and it provides endless hours of entertainment for local kids.

What's the Neighborhood Like?

The homes you would expect to find for sale in the Wasilla Creek Commons Subdivision are generally going to range between 1700 and 2800 square feet. Most of the homes were originally built starting 2008 to present.  The typical configuration is mainly 3 to 4 bedrooms and 2 to 3 baths. Most of the lots range from just under 20,000 sq. ft. to 32,000 sq. ft. on average.

What's Going on Nearby the Wasilla Creek Commons Subdivision?

Wasilla Creek Commons is conveniently located just off the Trunk Road between the Parks Highway and the Palmer-Wasilla Highway and is an excellent commute location to Anchorage and JBER.  Mat-Su Regional Medical Center is close by as well as big box discount shopping areas, most chain fast food establishments, as well as the local movie theater within 15 minutes. In addition we have a wonderful collection of local favorite restaurants, including Locals, Turkey Red, Pioneer Pizza and the Noisy Goose.  Downtown Palmer offers a variety of gift and specialty stores and caters to the local market with the Mat-Su Farm Market year round.  Colony Days and Colony Christmas as well as Friday Flings in Palmer which is another Farmers Market style of event are all well attended events.  Find out about Meadow Brook and the surrounding area's community information including banks, schools, shopping and what the community statistics are at my web page.

What Schools are nearby?

If you buy a home for sale in the Wasilla Creek Commons Subdivision of Palmer AK, the local schools serving this area are Pioneer Peak Elementary Schools as well as Colony Middle and High School. To get local school scores and more information about these schools check out the Palmer school reports on my website.
Because the area is in a growth phase sometimes school boundaries change, so you will need to reconfirm this.

Now You Really Want to Find a Home Here, Right?

If you are interested in the current homes and lots for sale in Wasilla Creek Commons Subdivision of Palmer AK click on the link. Our 'for sale' property information is a direct feed from the Alaska MLS and is updated multiple times per day.

To Search for Homes in the Palmer, Wasilla, Houston and other areas please visit my site.

BEWARE OF BOGUS RENTAL SCAMS IF YOU'RE MOVING TO THE MAT-SU VALLEY IN ALASKA

Beware of bogus rental scams if you're moving to the Mat-Su Valley in Alaska. There's no way to know how often this occurs, but we're hearing about it WAY more often than you would think.  We at http://www.alaskahomesellers.com/ are aware of the problem and the only way that we can think to try to serve all of you is to try to bring it to your attention.  

If you are moving to the Matsu Valley of Alaska and plan to rent for a while before you buy a home or other Alaska real estate, always verify who you are dealing with before sharing any of your personal information.  When the time comes to buy a home, you can shop on our website to see what is available for sale here.     

What the 'scammers' are doing is extracting information from the internet of listings that are 'active' on the market.  They can steal photos, number of bedrooms, bathrooms, square footage, the comments on the listing describing the highlights of the home, etc. etc. and generate bogus scam ads portraying themselves as the owner of the property and their wish to rent it. 

Unfortunately, the bogus rental scam ads often will contain information describing the owner suddenly moving from the area for an extended period for a supposed "mission" trip.  Clearly these ploys continue to work as this has been occurring for years in one form or another.  

I recently talked with a client that asked if I was aware of any bogus rental scams, and when I described how often they contain the "mission" term, their eyes grew wide and they realized how close they had came to losing deposit monies, personal identities, and more.  

Take a look at the following ad from "Craigslist" and determine for yourself if it is legit or a bogus ad.     

This is actually a home for sale in Wasilla, AK and contains all the data that is easily obtained by searching the internet for homes for sale in Wasilla, AK.  

They even had a copy of the correspondence that was emailed to them from the 'owner' describing in detail, their dissatisfaction with their 'realtor' and how the 'realtor' tried to "rip them off".  Here is a copy of the emailed response from the bogus 'owner'!  The story is quite plausible as well, and if you weren't aware of the scammers, it's easy to understand how this could happen.

I suspect that there is a lot of that going on here due to our sheer distance from the lower 48, and because the potential tenant isn't here, find it far too easy to fall prey to their fraudulent trap! There is an old saying that goes something like, "if something seems to be good to be true, it probably is".  Such is often the case when it comes to these scammers.  The ads are never on for very long, and "Craigslist" isn't the only offender.  Many of the national real estate websites contain these bogus ads as well.

We also have 3 professional property managers in our office that can share with you their available inventory.  To get their contact information you can contact us via our website, or call us at (907)352-1828.  

Please be careful out there!

Greg Shepard

Associate Broker, REALTOR, GRI, SFR, RFC

Jack White Real Estate 

Wasilla, AK 99654

IS BUYING A HOME IN ALASKA LESS EXPENSIVE THAN RENTING?

Is buying a home in Alaska less expensive than renting?  Buying Alaska Real Estate can often be approximately 50% cheaper than renting when the added advantages of appreciation and income tax savings are factored in.  If you wish to find out what's best for you, feel free to contact us on our website at Alaska Home Sellers.  You can also look at Mat-Su homes for sale here to see what your money will buy in the Wasilla Real Estate market.

A couple of months ago we blogged about the concept of the Boomerang Buyers that are coming into the Alaska Real Estate market, and how I feel they are going to further drive inventories lower and therefore resulting in higher prices in the months to come.  And when combined with our blog on Interest Rates and what is happening with the Anchorage Housing Shortage you can begin to gain some insight as to how these pieces of the Alaska Real Estate puzzle all start to fit together.   

According to Trulia's Winter 2014 "Rent vs Buy Report", it is 38% less expensive to buy than rent in 100 of the nation's largest metro areas.  Here is a link to the full story Trulia's Rent vs Buy Report Winter 2014.
  
There is even a very cool calculator on there that allows you to input your specific area and to use the sliding scales to find out more for your unique situation.  The link to the calculator can be found here Rent vs Buy Calculator.   As the article points out, the financial advantage to buying vs renting will lessen with an increase in home prices when also combined with higher interest rates.  We are already seeing an increase in both home prices and interest rates for home buyers in Alaska.  There is never a "one size fits all" answer to questions like this and it is only after counselling sessions with a competent real estate professional and an accountant that the answer will become more clear for your particular situation.  As Residential Finance Consultants, we employ even more empowering calculators to design a customized analysis tailored specifically for you.  

If you are a current homeowner and are contemplating a move you can visit our website and fill out this Short Form to obtain a quick estimate on your Alaska Home's Value.  We can prepare an analysis for you illustrating what the financial aspects of making a move now look like compared to waiting.

We can also be reached at (907)352-1828 to privately discuss your Alaska Real Estate goals.

Greg Shepard
Associate Broker GRI, SFR, RFC
Jack White Real Estate Mat-Su

THINGS TO CONSIDER WHEN BUYING A HOME

The Winter Edition of "Things to Consider When Buying a Home" is available now.  With all the daylight that we are gaining now on a daily basis, all of us are probably experiencing a bit of 'Cabin Fever' and are anxiously awaiting the rapidly approaching Alaskan Summer!

For many, spring also means that the new home that they have been dreaming of starts to become an all consuming part of their daily lives.  Looking online every night to see if the 'one' has came on the market today, to even sneaking a quick peak during breaks at work.  If you are one of these, we have a booklet that we think that you will find invaluable.

Things to consider when buying a home

It is filled with information that answers so many of the questions that today's buyers have.  It covers all of these topics, plus so many more of the most asked questions of today's buyers:  

BUYERS: THE WINDOW OF OPPORTUNITY IS STILL OPEN

WHERE ARE PRICES HEADED OVER THE NEXT 5 YEARS?

HOMEOWNERSHIP'S IMPACT ON NET WORTH

We at Alaska Home Sellers feel that this is the type of information that buyers in today's world are yearning for.  While there are countless websites to find homes for sale, simply having access to the millions of homes that are for sale across the country doesn't answer the BIG questions that most buyers have.   And that's where we come in...we bring you through the process with an unbiased approach to educate you on what the best moves are for you based on your individual goals.

There is still plenty of time to grab a cup of coffee and spend a few minutes educating yourself regarding the 2014 real estate season.  All the early signs point to a very busy year!

If you would like us to mail you a copy, simply give us a call at (907)352-1828 or send us an email to Greg@AKHomeSellers.com and request "2014 Winter Buyer Guide".  

 

 

5 THINGS THAT YOU PROBABLY DON'T KNOW ABOUT VA LOANS

There are 5 things that you probably don't know about VA loans according to a blog post that I recently came across.  But I am going to add in a 6th because of it's importance...and with 10% of Alaskans being retired military, there are a lot of VA loans that are used to buy Mat-Su Valley real estate.  

This is a link to the blog post that I came across that very well summed up a couple of the myths regarding VA loans that many consumers have. 5 Things that you probably don't know about VA loans.  And while those 5 are quite valid, I think that there is a 6th thing that could apply here in Alaska as well with the high amount of disabled veterans.  And #6 could be one of the most important of all.  Did you know that if you have a service-connected disability of 10% or higher that you are exempt from paying the VA funding fee?

If you are an active member of the military or are a retired member of the military and are contemplating buying real estate in the Mat-Su Valley of Alaska, we work with competent lenders that can review your present financial position to analyze what loan program would work best for you.  

VA Flow Chart from Hawaii VA Loans

You can always visit our website to obtain an enormous amount of information on Alaska real estate.  You can shop for current homes for sale here or if you are curious as to what the value of your home is in today's rapidly heating market , you can fill out this short form to obtain an approximate idea from us.

We at Alaska Home Sellers feel that there is something BIG about to happen this year here in Alaska real estate!  We featured a post about it yesterday WILL 2014 PROVE TO BE THE YEAR OF GROWTH?.  

Stay tuned for further updates as this begins to unfold...

Greg



 

WILL 2014 PROVE TO BE THE YEAR OF GROWTH?

Will 2014 prove to be the year of growth?  We at Alaska Home Sellers absolutely believe it will be.  2013 proved to be the year of stabilization as investors purchased an enormous amount of the "low hanging fruit", including the thousands of foreclosures that were available.  They were compelled to enter the market and invest after they watched from the sidelines during much of 2012 to see if the bottom had indeed drawn near and the market would start to recover.  And when they jumped 'feet first' into the market over the last 12-18 months they substantially, and knowingly, reduced the remaining inventory (homes for sale) levels causing a rapid increase in values.  With real estate being a market like anything else, it is predicated on a "supply vs demand" principal.  The more demand there is for something, the price naturally increases on the remaining supply.  
 
In an ideal world, you would always like to buy at the bottom of a market and sell at the top...but all too often, when the consumer 'senses' the market has hit the bottom, it has already made it through the lowest point and has already started back up.  Conversely, when a seller 'senses' that the market is at it's peak and tries to time their sale, the market has often already started a downward trend.

The investors over the last 12-18 months have hedged their bets with a bit of 'insider trading' of sorts.  Knowing that the price of the housing would increase with a decreased supply, they purchased untold amounts of it with that knowledge.  In a way...they were hedging that bet by purchasing placing large volumes of real estate (in many cases entire blocks filled with empty housing) into their portfolios and renting them out knowing that their asset would gain almost instant equity by virtue of the supply vs demand dynamic.  They know that reducing the inventory increases the price. 

It's in large part why areas like Nevada have experienced phenomenal year over year appreciation as illustrated in map below compiled by FHFA's third quarter report in 2013.

The bi-product of their investing has had a pleasant side affect that existing homeowners have been able to take advantage of.  Rather than being subjected to a long protracted recovery, the investor involvement has accelerated the recovery exponentially.  As you look at the map above, you will see those areas that were hit the hardest during the housing bubble bursting, are recovering at a much higher rate than those areas that were least hit.  Investors aren't interested in single digit returns on their money...they are interested in the big returns! 

And with the values rapidly recovering, the number of mortgage delinquencies is on a sharp decline as well.  Homeowners over the last few years that were 'upside down' in their homes and couldn't afford to sell because they would have to bring a check to the closing table, are suddenly learning that the market has often recovered to a point where they can now sell and actually walk away with a check in many cases.  And voilà, delinquencies are dropping like a rock.  The following map is from the National Association of REALTORS from December 2013.

We at Alaska Home Sellers feel that there is an ENORMOUS amount of pent up energy with existing homeowners that would love to be able to move...maybe to a larger home due to an increase in family size, or that have job opportunities in another area but couldn't accept them due to their negative equity positions in their existing homes.  Not only do we feel that 2014 will be the year of growth, we are starting to see signs of it being larger than even the experts are predicting.  All of this teamed up with our post about the Boomerang Buyers a couple of weeks ago is further evidence that 2014 will prove to be the year of growth.  

 

Of course all real estate is local...and Alaska real estate is no different.  The Matsu real estate market is off and running for the year so if you have been sitting on the sidelines trying to decide what to do, this might be your year to make the move that you have been dreaming of.  

There is no substitute for competent counsel and advice when it comes to making decisions regarding large financial matters.  If you are curious how the local market is impacting you and would like to get our professional advice along with a customized analysis based on your individual real estate goals, you can call our office at (907)352-1828 to set up an appointment to discuss them.  

WHERE ARE INTEREST RATES HEADED IN 2014?

Where are interest rates headed in 2014?  That is one of the questions that we are often asked and it isn't an easy guess.  At Alaska Home Sellers we keep a watchful eye on not only what the local real estate market is doing, but combine it with forecasts from many local, state and national economic and financial reports to help our clients to better understand what it all means to our clients.  We do not have a crystal ball as to what the future holds, but we like to keep our customers aware of the factors in the marketplace that could have a bearing on their decision making process.  

The following information was pulled from a real estate blog that we watch:

"Most experts are calling for an increase in mortgage interest rates in 2014. However, we believe the increase will be more dramatic than is being projected. We believe rates will be closer to 6% than 5% by year’s end.

The Fed announced last month that they would be pulling back some of their stimulus package which has helped the housing market by keeping long term mortgage rates at historic lows for the last few years. This should come as no surprise as the real estate experts have been warning of this likelihood over the last several months.

Above are the most recent projections of where rates will be at the end of 2014 by the four major agencies. However, we believe that the government is not afraid to shoot right past these levels.

Doug Duncan, chief economist for Fannie Mae, this past summer announced: “I don’t think the Fed ultimately would be troubled with a 6.5% mortgage rate.”

And Frank Nothaft, Freddie Mac VP and chief economist, at virtually the same time explained:  "As the economy continues to improve, we expect to see continued upward movement in long-term interest rates… At today’s house prices and income levels, mortgage rates would have to be nearly 7 percent before the U.S. median priced home would be unaffordable to a family making the median income in most parts of the country.”

Only time will tell. However, we feel that rates will be in the 5.75-6% range by year’s end."

Our personal opinion at Alaska Home Sellers is that there are monetary policies in place at the Federal Reserve that will keep mortgage interest rates at or near their current levels for much of the remainder of 2014, and would be very surprised to see them hit the 5.75-6% as stated in the blog.

As a Residential Finance Consultant (RFC) we have the tools to evaluate your personal situation to help answer the big questions:

• How's the market?
• Should I wait to sell my house?
• Is now the right time to buy?

To obtain a customized report created with your specific goals, give us a call at our office at (907)352-1828.  To find out an approximate idea as to what your home's value is in today's market, fill out this short form.

We have a tremendous amount of information on our website at www.AlaskaHomeSellers.com.  You can find information on communities, local schools, etc on there.  


We help clients understand the tax advantages, financing alternatives, and investment aspects of home ownership and why now is an incredible time to buy!

http://alaskahomesellers.blogspot.com/

WHICH REMODELING PROJECTS PROVIDE THE HIGHEST RETURN IN 2014?

Which remodeling projects provide the highest return in 2014?  Every year about this time there is a report that comes out from "REMODELING" magazine that illustrates some of the most common remodeling projects and their relative return on investment.  This year there are 22 different projects that were rated on 'mid-range' homes and 13 more on 'upscale' homes.  The National results can be found here.  This is a "good news/bad news" report.  The good news is that the results all show positive growth over their return on investment (ROI) when compared to their ROI from last year's report.  The bad news is that there are none that yet yield a positive ROI based on a National average.  

What does that mean?  It means that just because you decide you want to make some improvements to get your home ready for sale, it doesn't necessarily mean that you will get all of the money that you invested back.  For example, the national report shows that a basement remodel that costs $62,834 averaged a $48,777 return or only a 77.6% return on investment.

The news does get better however when you go to the Regional Data for the Pacific Region.  The results of the Pacific Region's ROI have 7 of the 22 projects on 'mid-range' homes showing at least a break even proposition.  The results of the Pacific Region's report can be found here.  A new steel front door will yield a 113% ROI and a new wood deck will yield a 109% ROI.  Only one project was able to yield a positive ROI on the 'upscale' homes and it was a garage door replacement with a 104% ROI.  

On a more local level, the closest community to us here in the Matsu Valley is the city of Anchorage.  Surprisingly, even with the housing market having a pretty good year in Anchorage, the reports show that last year's returns were better than this year's report.  The Anchorage report can be found here.

They also have some informative videos this year to help illustrate the purposes of the report. 

It's always this time of year that we talk to prospective home sellers and they often tell us about all the projects that they have done over the last year...and how much more they expect to get as a result of them.  Unfortunately, we have to then show them that the $10,000 project that they took on might only get $8,000 back.  

That all said, if you are thinking of taking on a remodeling project with the plan of selling in the near future, we need to schedule a time to meet and discuss them to really determine if they are projects that need to be done...or projects that should be left for the new buyer.  

To find out what your home is worth in today's market you can fill out this short form on our website.  For other questions on the state of the real estate market in the Matsu Valley, visit our website at www.AlaskaHomeSellers.com or call our office at (907)352-1828 to discuss your remodeling project plans to determine if they are right for you.  

Have a great weekend!  

Greg
 
© 2014 Hanley Wood, LLC. Complete data from the Remodeling 2014 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.

ALASKA BOOMERANG BUYERS ARE TAKING AIM AT THE HOUSING MARKET

Alaska Boomerang Buyers will be taking aim at the housing market over the next 2-3 years and if you aren't familiar with the term, you will soon start to hearing more and more about it.  The impact of the Boomerang Buyer is we are seeing a strong Seller's market here in the Mat-Su Valley and the inventory supplies are low in the most popular price ranges.  

For current information on homes for sale in the Mat-Su please click Mat-Su Homes for Sale or if you would like to find out how the Boomerang Buyers entering back into the market can impact your home's value, Click Here and fill out a short form.

A "Boomerang Buyer" is someone that has lost a home through the foreclosure process or other credit damaging event, and is working on repairing their credit (and in many cases already has) and wants back in to the home ownership arena.  The following illustration is from AfterForeclosure.com and highlights where we are currently at in the recovery process for those buyers and is an absolute bright spot for the real estate market in the coming years.  

There is also a very informative article on their webpage that you can read here 2014 Needs the Boomerang Buyer.  

Why do we at Alaska Home Sellers feel that it is especially applicable here?  We have seen an influx of in-migration into the state over the last few years as the employment opportunities here are greater than where they are moving from.  Many of the residents that have moved here over the last 3-5 years did so to seek a better financial environment, but due to the financial hardship where they were at either have a foreclosure, a short sale, or a deed-in-lieu of foreclosure and have been forced to rent once they arrived here.  

For many of our new arrivals, they fit the above illustration to a "T" and we are already starting to see evidence of them coming back into the housing market.  Something that the illustration doesn't address is how they will view the current interest rates.  Don't think for one minute that it went under their radar when interest rates were around 3% a year ago!  But for many, they were helpless to do anything due to the prior blip on their credit.  If you also think back to where we were at in 2006 when the housing market started it's collapse, interest rates were around 6.5%.  At 6.5%, it was still well below the 40 year average, but yet it's nearly 50% higher than where they are at today.  The following graph represents a snap shot of mortgage interest rates dating back to 1971 from Freddie Mac's Primary Mortgage Market Survey and compiled by www.calculatedriskblog.com.

What does all of this all mean?  

We are convinced that not only did we see a substantial increase in the number of transactions last year in the Matsu Real Estate Market, but it was also combined with a healthy 2% increase in average pricing.  We feel that as the Boomerang Buyers continue to gain financial traction, that they will put even further downward pressure on the declining inventory levels locally, creating an even larger increase in pricing in 2014.  

We also know that there are buyers that opted out last year thinking that mortgage interest rates were going to stay around where they were, and hoped they might even go lower.  But that have now realized that the "Mortgage Interest Rate Horse" is out of the barn and may be nearly impossible to put back in.

You can obtain real estate market information on the various communities in the Matsu Valley in Alaska by visiting this link Wasilla, Alaska Housing Market Insider Data.  Based on the last quarter of 2013, it appears that the trend is clearly toward higher pricing in 2014 as you can see by the illustration below.  Once there you can enter other zip codes in Alaska that you would like to obtain similar data on as well.

We see some definite trends starting to emerge as we hit the 2014 season and welcome you to come back to gain valuable local information presented in a logical format that you can use to determine what the best options are for you.

For current information on homes for sale in the Matsu please click Matsu Homes for Sale or if you would like to find out how the Boomerang Buyers entering back into the market can impact your home's value, click here and fill out a short form.

You can visit our website at Alaska Home Sellers or call our office at (907)352-1828 to privately discuss your real estate goals.

   

TO SELL...OR NOT TO SELL...THAT IS THE QUESTION

To sell...or not to sell...that is the question.  There hasn't been a period in my 20+ year history as a real estate broker where potential selling clients ask that question more then they have in the last 2-3 years.  Not necessarily in the 'Shakespearean' sense, but some variation of it.

In today's world it's not uncommon to find 2 completely opposite, contradictory opinions on the state of the real estate market on the same day, and in the same newspaper or news program.  And when that happens, the resulting effect is mass confusion for anyone that is thinking of buying or selling.  The following illustration from CoreLogic is a good example of it.  Reading the left hand side might lead one to believe that the current real estate market is pretty dire.  But if you continue onto the right side, it starts to look better on the top half.  But it isn't until you get to the bottom right hand corner, that you see that there is only one state ahead of Alaska as it relates to the number of homes with the highest percentage of having some equity...meaning that the home is worth more today than what is owed against it.

Sherri and I view our roles a little different than many others in the industry in that rather than putting a 'hard sell' on a customer to buy something, right now, today, our approach is more like an adviser rather than a pushy real estate agent.  We believe that while it is important for a client to know and fully understand what is happening in the local real estate market, it's when we then combine that knowledge with an overview as to what is happening in the national and world wide financial worlds, teamed with the local and statewide economic forecasts, that all of these factors have a cumulative impact on the client's decision making process. 

In case you might have missed it, the stock markets have blossomed since the crash in 2008 and the DOW has hit new record levels multiple times over the last year.  Many of the reports of the real estate market over the last few years have often been portrayed it in a negative light.  But the following graph from MSN Money.com and Case Shiller, illustrates how it has fared relative to the stock markets over the last 13 years.

And the National Association of REALTORS® recently produced a graph illustrating what they are projecting for the coming year.  

 

Because there are literally countless real estate websites that have information on homes for sale, it becomes completely overwhelming for most consumers.  That's why we focus on providing advice and counsel for the really big questions that our clients have that aren't so easily found on-line.   

We've found what most clients really want is someone who can...

1.  Analyze all the available information

2.  Connect the dots and let them know if now is a good time to buy or the right time to sell based    on their goals

3.  Take the time to explain their options—simply and effectively
 
Our approach is actually quite simple.  Overall, information being readily available (without context or understanding) causes confusion...and that’s when people seek out professionals. Whether it be a doctor, lawyer, or a real estate professional, for a thorough analysis of the information based on their unique situation.  Because of the wealth of information available, we believe people are yearning for expert advice...tailored to their individual needs and goals, and not some canned "cookie-cutter" reply.
 
If you feel this type of information is valuable, make sure to subscribe to our blog and keep checking back as we will be posting much more over the coming weeks as we head into the busiest season of the year.  For more, you can visit our website at Alaska Home Sellers, "like" our Facebook page here, or simply call our office at (907)352-1828.


Let us know what your "big" questions are...we're here to help.