Lack of inventory has trumped today’s doubling of the pandemic’s historic low mortgage interest rates. It is this lack of inventory that has propelled a 7% increase in average values which now hovers above $450,000. However, not all neighborhoods have benefited equally by the inventory shortage. The East Tudor/Abbott Loop district which is due to lose its Title 1 elementary school has had a 5% decline in the average sales price and a 29% decline in homes sold. On the other hand, Girdwood’s values have jumped 16% and Eagle River’s 10%. Both of which are outside the generally acknowledged Anchorage Bowl area. Underlying zoning and demographics play an important role in residential values. A preponderance of larger lots and low density create higher values while apartment style, medium density multi-family districts create lower values even if adjacent land is zoned for single family.
Buyers are finding out there are no bargains in today’s residential real estate market even if a home is 42 years old. Multiple offers and escalation clauses still exist. Sellers can maximize their values by preparing their home for sale which with December’s record 50 year snow fall can be as important as plowing the driveway, shoveling and sanding the sidewalk and front porch and checking their roof for snow accumulation which can cause unexpected leaks and roof repairs. The majority of our housing stock was built before 1992 when energy ratings were first introduced. These properties, in particular, should have a pre-home inspection before putting the home on the market so that a potential seller can actually understand what the cost of repairs are going to be required. A pre-home inspection also creates confidence in a potential buyer so that they can more accurately judge the market condition and value of the home.
If a seller has a well and septic system, you should have an adequacy test completed prior to listing the home for sale as well-septic systems are aging out. A Muni advisory has been issued on steel tanks and sunset fiberglass tanks over 20 years old. An adequacy test is good for two years and is the ‘leg work’ for a COSA—a certificate of on-site systems approval. There also needs to be a water sampling complete. Whether it’s a septic system or a leaky roof, it’s important for a seller to know what the cost of a sale is going to be.
Despite the interest rate or the condition of a home, buyers and sellers are motivated by five of life’s changes: marriage, birth, death, divorce and job change. It doesn’t matter the interest rate, the age of the home or the condition of the septic system, these individual life changes that occur in all of our lives which are sometimes planned and sometimes unexpected, are what motivates us to buy or sell in any market.
As always, thank you for your many referrals. My next column will appear on Wednesday, January 18th.