If you’re an Anchorage home buyer looking to buy a foreclosed property, you better act now. Anchorage defaults decreased over 50% for the first six months of this year compared to 2010. In fact, the 289 recorded defaults on mortgages are the lowest in four years. In 2008, the total number of defaults was 902; in 2009 it was 1115 and 2010 it was 1108. So far this year there have been only 342. For the past three years, defaults have been evenly spread out over the course of the year, so double the number of defaults for the remainder of this year and you have a projected 50% decline. That means fewer REO or short sale properties coming on the market. These properties are sold “as-is” where is and as a result, generally sell for less than fair market value which affects appraisals for non-distressed properties. When these comparables go out of the market, you can expect price stability and some increases next year.
The Valley bargain hunters better hurry because defaults in the Wasilla/Palmer area are also trending down. Last year there were 234 defaults for the first six months. This year there have been only 146 so Valley bargain days could easily come to an end by 2012. But, according to MLS statistics, there is still some room for negotiation in purchase prices. The average property still sells for 3% less than the original list price and my observation is the higher the asking price, the higher the percentage of discount, particularly in that million dollar range where less than one home sells per month and there is currently a 33-month supply. Interesting enough, between $750,000 and $1 million, the market absorption gets considerably better with an average of 3 sales per month. There are plenty of upper end buyers in Anchorage, but they take their time and are judicious in their spending which is probably why they can afford to still purchase an expensive home at record low interest rates.
On average, residential sale prices have declined only 1% this year while condo prices have actually increased 4% from last year. But what these statistics don’t tell you are the closing cost concessions that sellers are willing to make in order to generate a sale. Refrigerators, washer/dryers and maximum allowable closing costs (usually up to $6,000) are the rule rather than the exception for up to a $375,000 purchase price for single family homes and for almost all condos under $250,000, so ask and you shall most likely receive, particularly this time of year when builders would like to sell off their spring starts so that they can get their winter starts in the ground before freeze-up. There are always exceptions to every offer but now’s a good time to be shopping, again because of record low interest rates at 4% for a 30-year fixed and 3.65% for a 15-year amortization. No one predicted these record breaking low mortgages rates earlier in this year.
Inventory has only marginally increased and there continues to be significant buyer resistance to our aging housing stock while at the same time, home buyers long for large lots and mature landscaping. Unfortunately, you don’t get both in today’s market and probably won’t in the future. One emerging trend is the attached zero lot line or the small single family lot. Long-term mortgage investors treat attached zeroes like single family homes, avoiding the ever increasing regulations for condominium development and financing. However, buyers need to take seriously the covenants, codes and restrictions for landscaping and painting in order to maintain property values. Another emerging trend is private streets which allow for a narrower right of way and has cost benefits when working on slopes, either uphill or downhill.
Every day in the real estate business is different and every home is unique. Buyers and sellers move because of changes in their personal lives, almost always relating to marriage, birth, death, divorce or job change. Regardless of the interest rates, the amount of inventory, the number of defaults, the list to sale ratio, those underlying motivations for a change in housing remain the same. Those are conditions in our lives that we can’t always control; some buyers and sellers just have better timing than others.