No Real Estate Bubble In Alaska February 27th, 2007

Categories: Market Trends, Wasilla Real Estate News

I attended a presentation at Evangelos Restaurant in Wasilla by Ted Jones titled “Bubblettes and the Economy”. He is the chief economist and senior vice-president of Stewart Title Guarantee Company. 

Here is the gist of my notes, I just wrote down the parts of the talk that interested me so the points do not really string together.

• Investment or speculation.  If you are buying a house with the hopes of making money it is only an investment if the property will pay for itself.  The house should rent for about 1% of it’s market value.  If you are purchasing it with the hopes of making money because of appreciating values you aren’t investing, you are speculating.  Jones says there are two new Latin words for speculators…Californian and Floridian.
• Now is the time for a fixed rate loan.  The interest rate difference between a fixed rate loan and an adjustable rate loan, (an ARM), is extremely small.  Yet, 21% of current mortgages are still ARMs.  He blames some lenders for encouraging ARMs because they make more money on them.  He says many of these are time-bomb loans because they will blow up in a few years and result in a massive increase in foreclosures.
• Interest rates will increase to 7% by the end of the year.  Some economists believe the interest rate will remain at about where it is now…the low 6’s, but Jones thinks the rates will likely be close to 7% by years-end for 30 year fixed rate mortgages.  If you are waiting and watching before you buy think about what that 1% will do.  It will increase the monthy payment for a $200,000 loan by about $130 per month.  Multiply that times 60 months, (five years), and you just payed $7,800 more for your house because you waited to buy.  Of course, he could be wrong.  Interest rates may go down, but no one is betting on that.
• Oil prices have not risen because of greed.  They have risen because of the devaluation of the dollar.  75% of our oil is purchased from overseas.  Most of the dollars we spend for overseas oil is changed into euros which have gained in value compared to the dollar.  So the Saudis and others need to charge more for the oil to maintain the value.
• 79% of home buyers begin their search on the web.  I am convinced that an even higher percentage of Alaskans use the web for real estate.  Yet, Realtors and sellers still spend most of their money on print advertising.  I am moving most of my marketing efforts to the web for this reason.  I noticed long ago that I receive more from online advertising than from print media.
• Land costs are high in Alaska.  Compared to the rest of the US, the cost of land here is high in relation to the total cost of building a house.  The cost of land has risen  much faster than the labor and materials cost to build a home.  That is the reason many builders keep building homes because they need to get some return on the land that they purchased.
• Job growth in the Matanuska Valley is much higher than the national average.  The growth of jobs in Alaska is significantly higher than the national average, and the growth in the Palmer and Wasilla areas is almost twice the national average.  Increasing jobs means an increasing population and the need for more housing.
• We do not have a real estate bubble in Alaska.  Because we did not have the huge increases in real estate prices seen in other parts of the county, we are not seeing a correction.  Real estate prices may not increase like they did in 2005 but because of the continued need for housing, they will not decrease either.  Some areas of the country ARE seeing huge decreases in real estate values…namely parts of California and Florida.  But Ted Jones does not expect to see prices in Alaska to go down.

More on the economy in Alaska and the Mat-Su Valley.

Written by Marty Van Diest 8 Comments »

Hiding From The Wind In Palmer Alaska February 22nd, 2007

Categories: Alaskana, For Buyers, Wasilla Real Estate News

It’s -1 degree this morning in Palmer.  Wasilla is reading -15.  Forecasts today are for winds to 20 mph with gusts to 40.  That Matanuska Wind really magnifies the cold.  Hey, it’s clear and beautiful outside! There is always a bright side.

I don’t mind the wind or the cold until it gets really cold, like -20 or more.  There are some advantages to being built like a walrus.  The cold and wind remind me that we haven’t tamed everything, and that’s a good thing.

Since people often say they like Palmer but don’t like the wind, I thought I would tell you how to live in Palmer and stay out of the wind.  But first let me say that the wind blows in Wasilla too.  If it’s gusting to 60 mph in Palmer, the gusts are probably hitting 40 in Wasilla.  So just because you don’t buy a house in Palmer doesn’t mean you are avoiding the wind.

And, the wind doesn’t blow as much as people imagine.  It’s just that you remember it so well when the roof blows off.  We have serious wind storms only a few times a year.  I’m going to guess 5–8 wind storms that last 3 days or so.  I’m no geophysicist so don’t hold me to that.  I’m just giving my best guess after living here for 35 years. 

OK, where can you get away from the wind.

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Written by Marty Van Diest 2 Comments »

Wood Foundations In Alaska February 17th, 2007

Categories: For Buyers, New Construction, Wasilla Real Estate News

Homes in Wasilla and almost everywhere else in the Matanuska-Susitna Borough did not receive building inspections until 1992 when the Alaska Housing Finance Corporation required them for financing. Since that date, most homes are inspected during construction. The city of Palmer required building inspections and permits previous to 1992.

During the real estate boom of the early 1980’s , Wasilla was one of the fastest growing cities in the country.  Builders were selling houses as fast as they could put them up. As a result, they tried to to find ways to build homes faster.  One bottle-neck in the process was the lack of concrete workers to put in the foundations. Contractors found a way around this  by building wood foundations.  About 1/3 of the homes built between 1980–1985 had wood foundations. 

These foundations generally have a concrete footer on the very bottom.  Almost any experienced construction worker can build a concrete footer, but a concrete block foundation wall requires special skills.  These wood foundations used treated wood so that it doesn’t rot.  I suppose it may eventually disintegrate but I have never witnessed this. 

It is completely legal to use this type of foundation and it can also be structurally sound as long as the work is done correctly.  However, most of the foundations erected during the early 1980s have since been modified to make them more structurally sound.  Hardly any new homes are built this way today and there is a reason for that.

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Written by Marty Van Diest 1 Comment »

Police Protection In The Mat-Su Valley February 9th, 2007

Categories: Wasilla Real Estate News

I am often asked about police protection in the area by new residents in the Mat-Su Valley.  They are wondering how often their neighborhood is patrolled.  Many people are used to larger cities with a large police department.

Some of the cities in area do have their own police force.  But these cities are small compared to the total size of the borough.  Look at the city limits of Palmer, Wasilla, and Houston.  Palmer and Wasilla both have a police force. Houston is the largest city in size with 24 square miles…it has one policeman.  The borough is about 24,000 square miles and it does not have a police force. 

The only police force in the rest of the borough is the Alaska State Troopers.  The “B” Detachment of the Alaska StateTroopers has a force of 48 commissioned troopers that actually cover an area much larger than the borough.  According to retired trooper Rick Roberts the detachment covers an area of more than 55,000 square miles which is more than twice the size of the borough.

The amazing thing about this is that much of the area cannot be reached by a patrol car.  So these troopers also have to access areas by snow mobile, four wheelers, boats, and helicopters.  In addition, people expect them to come running every time a car drives a little fast down their subdivision street.

What I generally tell people who wonder about this is that you need to look out for yourself in this area.  The troopers have a good page called residential target hardening.  I would add that a locked door doesn’t necessarily keep out a determined burglar.  How hard is it to kick in a door or break a window if a thief thinks you aren’t home?  A locked door with a big dog barking inside will stop a lot more burglars.  That is the main reason I have a dog at my house. 

Don’t get one of these dogs for home defense, (I mean the pug, not the wolf),…they’re cute but really can’t fend for themselves, let alone defend your home. You want one with a deep bark. 

Some outside lighting goes a long way to keep thieves away during the many hours of winter darkness.  Getting to know your neighbors and agreeing to watch one another’s homes is likely on of the best options you can have.  Of course, you have a right to responsibly arm yourself for self-defense.  But all the guns in the world won’t keep your home from being robbed when you aren’t there.  In fact guns are a favorite target of burglars.

After all that, I have never had a problem with crime in area.  I don’t go overboard in personal protection.  There is someone home most days so we don’t have to worry much about it. 

Written by Marty Van Diest 1 Comment »

Zoning in Palmer, Wasilla, and the Mat-Su Borough February 4th, 2007

Categories: For Buyers, Wasilla Real Estate News