Anchorage, Alaska Real Estate : Dan Wolf : Anchorage,Alaska Real Estate Specialist

October 28, 2009

Anchorage YTD Real Estate Statistics

Filed under: Alaska,General Real Estate Industry News,Property Values — Tags: Alaska Multiple Listing Service, Anchorage Year to Date YTD Real Estate Statistics, keller williams real estate, MLS — Dan @ 3:42 pm

A question I am asked often is “How is the real estate market doing?” I pay close attention to how “The Dan Wolf Team” is doing and how well our office, Keller Williams Alaska Group is doing, but don’t look too often look at all Anchorage numbers. I met with Bev Rude at Alaska Multiple Listing, who does a great job keeping statistics.

Chugach Range behind mid-town Anchorage

Here are current official numbers straight from the source:

Active Listings: Between 2000 and 2006, the number of “Active” homes on the market averaged about 600 homes for sale every month. Since 2007, there are about 1100 homes on the market at any one time. That is twice the number of homes on the market as we had in the past, but the good news is the number of sales is keeping up and that inventory doesn’t appear to be growing.

Average Sales Price: I wonder how many cities in the U.S. can say this; the average sales price has virtually not changed for the past three years. In 2007 the average sales price was $327,070. In 2008 the average sales price was $325,967. As of October, 2009 the average sales price is $322,568.

Volume of Sales: In 2006 there were 2,565 residential sales by Oct 28, an average of 213 sales per month.

In 2007 there were 2,340 residential sales by Oct 28, 8.77% fewer sales than the previous year and an average of 195 sales each month.

In 2008 there were 2,135 residential sales by Oct 28, 8.76% fewer sales than the previous year and an average of 177 sales each month.

As of October 28 this year, we have 1,966 sales to date, or an average of 196 sales each month, or decrease of approximately 8%.

Average Market Time: The average market time varies greatly, depending on the price. For instance, at the average sale price of $322,500, homes unsold on the market have been listed 86 days, but the homes that sell average only 46 days. Averaging the entire market and days on market have grown from 2006 at 42 days to 2009 at 65 days.

If your house is $1,000,000, we average about 3 sales each month. It will take three years to absorb the number of homes that are currently on the market.

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October 26, 2009

Four-plex Investment Strategy

Filed under: Financing,General Real Estate Industry News,Saving Money,investment — Tags: dan wolf, duplex triplex, four plex, investments, keller williams alaska group, multi-family, Real Estate; alaska anchorage, rental property — Dan @ 8:38 am

Now is a good time to buy an investment property! If you have money in the bank right now, what are you getting each month in interest? Local banks are quoting .25 to .75 annual percentage rate. For discussion sake, let’s say you have $100,000 in the bank. Do you think you’d get $100 a month in interest on the money? $150 a month?

A typical four-plex in Anchorage

Consider the following. You take your $100,000 and find a four unit rental building (called a four-plex in Alaska and a quad in other places). In Alaska, it is possible to find four two bedroom units that are about 1,000 square feet each. Some have two bathrooms, are newer than 1980 and have some covered parking. You might even get less expensive if you shop a bit depending on the location.

Now, assuming you don’t want to move into this building (if you did there are even more advantages), loans for non-owner occupied investment purchases require 25% down-payments, so $100,000 down payment. Two bedroom units that are normally maintained and clean, will rent for about $1,000 per month for first floor units and say, $1,100 for upper floor units. That means this building generates $4,200 per month in gross income.

Now, the loan on the $300,000 you borrowed will have payments of about $2,600 per month, including taxes and insurance. After you collect the monthly rent and pay your mortgage, you’ll have $1,600 left over. Now you’ll have some other land-lord related expenses. You need to save some money for future updating and maintenance on your investment such as paint, carpet, wear and tear on the building, etc. You will have some normal expenses like lawn maintenance or snow removal. You can save money by doing it yourself, or you have money to hire someone.

Some lenders even pad the expenses and figure the expenses on a building like this will be as high as 30% of the gross income. That would be lumping EVERYTHING together and adding in vacancies, “no-pays” , professional property management and everything else you can think of.

Even conservatively with 30% expenses, you would have over $400 per month positive cash flow. Now is where the magic happens.

The IRS allows you to deduct all expenses from your income on your taxes and you are allowed to depreciate the building, which is a deduction you take every year on your taxes. Your “after-tax” income is greater than your before tax income because of this deduction. You see, the government wants people to invest in income property. When they do it, they provide homes for other people to live in and they create work for lawn guys, painters, plumbers, etc. You get the picture.

The other thing is that over time, real estate goes up in value. Much of the wealth of the nations rich, is based in real estate. Many wealthy people started just like this example! You see, if the past is any indication of the future, your $400,000 4-plex might be worth $500,000 in a few short years.

You get the idea, I think. You buy now, pay the bills with your tenants rent money, have a positive cash flow, get large tax benefits on your taxes and have the building go up in value and make even more money when you sell it! By the way, the four plex investment works even better on a larger scale. The more units, the more income and more money at the bottom line. Or, you can start lower at the duplex (two unit) level!

Of course, talk to your tax accountant and real estate professional and lender so you get good professional advice from all angles.

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October 22, 2009

Lease – Purchase Agreement Liability

Filed under: Financing,General Real Estate Industry News,Marketing,Price & Value — Tags: AK, Anchorage, earnest money agreement, lease agreement, lease purchase, MLS, Multiple Listing Service — Dan @ 2:46 pm

Every so often a buyer asks if a house is available for lease-purchase. Real estate agents fairly commonly request that Alaska Multiple Listing Service, who supply the industry standard selling documents, provide a lease purchase document. This seems logical that there would be an industry standard method for achieving this type of transaction.

A moment to reflect on Cook Inlet

The forms committee at MLS has declined building this agreement due to the complicated nature of protecting all parties as well as the myriad of things that can go wrong.

The reason buyers usually look for this type of transaction is they currently don’t have the down-payment, or cannot qualify for some reason. The reason a seller might entertain a lease-purchase is he gets someone presumably paying rent and utilities. The buyer gets to “test drive” the home.

The risks can be large. What if the buyer is in the house and they quit paying rent? What if they decide to remodel some of the house, but never finish and decide to move out? And what if they do an improvement to the property and then cannot close? Some courts would say that this tenant has improved the property and now has a financial interest in the property. Remember, the old saying “possession is 9/10′s of the law?“ The seller isn’t in possession of their home, so they have somewhat diminished power over their property. Remember the buyer thinks he can “test drive” the house? What if he decides he hates the neighbor or neighborhood? Can he just cancel the deal and move out?

This transaction is trying to meld both a lease agreement to a purchase and sale agreement. A lease normally includes, timeline of the lease, how much rent, limitations of use of the property, a security deposit for damage, insurance and then any other unique terms. A Purchase and Sale agreement generally has specific time-lines for home inspections, qualifying at the bank, timeline on dealing with repairs and a specific time to close. At the beginning, the parties involved rarely know specific times so many dates cannot be projected in the agreement.

There are some legal pitfalls of a lease-purchase, too. The seller is also the landlord and the buyer is also a tenant. The law offers different protections to tenants and landlords under the Landlord-Tenant Law. If the transaction starts to go sideways, the seller could find himself in a very unpleasant position trying to get his buyer-tenant out of his property.

When things go wrong, it can be difficult to unravel the transaction. How do you handle past due rent? Is there both an “earnest money” deposit and a “security” deposit? The landlord tenant law provides for a 10 day notice for non-payment of rent. If you don’t get your rent at that point will take a order of the court called a Forcible Entry and Detainee or FED.

Further, some buyer-tenants expect that portions of the rent will be applied to down-payment or to their closing

The closing statement, called a "HUD" for debits and credits

costs. Unfortunately, while this is the expectation of the buyer, both FHLMC (Freddie Mac) and FHA have clearly said that the buyer can only get credit for the portion of the rent that exceeds the fair market rent. This means the appraiser is going to look at how much rent is being paid, and the if the rent isn’t fair market, the lender may consider lower rent an “inducement” to the purchase. The ability to give a buyer credit for some of the rent paid against his down-payment or closing costs may ultimately reside in the appraiser’s opinion of rent, which may mean the tenant/buyer and landlord seller may have to re-negotiate the rent and credit long after the earlier agreement.

Can you see why these transactions are not well thought of in the real estate community?

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October 19, 2009

Count Down for Real Estate Continuing Education

Filed under: Alaska,General Real Estate Industry News,Uncategorized — Tags: Alaska, Anchorage, continuing Education, MLS, Multiple Listing Service — Dan @ 12:57 pm

The real estate commission shows there are 2,618 real estate agents licensed in Alaska. If you limit that to Southeast Alaska, the number drops to 1,750. I think a better indication of the number of active real estate agents is membership in the Multiple Listing Service. MLS shows 1,571 members across the State of Alaska.

Interesting tree root system on a cool fall evening

In real estate, there absolutely is a 80/20 rule whereby 20 percent of the agents actually do 80 percent of the real estate.

A situation seems to be developing that might urge a few agents that aren’t making a living in real estate to suspend, or even end, their real estate career.

You see, real estate sales people in Alaska are required to complete 20 hours of Continuing Education every two year licensing period. Time is running short , the current period ends January 30, 2010. Many agents are learning based take various classes all the time, but usually they aren’t of the “required” verity.

The State of Alaska Department of Commerce and the Real Estate Commission want every licensee to have some common classes which they mandate every two year period. The required classes generally aren’t offered until mid-way through the second year.

The required subjects usually aren’t exciting motivating topics that make agents want to run out and list more houses. They usually deal with topics like ethics and disclosure. This year there are eight mandatory classes all real estate licensees statewide must take. These topics are “License Relationships (Agency topic such as who is representing whom), Prohibited Conduct (really, if you have to talk about this topic….), Property Disclosures and Inspections, as well as Ethical Decision Making. I assume from looking at these topics not everyone has common sense, so we need classes on it!

Licensee’s can pick topics that are approved by the Real Estate Commission for twelve additional hours. These hours usually aren’t necessarily fun or motivating, but are usually more informative, practical and useful. These topics include things like appraisal practices, title company plants, how to read a closing statement and other things that a real estate agent might come across in their day to day real estate life.

Once we complete our classes at the end of January, it is time to renew our real estate license. There are several fees which come into play all at the early time of the year, which also happens to be when most people’s wallets are thinnest and the real estate business is at its slowest.

Bright Fall Leaves

This is the time that some licensees will look at themselves in the mirror and ask themselves if they are really in the real estate business. You have the cost of the classes on top of the licensing fees. There are some agents who work “day jobs” and sell on the side. It’s difficult and expensive for these folks to get the time off from their “real” job to take the classes. If you aren’t really making a living in real estate, between the classes and the fees, it’s that heavy straw on the camel’s back.

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October 14, 2009

Summers Last Gasp

Filed under: Alaska,Just for fun,Life in Anchorage — Tags: 2009, Autumn in Anchorage, keller williams real estate, Real Estate; alaska anchorage, winter — Dan @ 1:41 pm

Cold Blue Day!

When I saw the purple leaves piled up under this tree, the blue tint in the air and the fog, it just struck me as summers last gasp before succumbing to winter. I had to stop for a photograph!

The outdoor fun never really stops in Anchorage, it just changes from one activity to the next. I think I’ll be locating the sleds at my house pretty soon!

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October 11, 2009

Where Do I Buy Flooring?

Filed under: Maintenance,Price & Value,Saving Money,Uncategorized — Tags: AK, Alaska, Anchorage, Carpet, carpeting, hardwood, keller williams real estate, updating — Dan @ 5:16 pm

When it’s time to give your house an update the first thing that comes to mind is the flooring or maybe new kitchen counter tops.

Rick Stonke showing porcelain tile sample

For many years, when I had a personal property that needed new carpet, I called my friend Rick Stonke. Rick has been selling and installing carpet since 1981 here in the greater Anchorage area. During a busy work period a few years ago, Rick was approached to sell his flooring store business. At that particular moment, selling the big store seemed like a good idea. He accepted the offer to purchase and embarked on a sabbatical, of sorts; that’s if you can call three years of hunting and fishing a sabbatical.

Over time, Rick decided he missed the home interior surface business but wanted to scale down from a large store to a small “warehouse store” where he could work with friends and business’s that were his best customers in past years. He has only been open for a short time and is already running hard! Rick says clients are excited he is back and work is pouring in from old clients and from word of mouth. He is just getting the warehouse organized can only work on it between customers. You’ll find that Rick is very personable and cares about his customers.

Stonke carries far more than carpet. If you are looking any type of floor, window or wall covering, I would talk to Rick- cabinets and counter tops, too.

A display of Granite Tile for floor and backsplash

When I ask Rick why he has such a good following and why folks keep coming back he says “he can offer a fair deal because of lower overhead of a small shop.” Rick says his customers like personal service and the job done right and on time.

Rick says that Big Box stores offer the “perception” you are saving money. While it may be true if the goods are in stock and on the floor you may get a good price; if you have to order what you really want, it can cost more and take longer. Sometimes ordering carpet from a big box home store can take as much as six weeks to get to Anchorage because of the stores freight coming through a network distribution center. Rick says he can order direct from the mills in less than half that time!

One thing some stores do to make it look like you are saving money is to quote a “per foot” price. Carpet has traditionally been sold by the square yard. A square yard is nine square feet. A yard price might be $26 a yard, for instance. A store might advertise carpet at a seemingly low price of $4 a foot. To a novice consumer, it would seem like you were saving a lot of money, but really you would be paying $36 for a square yard, more than the $26 per sq. yard quoted by the competitor. And you have to be careful the price quoted covers the same pad under the carpet and allows for installation. Can you see why you would want to work with someone you can trust? It’s like comparing apples to oranges.

If you want to check out Rick and his warehouse called R & K Services, give Rick a call. He will be in the field measuring carpet, bidding jobs and overseeing installations. If you want to come by to see his showroom, he may not be in the office so call ahead so he can schedule to meet you there. Rick’s phone number is ( 907)242-6506. When you talk to Rick, tell him Dan sent you!

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Alaska’s 2009 Permanent Fund Dividend

Filed under: Alaska,General Real Estate Industry News,Life in Anchorage — Tags: AK, Alaska, Alaska Permanent Fund dividend, Anchorage, anchorage real estate, condominiums., homes in anchorage, keller williams real estate — Dan @ 4:26 pm

I’m humming the Dire Straits/Mark Knopfler song “Money for Nothing!” My bank account was $1,300 fatter this past week. The Alaska Permanent Fund dividend was deposited this past week into the bank accounts of eligible Alaska state residents. This year’s divided was $1,305 for every qualifying man, woman and child.

Alaskan’s have been receiving an annual check every October since 1982. For the first few years checks were around $300 per year, but the amount has increased over the years.

An interesting sunset on Cook Inlet

Many Alaskans have learned to plan for the pre-winter cash infusion. Retailers increase inventory of larger ticket items like flat screen TV’s, for sure but many people wisely save the money for retirement accounts and higher education accounts. To qualify for the Permanent Fund you must be a resident of the State for at least one year.

If a person had saved every check the State gave since 1982 they would have $30,800 – not counting the interest added over the past 27 years! Keep this in mind this winter when it’s cold out and you feel like saying “I wonder why I live in Alaska.” Better than a kick in the butt with a frozen mukluk!

Every year you hear of a family of four or five that pool their money towards a down-payment on a family home. If a family of five pooled this year’s Permanent Fund Dividend they would have $6,500 dollars they could put towards a down payment on a family home.

The Alaska Permanent Fund was established by 1976, primarily by the efforts of Governor Jay Hammond. Shortly after oil from Alaska’s North Slope began flowing to market through the Trans-Alaska Pipeline, the Permanent Fund was created to be an investment for at least 25% of proceeds from oil and gas sales.

Approximately 657,000 Alaskans applied for the dividend this year, which will be over $850,000,000 million paid out to Alaska State residents.

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October 2, 2009

“www.BelugaBluffHome.com” A True Alaska Fishing Camp and Retreat

Filed under: Alaska,Just for fun,Life in Anchorage — Tags: Alaska, Anchorage, dan wolf real estate, fishing, fly-in, keller williams real estate, mortgage, recreational in alaska, remote — Dan @ 3:58 pm

Dad and Cody at Spernak Air

This last week I had a pretty unique experience, at least for me. The father of a real estate customer of mine asked if I would list his cabin for sale. The thing is, it’s across Cook Inlet and it’s not easy for me to show, since I’m not a pilot. Long story short, I did end up flying over to Beluga and listing the property. It was so cool, I thought I would share the experience with you.

Beluga, as I learned, is only 30 minutes away, west of Anchorage, the other side of Cook Inlet (straight over Fire Island). Spernak Air, a local air charter, has six round trip trips a day. You can literally fly over in 30 minutes and be in the home in 45 minutes. The airstrip in Beluga was built to support gas wells that not only run the Chugach Electric power plant, but supply the natural gas to southeast Alaska.
View Larger Map

The actual cabin is located about 3 miles from the airport. It lot is rectangular and close to 3 acres. It is on a high non-eroading bank on Cook Inlet and looking east towards Fire Island and Anchorage, which you can see in clear weather.

This is the Bluff overlooking Cook Inlet on a cloudy day

This IS NOT roughing it!

There are many cool things about this property, that you probably won’t find in many Alaska bush properties. Here is a small, but probably not complete list; It has “commercial” electricity (not a generator), you have television and cable! The heat is not only an efficient wood stove, but also a gas “Toyo” stove (an Alaskan heating staple). There are two wells on the property, a conventional well and a hand dug well with the sweetest and cleanest water you have ever tasted! The home has laminate floors and is very clean and modern! The cabinets are light oak and there is a regular refrigerator, a microwave and all the comforts of home.

The lot is bounded on the south by a very nice fishing creek; and there are at least four streams to choose from for fishing, the Chuit River, the Theodore River, 3 Mile River and you can take a boat up the actual Beluga River to fish from your choice of many sloughs. There are trout and all variety’s of salmon in season – and you don’t have to wait in line like you do in Kenai to fish!

If you want to see lots of photographs and some great virtual tours, go to www.BelugaBluffHome.com

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