The Housing Market Economy; Loan Issues - Or Not ?
I thought I would take a moment to talk about what is - and what isn’t going on in the real estate market today.
I do recognize that in some areas of the country things are very bad. In fact I was recently at a Star Power meeting in with other top Realtors and was gasping at the market being presented by an agent from Ft Myers Florida with in some cases over 9 years supply of homes.
But here in South Central Alaska, things are slow and steady. In some areas prices are up as much as 3 - 4% such as Eagle River and Anchorage, while in others area, such as Palmer and Wasilla, prices are down 3-5%. But this is good news, when you compare it to other parts of the country, where home owners have seen the market and value of their home decline as much as 30 to 40 %. The issue is loans, and buyers obtaining financing, and really I have not noticed too much change other than credit scores are more important than ever. All of the "stupid loans” are gone, and while the pay option arms had a purpose - particularly for someone who might move in less than 5 years - they are not being sold to buyers without good credit and a good down payment.
All markets are local, and while what happens almost anywhere these days effect the economy all over the world to some degree, housing markets are basically driven by the supply and demand and local economic conditions. When the demand is up and supply is down, prices are up. Conversely when the supply is up, and the demand is down, prices fall downwards. Basically we have a fairly balanced market; it is neither a Buyers Market or a Sellers Market. Market values in Alaska continue to appreciate at a reasonable rate of about 2 -3 % annually. When compared to the double digit appreciation rates of a couple years ago, this may be a snails pace to some, but the current appreciation rates are healthy. It is precisely because Alaska did not go through much of the craziness some real estate markets went through, with zero down interest only loans, and annual appreciation rates of 25 – 30%, that we are not experiencing much of the doom and gloom we hear and read about in the news media.
What has changed is the loans need to make sense, and if so they are still being given. As Eagle River’s top selling Prudential real estate team, we are having a slower year than last year, but homes are still selling. In the heyday over 7 million homes sold across the USA and there will be close around 5 million USA homes sold this year. That’s still five million homes; and people still have to buy and sell; at the end of the day we all need a place to live and that is what housing has always and will always provide. This will never change.
So I wanted to let you know we are still here and not going anyplace. I am investing more in my team now than ever before and as with all things, this too will change. We will be ready to work with you on all your real estate needs whether now or in the future.