“What’s happening in the housing market?” That’s the number one question I am hearing from buyers and sellers lately. Whether you already have your house on the market, are contemplating selling, looking to move up to a bigger home or new to the area and wanting to grow some roots; the changing Delta housing market and its long term future will weigh heavily on your decisions. It’s certainly apparent that things have cooled off a bit.
Predicting the housing market is a bit like predicting the weather; it’s always best to look out the window and see what the horizon looks like. Gone are the market peaks of the last 2 to 3 years. Inventory was low and there were lots of people looking to buy. This combined with low interest rates resulted in a feverish market that saw prices climb through the proverbial roof. This was the case throughout most of the country. Real Estate Brokers are often blamed for an inflated market, but in reality, it’s all about supply and demand. In the last year, Delta has seen a flood of new construction, for sale by owner, and listed homes hit the market. Supply has gone way up!
Demand for housing, while not quite keeping pace with supply, has stayed up as well. And yet, we have certainly moved into a buyer’s market. So, why have things cooled off? There are several reasons. Buyers are more concerned than ever about what they get for their dollar and aren’t willing to compromise. Occasionally, a buyer will show up at my office with expectations of palatial grandeur for a flea market price, but most are reasonable in what they are looking for and willing to pay. Many of today’s buyers come from “outside” and are familiar with large scale subdivision construction and standardized building codes. The Delta housing market falls into a much wider spectrum of type and quality. I encourage my clients, and all buyers, to get familiar with what is available and adjust their expectations accordingly. They are well served to “Alaskanize” their desires, without giving up their pursuit of the perfect home.
Sellers, on the other hand, need to realize that while buyers usually adjust their expectations to the available inventory of homes, certain “must haves” won’t go away. Solid construction, completed quality finish work (including closet doors, switch plate covers and paint), a fair price that will be reflected in an independent appraisal, and eligibility for bank or Alaska Housing Finance Corporation financing are paramount. The time for testing the market with an overpriced “fixer upper” are gone. Houses that are priced right and finished properly have a much better chance of fetching a reasonable asking price.
In addition to the upswing in housing inventory, the recent loss of over 100 jobs on Ft. Greely has buyers leery of investing in the Delta housing market. They are concerned about what the future holds and the possibility of ending up in an upside down equity situation, where they may owe more than what their house is worth. Remember back in the mid 1990’s when the military announced the realignment and closure of Ft. Greely and the jobs started disappearing? There were a few home owners with high interest mortgages from the 1980’s that just walked away from their homes. Houses were at basement prices. Back then, I bought a nice contractor built house on Jack Warren for just $40,000.
Could a housing crash happen again? Possible, but unlikely, especially when you consider that new construction costs average $150 per square foot and are rising every year. Besides, there will always be hearty souls who choose to live and work in Delta and with North Korea making foolish moves to test long range missiles, the Ground-based Midcourse Defense System at Ft. Greely isn’t likely to be going anywhere soon. And don’t forget the Pogo Gold Mine, the explosion of new local small businesses creating their own economic momentum and the ever looming railroad. So what does all of this mean? From my vantage point, it looks as though the housing boom has peaked, prices are correcting and the market is leveling off and stabilizing. The housing market is still alive and well, but now is the time for savvy buyers and sellers with reasonable expectations.
Next time, I will address the topic of selling a house in a buyer’s market, including which improvements make you money and help sell your house, and which ones you should avoid.
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