INSIDE REAL ESTATE: A snapshot of Anchorage housing as oil prices plunge
In Anchorage, a home in an upscale subdivision was recently put on the market for $25,000 less than the buyer paid for it 17 months ago. The seller is a relocation company most likely hired by an oil, or oil field service, company to dispose of a departing employee’s primary residence.
The $25,000 amounts to a 3 percent reduction from the original purchase price paid by the employee to the builder.
Last week, for-sale inventory of single-family homes bumped up by over 20 homes. For the first time in several weeks, new inventory outpaced pending sales, according to recently published MLS statistics. So are these two scenarios indicative of a change in the housing market?
The answer is both yes and no. As departing oil industry employees’ homes are sprinkled throughout the marketplace over the next few months, expect some good buys. Relocation companies do not like to hold inventory.
It costs employers money, and depending on the relocation company’s contractual relationship with the employer, may reduce the relocation company’s profit. They like to sell homes “as-is where is” at a competitive price. If the average time on the market for a comparable home is 65 days, they like to price it to sell in 45. Their sold comps can drag a market down when used by an appraiser.
But, like the home with the $25,000 price drop, most of these relocation homes are going to be priced over $500,000. It’s a good opportunity for the move-up buyer. The homes are generally newer, well cared for, and include appliances, window coverings, and landscaping.
It is hard for builders to compete with these like-new homes, particularly when they are building in the same subdivision.
The question is what remains when these well-priced homes are absorbed. Anchorage continues to have a housing shortage in all price ranges below $700,000. With a population of 300,000+, Anchorage should be building 900 new housing units a year.
Yet, for the past several years, new housing units have averaged less than 500, including single family, duplexes, and multi-family. The new Title 21 rewrite, which went into effect in January of this year, will slow down any new permits for the first six months of this year as builders and developers grapple with the new requirements.
Plus, there is no doubt that these new regulations will add to the cost of all housing types. It is not just a housing shortage but an affordability shortage as well. New homes under $500,000 will be in short supply and any four bedroom, 2.5 bath home with a double, or triple car garage, will be hard to find and ultimately, a good buy.
Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected].