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As expected, 2010 housing market finishes flat

Barbara,Clair Ramsey

How did your home fare in the Anchorage residential 2010 real estate market?

Overall, Anchorage continues to weather the real estate crisis well.

But our market was affected, depending on the price range.

So, let's dissect the marketplace and break it down by a few key areas: number of houses for sale, price range and months of inventory.

The health of our market can be seen in the tables on this page about single-family houses and condominiums.

So depending on your price range, compare the number of houses listed for sale with the number of houses that have been selling per month on average and with the number of months needed to absorb the active inventory of houses if nothing else comes on the market.

A seller's market is usually gauged as four months or less of inventory; a balanced market is usually four to six months; and a buyer's market is six months or more.

The single-family house market as a whole would seem balanced -- only 729 homes for sale with 3.8 months of inventory.

However, if we break the market into price ranges, you can see the price segments of the market with more demand and those having problems.

Houses priced below $350,000 have less than a four-month supply, while those priced $350,000 to $749,999 range have a four- to five-month supply.

The market dramatically slows in the $750,000 and above price range. Properties priced at more than $1 million are averaging sales of 0.8 houses per month -- creating a 26-month supply. However, the over-$750,000 price range has only about 39 more houses on the market than the number that would give it a mere six-month absorption rate.

For condominiums, currently 395 units are for sale -- a 4.8-month supply of condos. The lower price ranges -- below $299,999 -- show a similar balanced trend to what is seen among single-family houses. The market begins to slow at prices between $300,000 and $399,999, and slows dramatically above $400,000.

So what really helped Anchorage?

Our relatively low numbers of homes for sale has allowed a steady absorption of inventory, even with lower sales.

In general, we are glad to report that 2010 ended as we expected -- flat overall.

Of course, that is not what buyers want to hear, nor sellers, for that matter. Many express concern that the local market will worsen as national foreclosures and potential shadow inventory increases.

Barring major local market disruptions, we predict that for 2011 buying and selling will run pretty normal for properties below $750,000. Remember that purchasing real estate is a hybrid investment -- part consumption and part investment -- so well-priced homes in good condition will sell quickly.

For a higher return on the investment portion, the deals are really found in the properties priced $750,000 and above, because of the number of choices available and the amount of discounting that has already taken place.

If you have the ability and courage as an investor and really want a deal, buy in the upper price ranges, because houses there are below current replacement costs. However, forget about a quick turnaround time -- you will need to hold these properties for three to five years before you can pat yourself on the back. High-end sellers should wait a few years if possible before putting their homes on the market. There are about 39 houses more for sale in this upper price range than what is needed for a balanced market, so a small change in supply can have a big effect.

Clair and Barbara Ramsey are local associate brokers specializing in residential real estate. Their column appears every month in the Anchorage Daily News. Their e-mail address is info@ramseyteam.com.


BARBARA AND CLAIR RAMSEY
HOUSING