About Matanuska Susitna County, AK

You get more house for your money…that’s why!

Anyone who shops homes in Anchorage and then comes out to the Valley can see that there is a significant difference in prices. I thought I would quantify it so that you know how much more of a home you get in the Valley compared to Anchorage.

I narrowed the Valley down to the Wasilla and Palmer core area. This excludes most of the land mass of the Matanuska-Susitna Borough but includes at least 80% of the population. If I would have included the whole borough the contrast would have been even more striking.

Real estate professionals often refer to the “3,2 and 2″. That is a description of the most common house sold. It has three bedrooms, 2 bathrooms and a 2 car garage. I decided to compare these homes in Anchorage to the Valley.

Below is the chart that shows all the sales on the Alaska MLS system of these homes in the past year.

3 bed, 2 bath
2 car garage Total Sales
4/11/2008-4/11/2009 Median Price

Wasilla-Palmer	249	$209,900
Anchorage	349	$265,000

You will notice that only 100 more of these homes sold in Anchorage even though Anchorage has a population at least 4 times larger than the Palmer/Wasilla core area.

Significantly, the median price of a typical three bedroom home in the Wasilla and Palmer areas is $56,000 less than it’s counterpart in Anchorage. Not only is this true, but the homes in the Valley tend to have more land, are newer, and are more energy efficient.

They have more land because the Wasilla/Palmer area is more rural so most of the lots are at least 1/2 acre in size. They are newer because the Valley has grown more in population than has Anchorage in the recent past. They are more energy efficient primarily because they are newer. That is not to say that you cannot find newer, energy efficient houses with some land in Anchorage. You can, but if you do you will spend even more for those houses.

I took a look at what would happen if you compared the two locations with a 3,2, and 2 and at least 1/2 acre of land.

Wow!…what a difference that made. Only 25 homes sold in Anchorage while the Valley sales only went down by 13. In addition, the median price in the Valley rose by only $100 but the price in Anchorage went up by $68,000. Now there is a difference of about $123,000. That is huge.

3 bed, 2 bath
2 car garage Total Sales
4/11/2008-4/11/2009 Median Price

Wasilla-Palmer	236	$210,000
Anchorage	25	$333,000

So if you want at least 1/2 acre of land with your house you will pay dearly for it in Anchorage.

Since 1992 Alaska Housing Finance Corporation<(AHFC), has required new homes that hope to receive financing through them to meet certain energy standards. If you buy a home that does not meet those standards you can work with AHFC to bring improve the energy efficiency. Up to a point AHFC will even pay you to do that.

Most of the homes built since 2000 used good energy efficient building methods. Of the 349 sold in Anchorage only 25% were built since 2000 while 48% of the houses in Alaska were built since that date. Almost 1/2 of the 3,2,2 homes sold in the valley were built since 2000.

So, to sum it up…

You get a newer, more energy efficient home with more land, for less money, if you buy in the valley as opposed to Anchorage.

I have been studying the confused heap of numbers being thrown around everywhere to come up with the likely course of Real Estate in Anchorage for 2009. With stock market investors losing or gaining tens of thousands of dollars daily, and an almost titanic panic nation-wide about ‘what the hell is going on?', it is fortunate indeed that there is not a raised terror alert, or hurricane, or earthquake to ruin your morning coffee.

ALASKA VS. U.S. The very first fact that should clam any concerns for Alaskans is that our economy functions entirely differently to the Lower 48. I recently returned from Hawaii where the locals hardly even bother to watch TV. So far removed, Hawaiians, barley realized it was Christmas, and good for them! Alaskans likewise, if they must watch TV, should have their own CNBC, CNN and FOX reporters, producing separate programs, if they are to be properly informed about what's going on right on here, and now, as opposed to what's going on outside. After reflecting on the various forecasts of Alaskan economists, from ‘dire' to ‘not so bad', I have concluded that Alaskan Titanic is not sinking. It seems the economic icebergs have all drifted south (obviously due to global warming) and, in Alaska at least, it remains "steady as she goes with some headwinds".

YOU WANT NUMBERS? Growth in the economy is best measured by jobs. Let me cheer you up. Whilst it is true that the unemployment rate in Alaska has risen by 1% over the last year, Alaska actually added 3300 jobs in 2008, 1500 of those in Anchorage. In fact Anchorage (and Alaskan economy), continued to grow for the better half of 2008 while the nation was in recession. It is true that 2009 will probably be the first year in twenty that we may experience a small decline in job production, but the State finances are in better shape than any of the other 49, due to Oil Revenues not spent but set aside to help us through the waves, now that the prices have fallen to $45 a barrel. While Alaska unemployment rate (a complex and incomplete calculation combining periodic telephone surveys with data from those who actually come in to the unemployment office) shows an increase (especially through late 2008) of 1%, the Nation's unemployment rate rose by 2% to 7.2%.

Not wishing to put you to sleep with ubiquitous imbroglio of statistics available, let me say that it's very bad' in the U.S. but ‘not so bad' in Alaska. At the annual economic forecast luncheon of AEDC held on the 28^th of January, predictions for 2009 were uncertain, but the forecast was a declined of jobs in Anchorage of around 100 jobs. Now while I strongly disagree with this overly optimistic outlook, the maximum number of job losses in Anchorage should be under 1000, and in the State as a whole less than 2000.

OPEN QUESTIONS REMAIN:

•1) Tourism: How much will traffic to Alaska be hurt this year due to problems in the Lower 48? Expect significant impacts on hotels, airlines, restaurants and other tourism related businesses.

•2) Retail: Will Alaskans stop spending money at the stores and will there be lay-offs, and how many? AEDC says retail jobs will increase but I say no.

•3) Federal Funds: The loss of Ted Stevens in the Senate, and declining influence of Don Young, has already reduced the enormous flow of federal funds for projects in Alaska. In fact, for years, Alaska received a huge, disproportionate distribution from the Federal coffers because of their influence. Offsetting this, how much of the Obama ‘Stimulus Package' will be sent to Alaska?

These open questions will impact the progress of the steady ship "USS Alaska" as she navigates the headwinds.

Real Estate: Real Estate values, though hurt up to 10% in price ranges above $500,000, held steady in the affordable range in 2008 with only small declines. What fell in 2008 was the excitement of buyers. There were just not enough of them, psychologically pulling back after every National news bulletin.

INTEREST RATES: 2009 will see some healthy home purchasing in Alaska. The main reason is interest rates. As I write, the 30 year fixed rate is at an incredible 5.00% and the 15 year rate is at 4.625%. I confidently predict that these rates will remain at 5% or below for almost all of 2009. I personally have an order in to refinance my own home when rates dip to 4.25%.

REFI TIP: If the cost of refinancing ($2,000 to $3,000) can be recovered in 2 years by the amount you save in monthly payments, it is a big ‘GO!'

The reason that rates will remain low is that the Federal Government desperately wants people to buy housing. Whilst those without jobs won't be buying much of anything, those with employment will have incredible opportunity, with both housing prices and interest rates as low as you will see in your lifetime.

CONCLUSION: If you are able to mentally detach from the ‘Sinking Ship Blues' on the radio and television (better still, turn them off like the Hawaiians), this is an excellent year to acquire real estate or to sell into an upgrade opportunity. The United States is in recession, as is the whole planet. The U.S. was the first to hurt, and the first to act. The U.S. will be the first to recover. One of the outstanding attributes of the United States is its aggressive reaction to emergencies. Just witness the industrial response after Pearl Harbor in 1942. Your country will be just fine. Alaska, insulated from much of the pain, will do even better.

The Colony High School Band became a part of history today when they marched down Pennsylvania Avenue in the Inaugural Parade.

The students were able to become a part of history through hard work, perseverance and and the great negotiating skills of the band's director, Jamin Burton. The band raised the $67,000 needed for the trip without the help of public funds.

The Colony High School Band, which is only five years old, also marched in the 2006 Independence Day Parade in Washington D.C. The CHS Marching Band has been featured on the Marching.comwebsite. The Colony High School Band is the only marching band in Alaska . Colony High School is located in Wasilla Alaska

You can read what the kids are posting to their Inaugural trip blog which is being featured in the Anchorage Daily News.

Pauline

Community Councils…Get Involved Or Don’t Complain.

We just had a presidential election in which about 60% of the registered voters in Alaska participated.  Some people think that is a pretty good turnout, I think it’s pathetic.  BUT, what people don’t think about is that local government actually has more effect on your everyday life.

It seems that the more local the government becomes, the less participation we see.  In the Mat-Su Borough we generally have these levels of government:  state, borough, city, community council.  There are many opportunities to become involved at each level.  Of those four, the community councils are the most local.

The amazing thing is that although everyone can be involved in their community council, the only people that show up are the activists that want to change the status quo.  All the people that are happy with the way things are remain at home and complain when their world changes around them.

For example, in the Chickaloon Community Council area the minimum lot size is five acres.  This was passed by the community council and now has the effect of law. If you had purchased 5 acres with the intent to subdivide a portion off for a family member you are now out of luck. 

I believe that community councils are an excellent way to get residents involved in local government, but it needs community participation to function well.  I attended the Lazy Mountain Community Council tonight.  It was held at the Lazy Mountain Bible Church on Clark-Wolverine Road.  At this meeting there was a sparse turnout, but Chairman Jim Sykes reported much better participation earlier in the year.

The Lazy Mountain Community Council has their own website here.  On it they show the agenda and report on each meeting. This is an excellent way to keep the community informed.  Here is a copy of their comprehensive: Lazy Mountain Comprehensive Plan,  On their website I noticed a plan for the Wolverine Lake Trail Access.  This trail may go right next to a fantastic lakefront property I am marketing.  

Not only is it normal to have low community participation in the community councils, often the council will restrict who can vote.  For example, I received a report today that the Meadow Lakes Community Council restricts voting members to residents of the area.  So you could own a rental property in the area but not be allowed to vote.  However, your renters will be able to vote to determine what you can do with the property they rent from you.  Doesn’t make a lot of sense to me.  Here is the Meadow Lakes Comprehensive Plan.  You will notice that it is over 300 pages, while the Lazy Mountain plan is 72 pages.  If you live there, you might want to read it carefully.

I searched the web for other community council websites but only found a defunct site for the Butte Community Council. .  If you want to know what is going on in your area you will need to dig.  You can start with the Borough’s list of community councils here.

The final step for the community councils is some sort of zoning.  Meadow Lakes Community Council is in the middle of that right now.  The borough will eventually have zoning over all of it’s millions of acres of land.   The question is, will you have a say in the rule changes, or will you let someone else make the rules for you?

 

Yesterday I looked at the market trends for the Knik-Goose Bay Road area. You can see that here.

Today I have the numbers for Palmer and Wasilla. The first chart is Wasilla and the second chart is for Palmer. These are based on the specific map areas of Palmer and Wasilla.

You will notice that the Wasilla area has more sales than Palmer. The reason becomes obvious when you look at the maps, there just are more developments in the Wasilla map area. The total sales volume is down about 18% from last year and down about 25% from the high in 2006. However the median sales price is only down about 2% from the high in 2005.

Year	Total Sold	Average Price	Median Price
2003	468	180,862	165,063
2004	477	193,244	175,000
2005	492	220,412	208,500
2006	559	241,604	225,000
2007	520	241,885	224,975
2008	422	238,343	219,950

The chart below is for Palmer. Palmer’s sales volume is done about 27% from the high in 2005. In 2005 and 2006 Hall Quality Homes was building a lot of homes in several developments. That building is still going on but at a slower pace.

Prices are also hanging in there in Palmer with the median price almost unchanged from the high of 2006. That is an interesting statistic that will bear watching as we go through this winter.

Year	Total Sold	Average Price	Median Price
2003	195	155,802	158,600
2004	238	190,567	177,076
2005	257	209,520	197,900
2006	242	221,035	213,500
2007	219	230,208	212,000
2008	186	233,459	213,200

The study of sales and prices show that the Matanuska Valley is weathering the real estate market quite well. There is a lower volume of sales but they haven’t died. The values are certainly holding their own better than the stock market has been doing lately.