Dave Johnson

Just returned from the Keller Williams Mega Camp in Austin Texas and it was fantastic. The 100 degree heat was a bit tough for an old fat guy but it sure is easier to get the bones moving in the morning. Learned a bunch, met some neat people and by pure chance my 21 year old daughter came in on the flight I was leaving on. She is entering her third year at Evergreen State College in Olympia (yes, I'm a proud Daddy). She and a friend from high school are driving up from Austin to Olympia for the next couple weeks. On the one hand I'm worried sick but how cool to be young and on the road traveling in this awesome country. I'm sure she was happy to see me but slipping her a fewhundy for the trip was a bonus.

Managed to snag a first class mileage ticket (thanks brother Randy) and my seatmate was Jonathan, the CEO of Active Rain. What an impressive young man and a real pleasure to visit with. Best of luck taking AR into the future!!

Be Well

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.