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12-20-12, The End?

by Eric Bushnell

Today is the last day that all will be normal...or is it?  Tomorrow according to the Mayan calendar is the end of the world.  So now is a great time to reflect on the good that has transpired in 2012.

Real Estate has done well this year here in South Central Alaska.  The Anchorage market had one of its best years in recent history.  I Eagle River we're on tract to sell approximately 12% more homes this year than last.  The Valley market started the year well, but has gas prices rose homes sales declined.  No with the price gas back down in $3.50's or below, we are seeing more traffic to Valley homes.  Land sales in 2012 were very good in all markets, and we have seen 20% of the Powder Ridge Phases sell already.

The weather has not been a positive point in 2012.  Last winter was very snowy, so if you like to ski and snow machine it was excellent.  The summer was cold, and this fall snow had been non-existent until recently.  It's been cold, definitely colder than normal.  Yesterday morning it was -26 at my home in Wasilla.  Today its warmer but we have 30 mph+ winds, wind chill in the -30's.

On a personal note, I stepped away from management and it has been perfect for me.  I've been able to concentrate on more real estate.  I've had time to be with my family.  My daughter came back from a year in Bolivia, where she was an exchange student.  She had a great time, but its good to have her back.  I had time to work with our local Eagle River Area Rotary club to build the Let's all Play playground here.  This was the first full accessible playground in the state, so that kids of all abilities could play together.

This fall I've had more time to  spend coaching hockey which I love.  I'm coaching two teams, Mini Mites (4-6) and Suirts (9-10).  We have agreat time and I am getting in better shape.  Three days a week at the gym is helping as well. 

2012 was a good year.  I made decisions and moved forward with my long term plans.  I was able to work with the chamber of Commerce, Eagle River Area Rotary, Sunrise Rotary, Mat-Su Amatuer Hockey Association, my family, the gym, and was able to go hunting this fall.  Yes, I did get a moose and my freezer is full.  Life has been good this year.

How was your 2012?  I hope the world doesn't end tomorrow, because I've go more on my bucket list to do.

Perception of the Market

by Eric Bushnell

Perception is a fickle beast.  One quote I remember from my early days in sales was:

"Perception is reality regardless of the truth"  ~Zig Ziglar

Last night I participated in a town hall round table discussion hosted by the Chugiak/Eagle River Chamber of Commerce.  As a current member of the CER Chamber and one of it's Board of directors I was the leader at one of the tables.  Our goal was to get the pulse of the community before our planning retreat this weekend.  We discussed the four topics over the course of the two hours.

We discussed why people moved to Eagle River as well as why they stayed.  We looked at the challenges of running a business in today's economy.  We discussed challenging budgets, taxes and growth.  How our community show look and feel, as well as what types of businesses we would like to see.  We also discussed threats to our way of life in Eagle River. The room was filled with business owners, residents, and many local and state politicians.

One discussion stood out in my mind and at one point became heated.  This was concerning home prices and the ability for our residents to sell their homes and move if they need to.  Our market suffered like many markets across the country, but real estate is local, and luckily we did not see the devastating foreclosures that many communities saw.  We saw some depreciation, in 2006/2007.  In my case I saw a 10% drop from the summer of 2006 to summer of 2007.

We saw this mainly in our older homes, which I written about in years past.  At the time I forecasted (speculated) that we would begin to see growth in approximately 5 years.  Fast forward to this year and our local markets saw increases of approximately 4% over a 6 month period.

The discussion that became heated was that values were falling her in Eagle River, and it was obvious because this information was on the Internet.  Which reminds me of another great quote:

"It's on the Internet, it must be true!" ~Ben Franklin

  There are forecasting websites that try to use sophisticated algorithms to determine the value of your home.  In some communities these work quite well, in Alaska they do not.  Alaska is a non-disclosure state where we do not disclose what you bought your house for.  There is no good information for the website to determine the value of the home.  This leads people to make incorrect assumptions about the value of their homes.  They need to hire a local expert who has access to this sales data.

This website showed declining values, which is the furthest thing from the truth.  What we have seen in our area is less volume, and this make a huge difference in the values you can obtain for your home.  If you home is worth $500,000 but there are only 3 buyers in the market, but they only qualify for $450,000 and they want to buy your house, that does not make your house worth $450,000.  The unfortunate part in this situation is that if there is no one who is buying in the $500,000 range the seller will have to reduce the price till the meet a level where there is a qualified buyer.  This is a complicated situation with lots of variables that affect values of the long term. 

Some sellers have to sell, while others just want to sell.  These two sellers will make different decisions when confronted with the same situation.  Many in our community move here then leave after only 3 years.  They want to own, but ownership has risks, when you have to sell so quickly.  This is a major concern in our community in which 30+% of our resident are active duty military.  They do not have a choice as to when they need to move.  Some will have to pay when they go to sell their home, some will not.  I will discuss the smart choice here in a future blog.

Owning a home is a smart move, it is not the wealth building bargain it was just a few short years ago, but it is still a better investment for most than renting.  But rest assured, home prices are not falling in Eagle River.  If you have question about this or want to know what you should do, please call me at 907-360-7471.

 

News from the Hill

by Eric Bushnell

U.S. Senate – Events 

Alaska’s Historic Day in the Senate --

Alaskan Impact: Today in an overwhelming 87-8 vote, Sharon Gleason became the first woman to be nominated as a federal District Court judge in Alaska – where she will serve on the U.S. District Court for the District of Alaska.  Prior to the vote, Senator Murkowski spoke of Gleason’s excellent qualifications:

(Click box to watch)

America’s Energy Update

The Senate Energy and Natural Resources Committee held a hearing this morning on the Quadrennial Energy Review Act (S. 1703), which Sen. Murkowski has co-sponsored. The legislation would require the Department of Energy to conduct a review every four years to help develop a coordinated, government-wide energy policy. Currently, there is no regular, high-level assessment of whether our policies are effective – and whether they can be consolidated, improved or repealed. Given the energy challenges we are facing today, it is appropriate to require something similar to the quadrennial review conducted by the Department of Defense.

6:00am AKDT  

Senate Energy and Natural Resources Committee Hearing

Topic: “Energy’s Quadrennial Technology Review”

Testimony from:

  • Energy Undersecretary for Science Steven Koonin
  • Ernest Moniz, director of Massachusetts Institute of Technology's Energy Initiative

 

U.S. Troops Leaving Iraq. What next?

 Alaskan Impact: 550 Alaska-based soldiers will be leaving Iraq next month – but a debate in Washington, DC is asking whether Iran will publicize this as a victory for their “unified resistance.” Today, the Secretary of Defense and the Chairman of the Joint Chiefs of Staff testified before the Senate Armed Services Committee.  The Iran question was asked, along with if we’re leaving enough troops in Iraq to defend our accomplishments.

 

5:30am AKDT  

Senate Armed Services Committee Hearing

Topic: “Iraq Security Issues”

Testimony from:

  • Defense Secretary Leon Panetta
  • Army Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff

 Question to Secretary of Defense: Is our withdrawal “a propaganda victory” for Iran?

 

(Click on box to watch)

 

House of Representatives – Events

Adapting U.S. Defense for a Frugal Era

Alaskan Impact: Within months, approximately 10 percent of America’s forces on the ground in Afghanistan will be Alaska-based, making it imperative to focus on Pentagon research and development of new technologies to keep Americans safe – especially with looming defense budget cuts. Unmanned Drones developed for Afghanistan have already been employed to help border patrol agents in California and Texas, with plans for more to be added to protect our forces around the world.

6:00am AKDT  

House Homeland Security Committee Hearing

Topic: “Using Defense Technology for Border Security”

Testimony from:

  • Mark Borkowski, U.S. Customs and Border Protection's Office
  • Paul Benda, Director of the Homeland Security Advanced Research Projects Agency
  • Paul Stockton, Assistant Defense Secretary for Homeland Defense

Questioning/Hearing: http://1.usa.gov/rzyFS5

 

Mid Summer Update For Eagle River

by Eric Bushnell

Mid Summer Market update for Eagle River Alaska

I know that a lot of pople are out and about enjoying the summer.  So far this year the weather has been decent, not great but at least everyday has not been cold and rainy.  so I know that everyone is enjoying themselves.  Dip net fishing on the Kenai River has been awesome, the Eagle River Bear Paw was great and this week I know my wife is hiking the Crow Pass trail from Girdwood to Eagle River.  so there is plenty to do out there.

So with all this going on; what's the real estate market doing.  I've seen recent reports about consumer confidence being down, but that does not appear to be the case here in Eagle River Alaska.  The Mat-Su valley(Palmer/Wasilla) is holding its own compared to last year, and Anchorage is down about 9.5% in the number of homes sold.  Eagle River and Chugiak are up 16.1% so far this year. 

One difference this year is that we are selling more land for new home construction, and as a result of this new home sales are up.  This is much different then what we are seeing in the markets in the lower 48.  It should be noted that many towns in the lower 48 are doing just fine.  Middle America is surviving, even though the talking heads and Wall Street don't give us much credit.

There are tough sales out there, and there is more homes available this year than last.  the selection is good, and some homes are just over priced for their condition or location.  Remember the #1 rule in real estate is location, #2 is condition, and #3 is Price.  You can't change #1, but you can change #2 & #3. 

For more detailed information feel free to call me anytime. 

Remember to rinse your fish before you put them in the smoker, they turn out too salty otherwise, but most importantly...

Enjoy the summer!

Alaska Politics is just like the Lower 48

by Eric Bushnell

I received this e-mail earlier today and thought I would pass it on.

"Last evening, the Senate finally passed on the FY11 Capital budget, SB 46,  a spending plan, totaling $2.8 Billion

The needless delay by the Senate in moving the bill forward potentially jeopardized many good projects. The unconstitutional language that bundled $400 million in Energy projects and caused the delay is still in the bill – it needs to be removed.  The Senate has included their projects in this spending plan, and the House now has to insert theirs and include some of the projects the Senate failed to include – the total is certain to grow.

SB 46 is up for public hearing in House Finance today at 9:00-12:00 and again this afternoon at 1:30 to 4:00. Your testimony is needed. You will have to sit on the line and wait your turn.

You need to:

Call in to testify at 1-855-463-5009,

Identify yourself and the bill, SB46

When called on by the Chair, briefly testify - limit to 2 minutes

The following are pertinent points to make with your testimony. Use any, all, and add your own personalized comments

 Urge them to

  • Pass a valid Capital Budget
  • Failure to pass a Capital budget puts millions in federal funds at risk
  • Delete the unconstitutional Senate language that puts a $400 million Energy Package at risk, which includes the Weatherization and Residential Energy Rebate Program

As an alternative, you can email your comments to the finance members"

 

Representative_Bill_Stoltze@legis.state.ak.us                                   Co-Chair

Representative_Bill_Thomas@legis.state.ak.us                                 Co-Chair

Representative_Anna_Fairclough@legis.state.ak.us                       Vice Chair

Representative_Tammie_Wilson@legis.state.ak.us

Representative_David_Guttenberg@legis.state.ak.us

Representative_Mark_Neuman@legis.state.ak.us

Representative_Mike_Hawker@legis.state.ak.us

Representative_Bryce_Edgmon@legis.state.ak.us

Representative_Mia_Costello@legis.state.ak.us

Representative_Reggie_Joule@legis.state.ak.us

Representative_Mike_Doogan@legis.state.ak.us

Representative_Les_Gara@legis.state.ak.us

It's time to get our economy producing!

by Eric Bushnell

It's time to get our economy producing!  This was the message at the CER Chamber of Commerce meeting today.  "Make Alaska Competitive" Coalition was the main speaker and the forum was sponsored by BP.

The message was that Alaska had increased taxes by so much in 2007 that Alaska was no longer a place to develop.  Based on the information they provided it appears that they're correct.  One excerpt from their handout reads as follows:

  • We a NOT competitive compared to other areas
    • When oil prices are $100 a barrel, the total marginal government take in Alaska is 82 percent.  In Alberta, it's 55 percent.  In the Gulf of Mexico it's 43 percent.  Alaska is simply not competitive under ACES. (source: Roger Marks)

I have a really hard time with these numbers, but no one gives all the information, so I have included a copy of the tax rate:

The formula for the total tax rate, including the base rate and progressivity is:

0.25 + ((Net per barrel value - $30) X .004)

ACES also contains a 20% tax credit for capital costs, with potential greater credits for exploration depending on location. For example, let's assume the following:

  • 100 barrels sold on the US West Coast
  • ANS West Coast price of $50
  • Transportation cost (pipeline and marine shipping) of $5
  • Upstream (exploration, development, production) costs of $20: $10 capital and $10 operating
  • No royalties (for simplification)

The net value of the oil would be:

100 X ($50 — $5 — $20) = $2,500

The per barrel net value would be:

 $2,500 / 100 = $25/bbl

Since this is less than $30/bbl there is no progressivity and only the base tax rate would apply. Thus the tax before credits would be:

.25 X $2,500 = $625

The capital credits would be:

.20 X $10 = $200

The tax net of credits would be:

$625 - $200 = $425

Now let's say the price of oil goes up to $70.

The net value of the oil would be:

100 X ($70 — $5 — $20) = $4,500

The per barrel net value would be:

$4,500 / 100 = $45/bbl

Since this is more than $30/bbl there would be a progressivity surcharge. The surcharge would be:

($45 — $30) X .004 = .06

Thus 6% would be added to the base tax rate of 25% for a total tax rate of 31%. Thus the tax .31 X $4,500 = $1,395

The capital credits would be: 

.20 X $10 = $200

The tax net of credits would be:

$1,395 - $200 = $1,195

Now if you can understand all this I am very proud of you.  What I do understand is that as the price of a barrel of oil goes up, so does the tax rate.  Only it is not prorated like our income taxes.  Alaska gave the oil companies a great rate and even a free pass for many years and oil production has dwindled.  Now prices are finely high enough that they can really make money.

Alaska needs a fair share of this wealth, but what is fair.  Talk to your politicians about what you think is fair.  I am no going to say how to fix this, but I do think it is broken.  Don't misunderstand me though. I think that Alaska should get more then we did before, but maybe not all of it.

 

Political Humor by Chad Carpenter

by Eric Bushnell

Eagle River Community Council Update

by Eric Bushnell

Hello to all interested in the Beach Lake Regional Park Master Plan Update:

 On March 29th the Eagle River/Chugiak Parks Board of Supervisors held a work session on the draft Beach Lake Regional Park Master Plan Update to thoroughly review the document and recommend any edits or changes.  The Planning Team has made the changes recommended by Board of Supervisors.   The project website has been updated with the full DRAFT Beach Lake Regional Park Master Plan Update.  It is available for download. 

Go to: http://www.muni.org/Departments/ERparks/Pages/BeachLakeMP.aspx. This plan will be considered for final approval at the Parks Board of Supervisors April 12th regular meeting (public testimony is welcome).

 Mark your Calendar!

Monday, April 12, 2010 @ 7P.M. in the Eagle River Town Center Community Room (12001 Business Blvd.):

ER/C PARK BOARD OF SUPERVISORS MONTHLY MEETING

The Beach Lake Park Regional Master Plan Update will be on the Agenda for approval of the Board. The public is welcome to attend and testify.

Eagle River Chamber of Commerce Luncheon

by Eric Bushnell

Chugiak-Eagle River Chamber of Commerce Lunch Forum

WEDNESDAY February 3,  2010

Downtown Eagle River Circulation Study

 

Are you frustrated by traffic congestion, access onto main collectors in the Eagle River business district?  The MOA has begun our downtown circulation study to identify problems and recommend solutions.  This is your chance to have input!!!  Doors open at 11:30am.

Menu:

Roast Chicken Burritto with carmelized onions, cilantro, refried beans, cheese, lettuce.  Topped with roast chicken tomatillo sauce & sour cream.

Salsa & chips


February Forums sponsored by 

Alaska Small Business Development Corporation

LOCATION: EAGLE RIVER ELKS LODGE Banquet Room

Doors open at 11:30 - luncheon begins promptly at noon.

17111 N Eagle River Loop Rd

(Banquet room doors are on the west end of the building)

Cost:  $14 members/$16 non-members.  Coffee tea only $3.00

 

You can reserve and pay online!

Go to http://www.cer.org/estore.html

Anchorage Economic Development Corporation Annual forecast luncheon

by Eric Bushnell

Can you look into a crystal ball and see the future?

Well, I cannot so today I attended the Anchorage Economic Development Corporation Annual forecast luncheon.  The ADEC is a group of business and business owners that work to drive the economy of Anchorage forward.  The investor luncheon is a great forum to see what the new year may bring.

This years event was the largest luncheon crowd ever in Anchorage Alaska; with over 1400 attendees.  There were several speakers, Governor Parnell, Mayor Sullivan, and keynote speaker Stephen Dubner, the co-author of 'Superfreakeconomics"

 

I visited Facebook prior to the luncheon and a good friend left me this comment:

"the ADEC Economic Forecast is going to be largely dependant on the pending legislative review of ACES (Alaska's Clear and Equitable Share, Alaska's state oil tax legislation). ACES is reducing new oil development projects on state owned leases. Yes, it drives up State Revenue, but it comes at the expense of new investment and jobs which ... See More largely drives real estate prices and demand for local goods and services. I'd be interested to know what assumptions ADEC uses regarding ACES future (it will probably be NO CHANGE since no one knows if we will be successful in lowering these tax rates). The good news is that oil development on Federal leases (Liberty etc.) are NOT affected by ACES as these are taxed on the lower MMS rates (Mineral Management Services). "

Governor Parnell did address this point and one of the hot topics in Juneau this year will be tax relief for companies that invest in Alaska.  Gov. Parnell also spoke about placing excess funds in an account for infrastructure maintenance in the coming years.  It appears we have good leadership for the time being.

Mayor Sullivan spoke to the issue of the city budget, and he likened it to the city being on a diet.  Less spending and minimal new bond packages for the short term will bring about some property tax relief.  The City is going to be hard pressed to provide the services everyone wants without raising taxes.  The City of Anchorage will be looking for federal money to match its investment in improving the Port of Anchorage; which will provide new jobs and growth.

The Keynote speaker, Stehen Dubner, was fantastic.  I will be reading his book 'Superfreakenomoics" tonight.  He mixed current economics with humor in a way that makes one really think.  Many of the national policies currently under review have great economic implications.  He covered global warming, monkeys, and prostitution; in that order but in a very funny way.  Mr. Dubner really got one thinking about possibilities, but as he explained we are creatures of habit, can we change?

It was a great lunch and the forecast is for job losses, approximately 1200.  Many of these are related to tourism; there will be a reduction by 10% in the number of cruise ships coming to Alaska.  Now this forecast does not include Military growth, or the self employed.  These areas are growing and will offset the losses.  The ADEC does expect to see moderate growth in the second half of 2010.  take a look at the documents I provided from the ADEC and feel free to comment below.

 

Displaying blog entries 1-10 of 11

Contact Information

Lee Realty, LLC
Lee Realty, LLC.
5050 Dunbar Drive #F
Wasilla AK 99654
Office: 907-376-0119
Fax: (907) 376-4039

 

 

 

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