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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.

 

Housing Market Vs. Stock Market

by Eric Bushnell

Where should I invest?  Should I buy stocks, should I buy mutual funds, these are great questions and I ask them myself.  I hear people asking whether they should buy a home or rent, and the answer is simple:

If you are a responsible person, and will be staying stable for the next 7-10 years then Buy!

If you are a responsible person, and would like to be able to move when you want to then Rent!

A lot of home were bought and sold in the last couple of months, we have many new homeowners that took advantage of the First time Home buyers tax credit.  this was a great deal and it help most real estate markets across the country.  There were many sales because of these first timers, resulting in additional sales for move up buyers, that were able to sell their existing home.  We saw many people selling and making the switch to renting, it just made sense for them.

Whether you should buy or not has nothing to do with the strength or weakness of a market.  You do not buy stocks only when their low, No, you buy a little here a little there.  You hold for the long term and sell when it makes sense.

Buying a home is the same way.  look at you present situation and ask your self this.."Do I want to be in this home in five years?".  If the answer is anything other than a big "Yes", then you should take a hard look at renting.  It is cheaper in the short term and allows you flexibility in moving. 

Purchasing a home takes a commitment that we used to say everyone should take.  Maybe not owning a home does not make you more responsible, or more successful.  However for many people this is a wise investment.  If you are stable in your life an career then home ownership is probably the wise choice.

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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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