Real Estate Information

Spring is fast approaching and the temperatures are starting to rise.  The snow piles are beginning to shrink and the sun is up till 9 pm.  I love this time of year because the promise that summer is fast approaching.

But, it is ugly out there.  The once brillantly sparkling snow piles are now dirty brown piles of dirt and snow slowly melting, putting water on the road ways and encasing my car in brown muck.  I make multiple trips to the store for window washer fluid.

In the coming months many organizations will be putting clean up projects together.  Eagle River Rotary will be doing a road clean up project in April, and another clean up day at the Eagle River Nature Center sometime in early May.  Now is a great time to get out in the community and meet your neighbors while picking up the trash that magically appears as the snow piles melt.

Help keep Alaska beautiful, find a project and pitch in.

EAGLE RIVER COMMUNITY COUNCIL

13135 Old Glenn Hwy., Suite 200

EAGLE RIVER, ALASKA 99577

AGENDA

Thursday, March 17, 2011

12001 Business Blvd., Room 170 conference room

(Next to the Eagle River Library)

Call to order

– 7 PM

Guest Speakers

Assembly/Legislative Updates

Legislative update (Sen. Dyson & Giessel and Rep. Fairclough & Sadler)

New Business:

Open

 Old Business:

Membership drive to increase participation and fill vacant positions st Wed. at 6:30pm, same room.

Reports:

Meeting Minutes: Brian Fay

Treasurer: Michael Foster (acting) $258.75

Parks & Rec. (3 yrs): Brian Fay (May 2012)

Road Board (3 yrs): Michael Melielo (June 2013)

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.

What a beautiful day!  I just returned to my office from a quick tour of Eagle River.  Tuesdays we visit the new homes that have been listed for sale in our market.  What a beautiful day; the sun is up and sky is crystal clear.

As we move towards spring there is more sunshine everyday, and today is no exception.  The sun is brilliantly reflecting off the snow.  I replaced the battery from my camera with it's alternate on the charger so that I could take a couple photos.  Unfortunately I did not realize that the charger was not plugged in and the new battery I put in the camera was dead.  Bummer, no pictures from this outing, maybe next time out.

This is the time of year I like to keep a camera in the car, you never know what you will see.  I am reminded on a daily basis why I live in Alaska and work in Eagle River.  It is absolutely beautiful.

How to Sell Your Eagle River Home
in a Buyer's Market

A Fresh Look

The snow is falling today and it reminded me that Mother Nature has a way of making everything beautiful.  As the winter drags on the landscape is drab and gray.  Well thanks to Mother Nature, last night it started snowing, and 'Whallah', everything white and pristine again.

Some days we wish life was like that.  When you are selling your home this is an important lesson.  Your home needs a fresh look!  Don't get me wrong your house is beautiful, but face it you live in it everyday.  I realize you clean up after your self, but when was the last time you dusted, washed the wall corners leading to the kids room, cleaned the light shades, and the most important back-splash behind the stove?

These things seem like no brainers, however when you're selling your home they may get overlooked.  I know you clean them when you have a party.  My wife loves our home when we have a party, as everything gets cleaned and decluttered.  The home sparkles, although I may not be able to find everything I'm looking for the next couple of days.

The fresh snow reminds me that the one most important thing you can do in selling a home is to paint it.  Give it a fresh look.  Do it right, tape things correctly, take your time, put on multiple coats. 

Do it Right! Just like Mother Nature would!

"Can you believe that they drive from the Valley everyday?"

"Wow, you drive that far EVERYDAY!"  I hear this all the time from people.  A reality in most people everyday life is that they have to commute.  East Coast, West Coast, and in the Midwest, people drive to work.  Some may take mass transit, which does lessen the toll on you, maybe.  I still think the daily grind of getting to and from work is pretty consistent for everyone.  Well not everyone, some lucky people walk to work or ride their bikes.  This blog is not for you!

Its for the rest of us that spend 30-60 minutes on our way to work.

In a Alaska the commute can be quick and other days it can be horrible.  The weather dictates this as well as the moron that just cut off the guy in from of me sending him into the ditch, creating a huge snarl of traffic on the only road linking the Mat-Su Valley and Anchorage.  This is a reality that effects at least 30,000 people a dozen times a year.  Yes, just a dozen times a year.  So its not really that bad, well when it happens it's that bad.

I think if you commute from anywhere it will take you time.  commute from South Anchorage and it will take you longer to get to downtown than if you live in Eagle River.  The commute from Eagle river is the same as from Wasilla to Eagle River.  I just wish more businesses would relocate their corporate headquarters to Eagle River (BTW, Corporate guru's, we have land and would love to have you).  So if the difference is just an additional 30 minutes is it worth it. 

Some say the cost is huge, but I would argue its not.  For example 30 minutes at 65 mph in a truck that get 16 mpg ( I hope your car does better) uses 2..03 gallons and costs $7.03 ($3.46 per gallon) each way, $70.28 per week for the additional miles driven each way.  I think most people get better gas mileage than this.  This adds $302 to the monthly commute bill.

If a home in the Mat-Su Valley is $90,000 less does the difference save you any money at the end of each month?  Is the extra space that you get, as most homes are on larger lots (Half acres+ compared to a 1/4 acre or less in Anchorage), worth the difference?  there are more newer homes in the Mat-Su Valley, so the energy costs of these new more modern homes possibly offset the cost of the commute?  Easier access to the trails and rivers of the Mat-Su valley, that can save on your weekend gas bill, so there is a minor trade off, unless you go to Kenai or Seward every weekend than there is an increase.

Current interest rates are 5.125% today, and that additional $90,000 will cost you $490 per month on a 30 year conventional loan.  That is a saving of $182 per month that could go towards a more fuel efficient vehicle, or maybe a new boat?

BTW, this is what I was thinking about on my way in from Wasilla today.

In the Mat-Su Valley homes can be more affordable with a majority of the homes in the $150,000 to $350,000.  The Mat-Su Valley offers larger lots and access to recreational properties that Eagle River and Anchorage do not.  You can click anyone of the links below to see the current homes for sale.

• Wasilla
• Palmer
• Big Lake
• Houston
• Willow
• Talkeetna

Alaska Real Estate

The local real estate market continues to chug along with more buyer moving up from the lower 48.  Many of the buyers that I am seeing in the market are military relocating from other bases.  Will these new Alaskans buy or rent.  Many of the inquiries I've seen have asked about rental in our area.  This is a trend that has been ongoing for the last 3 years and I believe is driven by the turmoil down south.

The housing market across the country is getting better, however there have been casualties along the way and unfortunately many buyers that are relocating to Alaska have taken losses before they moved here.  I understand that it is very frustrating to lose money that you have invested in your home.  Our parents taught us that his was one of the safest investments we would ever make, but in the last 5 years that changed.

Here in Alaska the market has had its ups and downs.  We've seen corrections in valuation, but not to the extent that our neighbors have down south.  There are a few more foreclosures in recent months, and there will be more.  Even here in Alaska there were lending practices that snared a few ill prepared buyers.  For the most part we have seen a slow down in the market.

Last year in the Eagle River area the number of homes sold decreased by approximately 6%, but the average sales price went up.  It varied depending on the price range.  The Anchorage market saw minor increases, as did the Mat-Su Valley.  As we move towards the spring sales season, homes are slowly coming on the market.  Inventory numbers are increasing, but only marginally.  The number of sales are increasing as well.  Three years ago I forecasted that it would take 5 years to fully rebound here in Alaska, and I still stand by that forecast.

There will be a move to quality, and that has been a trend that started about a year ago.  People want more for their money.  New construction will continue to get better.  I believe that Eagle River will see growth from this has the subdivisions in this community continue to grow.  This year should be good, a little better than  last year.  According to ADEC there will be more jobs in Anchorage, and the Mat-Su Valley will also see job growth. 

No boom here just good growth.  Just what we need.

If you have questions about buying or selling a home feel free to call me at 907-360-7471, or visit me on Facebook at www.facebook.com/eric.bushnell/

Recently I had the opportunity to attend the AEDC Economic Forecast Luncheon.  The Keynote speaker was Perter Sheahan, author of Flip.

Click Link to the video.  This is not short, but really good.

Peter Sheahan - 2011 AEDC Economic Forecast Luncheon from Christopher Makinster on Vimeo.

2011 Forecast for Eagle River Alaska

January 2011 has arrived and now its time to pull out the crystal ball, or the magic 8 Ball, whichever you think is most accurate.  Now is when I do much of my planning for the coming year.  In the past months we have celebrated the holidays, enjoyed our friends and family, and looked forward to dealing with a new year.

So what will 2011 be like?  Before we decide on our best guess we need to take a look at 2010 and 2009.  How have we fared in the past two years?  In Chugiak and Eagle River we have sold 971 single family homes (This does not include condos), 501 in 2009 and 470 in 2010; down 6.2%.  Not too bad considering that the market was down much more substantially in the lower 48 markets.  The average sales price was unchanged in the Chugiak market, but up 3% in Eagle River and the median sales price was up in both markets.*

The available homes on the market was up at the end of the year with approximately a 5 month supply of homes.  This was up from a 3 month supply at the end of 2009.  The numbers have dropped off now at mid month and when you remove the new construction to be built (homes that have not been started at this time).  Currently there is about 1/3 less homes available; however these number are sure to climb over the next 30 days.  This low number limits a buyers choice and they tend to look in Anchorage or the Mat-Su Valley, trying to find a home they can afford.

If we look at these numbers it is easy to suggest that 2011 will be a slow year, however I would like to point out that we are coming off several booming years.  Our market is more normalized now the ever before.  The sales rate will be steady and I think most client are looking for quality over quantity, a nicer home vs. a bigger home.  I have seen more people trending towards larger garages.  Banks will continue to be a speed bump in the selling process as the underwriting standards become stricter.

My forecast for 2011 is similar to many others I have heard, I believe the Eagle River and Chugiak markets will experience increases in the number of sales and valuation.  A tighter inventory will bring up the price for the home, and there will be more new homes built this year.  There will be less condos, and more single family homes. Here it is the magic number for our area, we will sell:

501 Homes

I really like the extra one!

 *Based on information from Alaska Multiple Listing Service, Inc. (AK MLS) for the period CY2009 and CY2010 but not compiled or published by AK MLS.  Listing content maintained by AK MLS may not reflect all real property activity in the market.