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The economy is starting to emplode so I expect to see prices start to sharply fall along with rent. I will be checking the MLS every week for the next year. What was/is going on in anch was/is unsustainable.
People are hunkered down right now, living with family and renting out rooms etc. The ax is falling in oil and gas and those that remain will find drasticly reduced prices. Not like the 80's but I can gaurentee sand lake wont be costing anywhere close to half a million in the next year or 2.
Land "owners" who have a mortgage noose around their neck are going to start off reducing the price by nickles and dimes and if they were ones that got axed you will start seeing forclosures that is the time to act and start making really low ball offers. It will take about a year or 2 for the market to respond because people are not going to joyfully sell their homes for 50 to 60% of what they paid, they will try to make 3-5% changes and no one will bite because the jobs are shrinking.
The army is also "laying off" they are doing it in small chunks so the press coverage is minimal. If you do 800 people every 6 months or so people forget.
Keep an eye on the oil patch, once it starts dropping off you'll see prices start to slide. I'm surprised that anyone who survived the 80's boom and subsequent bust would find this unusual but the correction can be brutal. I'd wait to buy right now, once the slide starts it will pick up momentum and once again, prices will be reasonable.
If the price is out of reach now, it will still be out of reach if it keeps going up, so don't get caught up in the trap of "we need to act now".
And if your hubby is a slope worker, why can't you move to the valley? It is a better place to raise kids. The drive is as bad as some make out if you aren't doing it every day.
The military reduction will certainly have an effect but a 50-60% decline in home prices seems extreme. Even with decreasing oil prices, for the past 3 years there have been more employed on the North Slope than ever before. I see this more as a slow painful economic slide than something drastic in the next couple of years.
As someone who works in oil and gas I can tell you that slope personel are being reduced. It costs over 100k just to have someone on rotation (not counting their salary or per-diem). Assets are being sold off to small companies who operate extremely lean. I have recommended to people I know that are going to the new companies that they might want to recommend they not go TOO lean because if crap hits the fan you need to have proper response (ie a well blows out, you loose your major compressors, etc)
A 10-20% reduction in home prices is not going to get most people to bite, not when there are lay offs going on and those jobs are not being replaced. Homes are already grossly over priced for the median income of Anchorage so I personally believe Anchorage is due for a MAJOR correction. If the bridge gets built on top of all the down sizing you could see a half million dollar home today going for 150-180k if that. I would personally buy at a 180k price point for a nice sand lake home that butts up against kinkaid park with a 2-3 car garage. But im not going to eat spam out of a can to float a half million dollar mortgage payment. With a decent down that's about a 1500/month mortgage which is about 25% of a person making good moneys net income.
For someone making a 3500/month mortgage that means their NET income should be around 14,000 a month, I don't know anyone that makes that much money, that means a lot of people are living house poor or not saving for retirement, etc. Just so they can out bid other idiots who are willing to be house poor to get into coveted neighborhoods with the nice schools. I like those neighborhoods too but im not going to be destitute over it.
Also the military has become like a boarder line welfare program, the army has WAY more people than it needs for a first response. If we ever got caught in a long drawn out war on our soil we would have to draft anyways so why have tons of guys sitting on base collecting checks being whipping boys for mid range NCO's and low grade officers, let them go home and yell at their dog. The DOD is wising up to this and cutting people.
Of course I could be wrong and people just keep lining up like lemmings to make 3500 a month mortgage payments with the back drop of lays offs going on. A lot of people buy the realtor hype that "omg you have to buy now because prices just keep going up and Anchorage is a magic ferry land exception and will never correct downward in a significant way" rolls eyes.
But if the lay offs keep coming its not going to matter because those jobs are not being replaced and unless some other business sector is picking up the slack (medical, telcom?) who is going to be buying these homes that come on the market from the people displaced? Renters? Renters are renting for a reason because we don't want a 3500 mortgage. How are the displaced people going to make their 3500/month payments?
If im a renter with a month to month lease and I know the market is contracting do you think im going to let a seller get away with a 10-20% reduction?
Last edited by highlife2; 10-12-2014 at 01:37 AM..
It's been an Alaska tradition to live house poor. I recalll the last time I was seriously looking, and the mortgage company was ready and pantingly willing to sign the ex and I up for a cool quarter mill. At that would have left us really just enough to live on, with a car payment, etc. Since we already had a house I thought that was ridiculous.
I wonder how many posters here actually experienced the '80's. It looked an awful lot like now. Oil prices are falling, with that the state takes in less, the oil companies take in less, and it turned so fast that nobody really could reasonably react quickly enough to stop the disaster. Right now is so very not the time to sign up for half a million dollars worth of house, despite what the chirpy little sparrows at the real estate companies will tell you.
Let me relate one last anecdote about how bad it can get. We had wanted to leave the state at the time but couldn't sell our trailer as the market had gone dead. We did get an offer from one of the leading RE agents who had basically gone broke, was a note on the door from being homeless, and needed a place to live. This broker had their entire empire collapse and likely right up to the end never acknowledged its coming.
The economy always turns around and the deals will be there when it does but will you be able to take advantage? Life in the last frontier is often challenging, rewards the quick and punishes those who won't absorb the lessons of the past and the trends of the present. Trust what you see and know and don't be swayed by those who stand to make their money off you.
It's been an Alaska tradition to live house poor. I recalll the last time I was seriously looking, and the mortgage company was ready and pantingly willing to sign the ex and I up for a cool quarter mill. At that would have left us really just enough to live on, with a car payment, etc. Since we already had a house I thought that was ridiculous.
I wonder how many posters here actually experienced the '80's. It looked an awful lot like now. Oil prices are falling, with that the state takes in less, the oil companies take in less, and it turned so fast that nobody really could reasonably react quickly enough to stop the disaster. Right now is so very not the time to sign up for half a million dollars worth of house, despite what the chirpy little sparrows at the real estate companies will tell you.
Let me relate one last anecdote about how bad it can get. We had wanted to leave the state at the time but couldn't sell our trailer as the market had gone dead. We did get an offer from one of the leading RE agents who had basically gone broke, was a note on the door from being homeless, and needed a place to live. This broker had their entire empire collapse and likely right up to the end never acknowledged its coming.
The economy always turns around and the deals will be there when it does but will you be able to take advantage? Life in the last frontier is often challenging, rewards the quick and punishes those who won't absorb the lessons of the past and the trends of the present. Trust what you see and know and don't be swayed by those who stand to make their money off you.
I am saving money like crazy so that I can exploit the enevitable collapse. The other angle is you have to make sure that you have made yourself stand out as highly competent in your profession that way you can weather the lay offs. In this case the lay offs are going to be swift and numerous in the oil patch (unlike the military), this is because civilian companies know that if they drag it out too much they will loose good people who are worried about being caught in the throws of lay off season.
Then you snag a super nice property in a nice area for pennies on the dollar and when things pick back up your not drowning in mortgage debt and can start adding pins to your map or what ever it is you do.
People having 2-3 kids who keep them up all night don't have time to stay at the top of their game. I am frankly surprised that it is taking so long for a second correction to take place since the 80's though.
Maybe that's why im at odds with so many in this state and these forums because I am not willing to buy into the culture of being house poor and im not willing to pay out the rear end for basic services I can do myself.
The correction may never come and the lay offs come and go and real estate stays outrageous, in which case I will just keep saving to retire out of state or country. How ever the cookie crumbles im not paying someone a half mil for a cracker jack box home with a 2 car garage just to stay out of the ghetto.
I am saving money like crazy so that I can exploit the enevitable collapse. The other angle is you have to make sure that you have made yourself stand out as highly competent in your profession that way you can weather the lay offs. In this case the lay offs are going to be swift and numerous in the oil patch (unlike the military), this is because civilian companies know that if they drag it out too much they will loose good people who are worried about being caught in the throws of lay off season.
When do you think these mass layoffs will occurr that will collapse the economy? As it stands now there are more employed on the North Slope than ever before. This trend seems to be continuing as with unconventional drilling there needs to be more employees not less.
I don't buy into the gloom and doon scenario but think we will see an adjustment that will be much slower. We will never see anything like the 80's situation again.
When do you think these mass layoffs will occurr that will collapse the economy? As it stands now there are more employed on the North Slope than ever before. This trend seems to be continuing as with unconventional drilling there needs to be more employees not less.
I don't buy into the gloom and doon scenario but think we will see an adjustment that will be much slower. We will never see anything like the 80's situation again.
I think a sitaution like the 80's is unlikely but never say never. The lay offs are already happening, BP announced they are doing major cuts and the companies that they sold some of their assets too operate much more lean.
I dont know what your talking about as far as "more people on the slope than ever", all my sources say its contracting and they have already canceled one shared services flight. BP has been pulling people off the slope for the last few years now.
Yes during the last CGF and gathering center turn around there was a temporary ramp up. The CGF was one of the biggest turn arounds in slope history but it was a finite event that is now over. Also drilling is on the decline.
Perhaps with this latest ballot measure more drilling will start happening but even if there is its not going to require a huge number of people and I think there will be a slow decline. After this round of lay offs its likely that the majors will just allow people to retire and not back fill the positions (unless its a critical roll).
So no I dont expect to see 80% losses in home values but its not going to be the same gravey train it once was and the market is going to have to correct. I also do not think it will be a step change like in the 80's where things crashed almost over night but it will be a slow decline. 5-10% in the next 6 months to a year then another 10% and so on.
Unless there is some major catalyst to change the downward trend (open ANWAR, new drilling in the cook inlet, major gas line, LNG project, kink arm bridge construction, etc) then I dont see how these prices can stay proped up.
I could be wrong but I will be checking the MLS over the next year to watch for trends, I think most people are sick of half million dollar slapped together homes just to get into a nice neighborhood.
Also with the military laying off at the same time is a double whammy.
It is far from gloom and doom, a nice healthy correction in prices will be good for new families to not have a tight noose around their necks. In my opinion healthy would be about a 50% correction. All it takes is people wising up and stop making these huge offers and getting themselves in over their heads. Just becuase an owner has a certian price does not mean me or anyone else has to pay it and if the person is a motivated seller the price will come down or the house will go into foclosure.
I guess the other thing that could happen is that a bunch of properties could just become bank owned and banks are starting to hold on to property because they dont want to take the huge losses either. The only thing that could force a sale at that point would be if the city stepped in and forced an auction to avoid creating blighted neighborhoods.
Last edited by highlife2; 10-13-2014 at 01:05 PM..
Did you go to Russia Highlife2? Didn't see you posting here for awhile. If you did, what is the RE market like there?
Problem with the foreclosure is exactly what you said- some banks held onto properties for years before they let them go and they only slowly put them back on the market, when they can get out of them what they have in them. It is typically a complicated formula, since at one point people were making payments. The banks will create a tight supply so the demand (and price) go up or stay flat. They did it in Forida, one of the leading foreclosure states in the US...
Correction coming? Maybe... It will definitely happen when the FED increases interest rates as they have indicated they will. Your $500k home costs a lot more on a mortgage at 8% then it does now at 4%.. Cash is king, so having cash in hand will help you... That is my double edged sword. If I pay a little more to own a house but get in at 4% vs. waiting, paying less, but having to finance at 8% I could have a higher payment. For one person earning family, $14k a month is gonna be tough, but if husband and wife (or significant other) are both working $14k a month isn't all that hard to muster.
Did you go to Russia Highlife2? Didn't see you posting here for awhile. If you did, what is the RE market like there?
Problem with the foreclosure is exactly what you said- some banks held onto properties for years before they let them go and they only slowly put them back on the market, when they can get out of them what they have in them. It is typically a complicated formula, since at one point people were making payments. The banks will create a tight supply so the demand (and price) go up or stay flat. They did it in Forida, one of the leading foreclosure states in the US...
Correction coming? Maybe... It will definitely happen when the FED increases interest rates as they have indicated they will. Your $500k home costs a lot more on a mortgage at 8% then it does now at 4%.. Cash is king, so having cash in hand will help you... That is my double edged sword. If I pay a little more to own a house but get in at 4% vs. waiting, paying less, but having to finance at 8% I could have a higher payment. For one person earning family, $14k a month is gonna be tough, but if husband and wife (or significant other) are both working $14k a month isn't all that hard to muster.
Till one of the 2 gets laid off, and in anchorage its not easy to find a new job in some industries. so that leaves one person paying on the note. Like I said a correction of substance may never come but I refuse to be caught with my pants down. Thats just me though.
Co worker went to russia and they said it was cheap (as long as your not in moscow or st petersburg). My truck finally bit the dust so I bought a new one and have been dealing with all of that and getting ready for winter.
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