Anchorage's hot housing market has cooled.
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Evidence comes from the proliferating "for sale" signs around town and in the Mat-Su, many of them marked "price reduced."
The upshot is that the housing market in the state's largest city -- for the first time in years -- is shifting in favor of buyers.
Here are the key trends:
The number of houses for sale in Anchorage has increased steadily almost every month since spring of last year. By August, the inventory of Anchorage single-family homes for sale was the largest since 1994 and almost double what was available in August 2001.
With the increased supply, it's taking longer for houses to sell.
The average selling price for houses is still increasing but at the slowest rate this decade.
New home construction has tumbled to half of last year's level.
Ask a local real estate agent, and there's a good chance he or she will assure you that Anchorage isn't entering into some kind of dangerous, downward spiral in housing. Actually, the city is returning to a more normal housing market, like locals experienced throughout the 1990s, they say.
If that's true, Anchorage is in a different situation from the overall U.S. housing market, which real estate analysts say is in its worst slump in more than a generation. Nationally, foreclosures have increased dramatically and analysts predict the average price of existing homes will drop 1.7 percent this year -- the steepest decline in decades.
In contrast, Anchorage house prices still seem to be rising, although slowly. And while foreclosures are up, it's nothing approaching the spike in foreclosures in the Lower 48.
Here, the big trend is sluggish sales. Sellers are coping by slashing their asking prices by tens of thousands of dollars. Buyers are taking their time to negotiate and explore the expansive supply of median- to high-priced homes on the market.
Some industry watchers speculate that some buyers may be skittish due to fear about the national housing slump; other wannabe buyers may no longer be able to finance a home purchase, due to many lending institutions' reduced offering of risky loans.
In Anchorage, the inventory of single-family houses for sale in the $250,000 to $350,000 price bracket has increased to about a five-month supply, based on how many houses typically sell in a month.
The inventory of houses priced $1 million or greater is at 29 months' supply.
It's still a strong sellers' market for the lowest-priced homes, though, which are in a four-month supply.
Many real estate analysts agree that a housing market has shifted in favor of buyers if the inventory is five months or greater.
CHOOSY BUYERS
New homeowner Jon Dyson looked around casually for about a year before he finally closed a deal on an East Anchorage house last month.
When he saw what he wanted, he put down an offer quickly. "It was pretty much what we were looking for," he said.
Dyson graduated from college a couple years ago and returned to Alaska to work. An assistant manager for the Glacier Pilots baseball team, he and his brother waited around to find a house to share that seemed to have some investment potential and fit inside their price range. Dyson was able to negotiate the price down a little further.
"It definitely is a buyer's market right now. People seem anxious (to sell)," Dyson said.
Another recent buyer, Ron Caron, was pleasantly surprised after he set a purchase goal that he didn't think was realistic: Turning 50, Caron hoped to upgrade to a home "with a view," but didn't want to pay more than $500,000.
Caron was shocked when his wife found a property fitting his criteria on upscale Potter Valley Drive, after she looked at roughly 50 houses. "I figured she'd never find it," he said.
The house was reduced $50,000 from its original list price, Caron said. "I think it's an excellent time to buy a home," he concluded.
All this doesn't mean that Anchorage houses are suddenly a bargain, especially for people who aren't wealthy. It's still a brisk seller's market for houses in the lowest price brackets.
"Affordable housing is a huge problem," said new homeowner Karin Halpin, who moved to Anchorage from the Bush last month with her husband.
The couple hoped to buy a house for $175,000 but quickly learned that just about anything under $250,000 was a fixer-upper. They increased what they were willing to pay several times and lost out on an offer that they tried to negotiate. Halpin is still shocked that they paid $250,000 for a 1,200-square-foot home. They didn't negotiate the price.
"I thought I had tapped out the market in our price range," Halpin said.
NERVOUS SELLERS
With their kids turning into adults, Terrie Gottstein and her husband, Jim, recently downsized to a smaller home. But they are having a heck of a time selling off their sprawling stucco estate on the Lower Hillside.
The house, with massive windows and a double staircase, is the origin of many fond family memories. The Gottsteins raised their children there, even turning one of the rooms into a dance studio.
These days, the house on Alpine Woods is mainly a source of anxiety.
It's been on the market since late October. Since then, an average of one house per month in its price bracket -- $1 million and up -- has sold in Anchorage. So, Terrie has joined the ranks of the nervous sellers. She's hired a professional who "staged" the house with sofas, table settings and wall decorations to make it look more enticing.
The Gottsteins are holding frequent open houses, and recently, when Terrie heard about a business executive moving to town, she e-mailed him a link to a virtual tour of her home.
"One of the ways to deal with stress is to be more proactive, to put (the house) out there as much as I can," she said.
Crystal Neff, who owns a home in Muldoon, is another nervous seller. She, her husband and their four kids are moving to Texas to advance his career.
After purchasing their Anchorage home a couple years ago, the Neffs remodeled it "from head to toe," taking out a second mortgage to complete the repairs.
They still owe more than $400,000 on the home but can't seem to attract any serious buyers, she said. They've already reduced the list price by $15,000, and can't afford to reduce it much more without losing some money, she said.
"I am partly scared that it hasn't sold or remotely had an offer," Neff said.
She's speculating that prospective buyers are getting scared by the national news about housing.
DEALING WITH SLUGGISH SALES
An observer of Anchorage's housing market could say it's going downhill.
Or, one could compare the city's current market to the scene in the 1990s, and conclude everything is normal, and the previous five years were what was unusual, says Niel Thomas, an Anchorage real estate agent who publishes statistical reports on the local market.
In the past 30 years, the Anchorage housing market has slumped twice due to job and population loss -- including a spectacular crash in the late 1980s.
Thomas doesn't see any signs of doom right now.
"It's a balanced market that is beginning to tilt to buyers," Thomas said.
Anchorage would probably need to see a serious loss of jobs or population -- or some other massive hit to the economy, for its housing market to crash. Instead, "what we see is a decline in seller expectations," he said.
In other words, sellers can't demand sky-high prices and expect to nab a buyer. And in many cases, especially for high-end properties, buyers can be more aggressive in their price negotiations.
It's hard to point to one single factor for the sluggish market.
A segment of buyers might be afraid to "pull the trigger" on a major home purchase because of the national foreclosure and credit crisis, or because of general worry over the economy, according to John Carman with Homestate Mortgage Co.
Local house sales aren't down dramatically, though, statistics show.
But another dampening effect on sales is the deepening financial crisis affecting lenders. Financial institutions no longer offer several types of high-risk, subprime loans, and it's a lot tougher to buy a house now with no money down, or no stated income. Also, jumbo loans -- used to buy expensive houses -- now come with much higher interest rates, Carman said.
In general, 20 to 30 percent of the loans that used to be available to home buyers in Anchorage now have been eliminated because they are now deemed too risky, Carman said.
Some prospective homeowners also could be holding back to wait for positive economic signals, like the state forging a deal for a North Slope gas pipeline, he said.
"People don't want to buy when they think values might go down," he said.
Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.
Tips for sellers:
• If you want to sell in a relatively quick time -- 60 to 90 days, for example -- price your home accordingly. "At least half of the buying public is holding back, waiting for a bargain. They know interest rates and prices are moving in their favor. They plan to buy a home this season, and will in fact do so. But right now, unless a property meets their needs and strikes them as an outstanding value, they won't act. This means that sellers, to capture the attention of that part of the buying audience, need to be better than number one," says Anchorage real estate agent Niel Thomas.
• If buyers aren't coming to look, your house is probably priced too high.
• Adjusting the price might work better than offering other incentives -- such as contributing to closing costs, or paying points or other fees to hold down a buyer's monthly mortgage costs. Those may also be useful, but buyers tend to focus on the list price, and may never read the fine print about incentives.
• Play buyer: To find out if you need to reposition your asking price, or make other adjustments, go look at the competition to see how other houses compare to yours.
• "Stage" your house properly, with strategically placed furniture and decor, to make it look inviting.
Tips for buyers:
• Anchorage is now a red-hot buyer's market for luxury homes. It's a good time to negotiate the price or ask for other concessions.
• Don't expect to be able to run a hard bargain on a low- to mid-priced house. Those properties are still in high demand.
• It's a good time to be a bargain hunter, but it's a bad time to be a speculator expecting to flip a property for a quick profit. House prices are not appreciating as rapidly as they had been, and nationally, prices are actually dropping.
• A buyer who connects with a seller trying to close a sale before winter might have a good chance of negotiating a lower price or other seller concessions.
Sources: Associated Press; Niel Thomas; local interviews with real estate agents and mortgage bankers.
