PUBLISHED: 5:30 PM on Wednesday, February 13, 2008
Home sales activity, lower rates creating new enthusiasm for home buyers, sellers
Editor note: This is the first in a series of articles looking at trends in Juneau and Southeast Alaska real estate. This week looks at recent improvements that are jump starting real estate sales in Juneau.

Juneau real estate professionals are saying that there's a new energy in the local home buying and selling market, despite continuing pessimism about real estate markets down South.

That is buoyed by a basically solid market that does not play by the same rules as Lower 48 communities which fell victim to sub-prime lending problems.

And that recent surge in both home sales and refinancing are creating new enthusiasm for home buyers, sellers and the businesses that rely on them.

"Things are rocking right along right now," said Adam Hendren, vice president and mortgage lending manager at Alaska Pacific Mortgage in Juneau. "We've had a massive increase in our business at Alaska Pacific."Obviously rates have dropped. And about at the same time, it seemed to be the spark that this community needed to get sales back on track.

"We hit an all-time rate low three weeks ago, and are still at the lowest since 2004 (5.5 percent)."

Total real estate sales transactions did drop in 2007 in Juneau, by almost 20 percent, while average sales prices rose about five percent, but not for the reasons that have affected other communities, he said.

"We are in a market that had been slower, but we are seeing indications that things are coming to life," Larry Telfer, broker of Re/Max of Juneau agreed. "People are coming to town and are ready to buy.

"This is the time of year that people that are going to move in the summer come to house hunt."

That trend covers the spectrum of new residents from government to private industry jobs, he said.

"Last year we had more inventory, and less buyers. This year inventory has gone down."

While the number of Juneau homes for sale varies day-to-day, the inventory seems to be down from a high of about 120 homes last year to 70 or so this week, he said.

"That is one of the secrets about Juneau real estate," Telfer said. "We have plenty of selection and interest rates are good....probably near an all time record low.

"Now we're seeing buyers across the board."

"I believe the slow-down was self-imposed," Hendren said. "We had none of the crashes or massive foreclosure, but people got scared about what was happening down South. So they took a 'wait and see' attitude.

"For example, a lot of first-time home buyers thought 'I know if I wait, property prices will go down, so they waited to buy a home. And since a lot of people looking to upgrade, had not sold their homes (to first-time buyers), it rolled into the whole market.

"Last summer a combination of factors-the sub prime crash, capital creep, all the other things you heard combined to put everyone into a wait-and-see mood. Even with a slight increase in foreclosures, it's not the same as down South.

"That's my own personal assessment, because we have not seen a massive drop in prices. And now with rates dropping, that has kicked people to say 'Here's my opportunity. I'm tired of sitting around.

"So our lookers are turning into buyers."

"A lot of buyers are on the sidelines waiting to see what happens," Telfer agreed. "Those are the move up kind of people. We are not seeing any loss in confidence in real estate as an investment in Juneau."

Hendren said he's seen several new home purchases this month, as well as lots of activity from prospective purchasers of homes to be built, which add to his enthusiasm about an improving market.

"Those are really good signs," he said.

"I'd say the market is stable, with slight adjustments in a few cases," Telfer said.

Where prices have been cut, the properties may have been prices too high initially, he said.

Telfer is also optimistic about the coming year.

"Remember that all real estate is local. And the Alaska economy is always 180 degrees out with down South.

"I think it is going to be stable, but a few things could happen that could cause it to really come back to life, like oil prices. High oil prices are good for Alaska and good for jobs here. So is a combination of state spending and new activity on the Kensington Mine."

Compared to a few years ago, when there was a true shortage of homes for sale, the 2008 market seems a better balance.

"We have a good inventory, lower rates and stable pricing. It is a good market for the buyer, but I would not call it a strong buyer market. The sellers have not blinked by any means."

Lower rates also have kicked off a new rush of refinancing, Hendren said.

"When you see rates drop nationally, we see a refinance boom. With rates all the way down to 5 percent, all those people who purchased in recent years now have the opportunity to refinance."

Refinancing is another testimony to confidence in a real estate market, because owners have to feel confident they'll be in their home long enough to recoup closing costs.

"We're seeing a lot of people refinancing to pay off debt. It's a great opportunity to get themselves into better financial shape."

Low interest rates seem destined to stick around for some months, providing more opportunity for buyers.

"Anyone who says they can predict rates doesn't know what they talking about," Hendren said. "Federal rates cuts do not have a direct impact on mortgage rates, with the first cut we did see an initial reaction of the market down to 5 percent. That was a huge dip, then quickly recovered to the mid fives and has been hanging around there for weeks now."

Next week: By the numbers-details from the Juneau MLS on trends in Juneau and Southeast Alaska real estate.