Homer Real Estate News

Yesterday (Wednesday) my broker, Philip Alderfer, was one of the presenters on KBBI Radio's "Coffee Table" program (www.kbbi.org), talking about the real estate market in Homer. Some of the information he presented was as follows:

"The Good News: On average, MLS brokers sold 110 residential homes per year (including condos and multi-family’s) in the Homer area* between 2002 and 2007. In 2008 we are on pace to sell 90+. While that is a decline, the market has not totally gone away.

The Bad News: Between 2002 and 2007, MLS brokers sold an average of 120 vacant lots per year in the Homer area and in 2008 we are on pace to sell only 65-70. As I see it, the Homer “land bubble” has popped. 2006 was the high water year for land, with 160 closings. The market has slid 60% since then, to the level we see today.

What about inventory? Inventory levels remain high, especially for a softening market. With nearly 120 homes available in the Homer area, we currently have 12-14 months inventory available, excluding any new listings. And with more than 200+ vacant lots in Homer, alone, and sales of less than 100 / year, land inventory far exceeds current demand.

So what about sales prices?: In 2002, the average Homer-area home price was $143,600. In 2007 the average home price rose to $247,300, an increase of 72% over 7 years. However, in 2008 the average home price will fall, to approximately $215,100, a 13% YoY decline. While average lot sale prices rose from $35,700 to $83,400 between 2002 and 2007, the average lot sales price was $85,920 in 2008. With inventory levels remaining high, I would expect this average price to fall, perhaps significantly, over the next 1-2 years. (Nor are dramatic price fluctuations unusual. Between 1998 and 1999, average lot sales prices fell by 13% and between 2001-2002 they fell again by 19.6%)

Finally, High-end homes are most likely to experience pricing pressures: While the average home sales price was $215,000 in 2008, the average list price was far in excess of that, at $353,000. This reflects appreciation in the perceived value of the underlying land and increasing building materials costs on new construction. However, in 2008 RE brokers will sell only 8-10 homes priced at $350,000 or more. And as of today, there are 46 homes listed at or above $350,000, nearly 5 years of available inventory.

Now, more than ever, we must council “aggressive pricing” with our Sellers, especially at the high end. Lower priced homes must be in perfect condition, priced well, and immediately “show-able.” And for our buyers it is a great time to go shopping. Interest rates are likely to fall as the Feds work to stimulate consumer spending. However, they will be quick to reverse rates as soon as they sense any strength in the broader economy. So, if buying a home is a goal for the next year or two, let’s encourage clients to think about buying now!

Lastly, as always, the best measure of economic strength in a community is jobs, jobs, jobs! " So this was Philip's take on the market, and I agree with him.

Now if you're a seller of raw land, you shouldn't get discouraged. Part of hiring a Realtor to sell your property is getting it priced right and marketed agressively. That's where I come in. If you have property to sell, give me a call or email me and we'll talk about how to position your piece of property in today's market! Don't despair! What seems like a challenge is really just an opportunity!