Peninsula real estate market confuses reader

Posted: Tuesday, July 19, 2005

I am confused. While in Anchorage I got a copy of a real estate magazine that mostly covers Mat-Su. The Mat-Su real estate market is hot because it gets the overflow of the even hotter Anchorage real estate market. There is no earthly reason as to why prices in the cool central Kenai Peninsula real market are rising faster than Mat-Su.

Yes, Kenai River front property is in high demand from outside buyers, but what about regular subdivision houses? Why do simple cabins here have asking prices and appraisals nearly twice as high as hot Mat-Su? Like $110,000 for a 448-square-foot cabin on Funny River Road as compared to $35,000 to $60,000 for similar hot Mat-Su cabins.

Appraisals and borough assessments are up nearly double and more over the last five years for many homes and land. Land that has been on the market for 20 years and hasn't sold is being upped in appraisal and asking prices. Are appraisers, assessors and real estate people living in la-la land? Local demand is not high enough to justify the increases.

The jobs are not here that would allow most people to afford the housing. A $15-an-hour job cannot make the mortgage payments on a $200,000-plus house (most carried a $120,000 price just a few years ago). And demand will get even worse once Agrium closes. Nine percent of the peninsula payroll will end. The ripple effect will cause others to lose their jobs. The Pebble Mine may never open.

I know the borough pushed assessments in order to be able to claim no mill increases, but if your assessment doubles, your taxes double even without a mill increase.

Reading the Alaska Multiple Listing Service listings is interesting. I have noted a number of local real estate people apparently have put their personal home up for sale. If things are booming, why? I have been told that one local appraiser has retired and is leaving the area. Getting out while the getting is good?

Of course, the people who do manage to get their houses sold at the current asking prices will benefit, but what about the buyers? What about owners who refinance based on inflated appraisals when the local real estate market drops and they need to sell? I remember the 1985 real estate crash. We may not have a crash, but we are headed for a severe correction.

Maybe our borough assessors, local appraisers and real estate people can end my confusion by explaining why the laws of economics have been suspended for the central peninsula.

William Phillips, Kenai

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