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Thread: Oil prices and real estate

  1. #1

    Default Oil prices and real estate

    I am a long time Alaskan and while I was a very small child in 85/86 I have heard stories of being able to buy nice condos in south anchorage for around 20k (nickles on the dollar). As oil prices tank and the lay offs have been on going I am barely seeing a dent in various real estate prices. I have heard that the crash in 85/86 was extremely abrupt, prices crashed from full blown fleece to reasonable prices within a 3 month period. Was that because everyone was laid off enmass in one month where as now it seems like the lay offs are trickling out over more than a year so we are not seeing a huge glut of properties hit the market yet?

    Do oil prices have to drop even lower? Adjusted for inflation we are not far away from mid 80's 10$ a barrel oil. I am hoping we have another year or 2 so I can keep saving up to buy a nice single family home with a cashiers check but I kind of thought with the lay offs we have already seen and the base down sizing that it would start being reflected a little in the market but there is no shortage of grossly over priced single family homes still.

  2. #2

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    So I guess no one else is excited for the potential of buying a house without a mortgage.

  3. #3
    Member hogfamily's Avatar
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    We bought our house in late 80s when oil was $9 bbl. Paid about one third of what it is worth now.

    Seemed like half the houses in Anchorage were for sale. Many were left abandoned as the owners walked away from the mortgages.

  4. #4

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    1/3 of the price would be good too, but if you adjusted for inflation between the 80s and now that would mean you only got about 50% off. I thought the deals in 85/86 were a lot better than that, like a quarter or less of todays values. For instance a south anchorage home that goes for about 500k today going for 100k after the crash? I know that nice condos were going for next to nothing but perhaps single family homes were keeping slightly more value?

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    Member hogfamily's Avatar
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    Maybe I stated it wrong. If we were to sell our house today we would triple what we paid for it. It was a cosmetic fixer when we bought it.

    Not quite 100k on 500k more like 250k -$300k depending on the area of town and quality of the home.

  6. #6

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    Ok so a 300k home on Patterson might go for 100k? It must have been the condos that really took a bath then, I talked to a guy selling a hangar and he was able to pick up condos next to fred Meyers on dimond for 20k and that's a pretty nice area. Might be worth picking up a whole condo building, living in one and renting the others out at some later time when the economy picks up. Not sure if you could dissolve/divorce from the association if you owned the entire building?

    Quote Originally Posted by hogfamily View Post
    Maybe I stated it wrong. If we were to sell our house today we would triple what we paid for it. It was a cosmetic fixer when we bought it.

    Not quite 100k on 500k more like 250k -$300k depending on the area of town and quality of the home.

  7. #7

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    Quote Originally Posted by rppearso View Post
    I am a long time Alaskan and while I was a very small child in 85/86 I have heard stories of being able to buy nice condos in south anchorage for around 20k (nickles on the dollar). As oil prices tank and the lay offs have been on going I am barely seeing a dent in various real estate prices. I have heard that the crash in 85/86 was extremely abrupt, prices crashed from full blown fleece to reasonable prices within a 3 month period. Was that because everyone was laid off enmass in one month where as now it seems like the lay offs are trickling out over more than a year so we are not seeing a huge glut of properties hit the market yet?

    Do oil prices have to drop even lower? Adjusted for inflation we are not far away from mid 80's 10$ a barrel oil. I am hoping we have another year or 2 so I can keep saving up to buy a nice single family home with a cashiers check but I kind of thought with the lay offs we have already seen and the base down sizing that it would start being reflected a little in the market but there is no shortage of grossly over priced single family homes still.
    I wished I could share your enthusiasm!


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  8. #8

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    Expect West Texas Intermediate Oil to be in the upper $30's next week.

  9. #9
    Member BluNosDav's Avatar
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    Quote Originally Posted by rppearso View Post
    So I guess no one else is excited for the potential of buying a house without a mortgage.
    Since many of us currently own those "grossly over priced single family homes still", no, we're not excited about losing all of our equity, so that you can make a killing during this economic down-turn. Really pathetic that you're sitting there rubbing your greedy little hands together at the prospect of your neighbors loosing their jobs and eventually their homes. Troll!
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    Quote Originally Posted by BluNosDav View Post
    Since many of us currently own those "grossly over priced single family homes still", no, we're not excited about losing all of our equity, so that you can make a killing during this economic down-turn. Really pathetic that you're sitting there rubbing your greedy little hands together at the prospect of your neighbors loosing their jobs and eventually their homes. Troll!

    Kinda what I was thinking. I was here for the 86 crash. it was ugly. Lots of families and individuals took a bath. Folks with some extra cash, and time to wait it out, did well in the long run.
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  11. #11
    Member KantishnaCabin's Avatar
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    Really? Conspiracy theorist anyone? There is no giant government agency controlling the price of homes in Anchorage. The real estate market is a free market and subject to the whims of the consumer. If you think that the prices are too high then don't buy, its that simple. if enough consumers think as you do then the market will adjust accordingly. The economy in AK is no where near what it was in 87. It is much more diversified now days. That being said we still have a long ways to go to get off the oil dependance of the past. I remember 87, bank failures galore and lots of people just giving up on their dreams. I don't wish that on anyone. Yes, there were $10K condo's that some people were able to scoop from failed banks and reap the rewards, but lets remember that these were people that had the cash ready and were ready to assume the risk. At the time, many people thought that the AK economy was done and might not recover.

  12. #12

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    Even if the economy never recovers this is my home and I dont want to be paying someone elses cash out while I am paying a mortgage into old age. So I am going to wait it out and if a meaningful crash never comes then I will just put my money somewhere out of state where i can afford a house to retire.

    Quote Originally Posted by KantishnaCabin View Post
    Really? Conspiracy theorist anyone? There is no giant government agency controlling the price of homes in Anchorage. The real estate market is a free market and subject to the whims of the consumer. If you think that the prices are too high then don't buy, its that simple. if enough consumers think as you do then the market will adjust accordingly. The economy in AK is no where near what it was in 87. It is much more diversified now days. That being said we still have a long ways to go to get off the oil dependance of the past. I remember 87, bank failures galore and lots of people just giving up on their dreams. I don't wish that on anyone. Yes, there were $10K condo's that some people were able to scoop from failed banks and reap the rewards, but lets remember that these were people that had the cash ready and were ready to assume the risk. At the time, many people thought that the AK economy was done and might not recover.

  13. #13
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    Put in a different way. I think about 5 years from now the state wil have exhausted it's reserves and will have to decide how to pay for the swollen state government. Once the 60% of the residents who don't work vote to make the 40% of us who do, pay for their benefits the I think we are in big trouble. The unemployed want the PFD handout so the rest of us (40%) have to pay about $10k for taxes. Huge hit to the economy. Think we will be pumping more oil thru the pipeline? Nope. Save your pennies and you should do well in the near future.
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  14. #14

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    Save your money and there will be deals to be had, every one I know is waiting to buy until prices for single family homes fall significantly. The base lay offs have nothing to do with oil and that will help temper demand. You can see land lords trying to get every cent right now for rent because they see the writing on the wall, but of course thats noble to fleece the renter (per fishcatcher) but when the renter bites back when the time is right then he can pound sand lol. I think its funny when owners and land lords say its just buisness but then when the tables are turned it gets personal. In reality its always personal, someone wins and someone looses. The winnings are going to go to the patient savers.

    Quote Originally Posted by Mkay View Post
    Put in a different way. I think about 5 years from now the state wil have exhausted it's reserves and will have to decide how to pay for the swollen state government. Once the 60% of the residents who don't work vote to make the 40% of us who do, pay for their benefits the I think we are in big trouble. The unemployed want the PFD handout so the rest of us (40%) have to pay about $10k for taxes. Huge hit to the economy. Think we will be pumping more oil thru the pipeline? Nope. Save your pennies and you should do well in the near future.

  15. #15

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    I know, because its not greedy for someone to want to make 50 grand on a place because they sat on the property for a number of years and put some counter tops in, rolls eyes. Of course when the market is high owners will smugly stand there with their arms crossed and say "well that's just the market" as they are planning what they are going to do with their windfall from their flip/sale, but then when the market corrects they cry like babies.

    I am playing the worlds smallest violin for you.

    Quote Originally Posted by BluNosDav View Post
    Since many of us currently own those "grossly over priced single family homes still", no, we're not excited about losing all of our equity, so that you can make a killing during this economic down-turn. Really pathetic that you're sitting there rubbing your greedy little hands together at the prospect of your neighbors loosing their jobs and eventually their homes. Troll!

  16. #16

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    I would feel for them if they were not fleecing renters or potential buyers when times are good, but that's exactly what people do, because of course its just the market, they cant help it lol. I can just see land lords already counting their increased rent amounts back in the day when the military would ramp up or when big oil projects were going on.

    How am I suppose to feel sorry for these people? They have been making a killing for years now, why cant the little guy be excited for a change.

    Quote Originally Posted by rppearso View Post
    I know, because its not greedy for someone to want to make 50 grand on a place because they sat on the property for a number of years and put some counter tops in, rolls eyes. Of course when the market is high owners will smugly stand there with their arms crossed and say "well that's just the market" as they are planning what they are going to do with their windfall from their flip/sale, but then when the market corrects they cry like babies.

    I am playing the worlds smallest violin for you.

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    I have 2 rentals. Haven't raised the rent for many years. $700 a month seem like I'm making a killing to you?
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    Member BluNosDav's Avatar
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    Quote Originally Posted by rppearso View Post
    How am I suppose to feel sorry for these people?
    I didn't ask you to feel sorry for me. But, I do feel sorry for you. You're just a bitter little man, who for whatever reason, never "got" what you think you deserved. I'm sure it wasn't your fault (roll eyes), and now you want some larger force to "give" it to you. Good luck, Troll.
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    Quote Originally Posted by rppearso View Post
    The winnings are going to go to the patient savers.
    ...Always.
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  20. #20
    Member KantishnaCabin's Avatar
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    Again, the rental market is a free market. Fortunately here in Alaska we do not support socialist programs that force landlords to rent at rates lower than what the market will bare. Rent control is for cities like New York not Anchorage. I have been a landlord, I hated it 364 days a year. I just wasn't cut out for it. But, when I was a landlord I certainly did not "fleece" anyone. Typically rental properties barely cover their fixed expenses. The real benefit of owning a rental is that 365th day that comes ever April 15th and allows you to shelter earned income from the tax man. The long term payout is hopefully in property value appreciation. And in a market like ours with less than a 2% vacancy rate a landlord can and should charge as much as the market will pay. I want people that are offering a service to make a profit.

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