Despite the mild fall weather, the Anchorage building season is almost over and the permit numbers and valuations won’t budge upward much between now and the end of the year.  As of the end of October, new permits for single family homes, duplexes and multi-family are pretty much the same as last year—despite the local and national hype that the building business is in recovery.   Single family permits are only up a modest 11 homes; duplexes up by only 8 permits; and multi-family actually down by 19 units.  That’s pretty small potatoes for a community of almost 300,000 people.

    What is up is the total valuation of all permits, including commercial and residential alterations from $401,067,017 to $540,862,206.  That good news increase is what politicians like to quote about the strength of our building sector but behind all these numbers are some underlying needs and concerns that remain unaddressed.  The increase in valuations is due primarily to residential alteration permits which have increased from 1,066 to 1,243 as homeowners and remodelers try to address our aging housing stock.  Commercial alterations are also up from 775 to 998 which includes signage permits. A closer look at the residential permits shows a consistent increasing pattern of roofing permits which again speaks to our aging housing stock.  Functional obsolescence sets in at about 25 years and the majority of our housing stock was built in the early l980’s.  Thus, the need for major roof repairs consistent with new technologies such are peak vents.  Another area of permit growth is for elevators, which speaks to the need of our aging baby boomers.   But, the fact that these are alteration rather than new permits indicates that many homeowners are willingly or being forced to age in place because there are not enough new housing permits to accommodate the need of our modest growth in population.

    However, despite the pressure on our aging housing stock due to lack of new permits, the Anchorage marketplace has seen only modest increases in appreciation.  Year to date, the Municipal sales data from multiple listing service shows only a 2.68% increase with an average sales price of $346,332.  That 2.68% increase barely covers the cost of new carpeting and vinyl of an average priced home that is 25 years old.  Appreciation is being offset by the seller’s cost for cosmetic and health/safety repairs required by buyers, appraisers, home inspectors and lenders in order for the home to be sold.  The appreciation rate of 2012 was a healthier 4.76% but it was offset by the previous year’s loss of value by 2.16%.

    Statistics don’t always tell the real story but they are good indicators.  It’s clear that Anchorage has a demand for more housing of all types with the exception of the custom $1 million home market where there is  a 36 month supply with less than one home per month selling in that price point.  Anchorage doesn’t need to worry about that million dollar home buyer. They have resources and opportunities that the $350,000 buyer doesn’t even know how to dream about.  The real need now and in the immediate future is for homes under $500,000.   Those homes can be single family, duplexes, affordable and luxury multi-family for sale or rent.  Anchorage, which includes Eagle River, has only a two month supply of homes between $300,000 and $350,000.  That price point has an average of 42 sales per month and yet we have only 88 homes for sale in that category.   

    When Anchorage loses an economic opportunity for job and population growth like just recently occurred at JBER because of ‘lack of housing’, it is time for us as a community to take a hard look at our municipal development and building policies.  Residential building permits are now far more expensive and what used to take 12 to 18 months for a new subdivision can now take as long as two to three years. The demand is there.  We need new internal policies and procedures that recognize our diminishing land base and that encourage growth and creativity.  Otherwise, our stealth neighbor to the north, the Mat-Su Valley, will take not only our population but jobs as well.