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Where Do You Live?

by Connie Yoshimura

     That question is a popular topic of conversation and where you live can tell someone a lot about you.  For example, if you live in Mt. View there’s an 80% chance you’re a renter paying somewhere between $800 and $900 per month.  That’s on the low end of the cost of housing scale, according to Alaska Economic Trends, a publication put out by the Department of Labor.  At the top of the housing scale is the hillside area where the median cost of housing is more than $1,900 per month.  However, you might be surprised to learn that Eagle River shares the top spot with the hillside when it comes to expensive housing.  That’s because Eagle River and Chugiak have nearly tripled in population since 1980, creating a dramatic need for new housing which is always more expensive than an older home.

     Are you an aging baby boomer?  Then chances are you live west of the downtown core area, near Bootleggers Cove, Westchester and around Turnagain or in Rogers Park or along Tudor Road.  However, recent trends also point to senior populations increasing in South Anchorage.  Don’t be surprised to find retirement type condos and townhomes popping up in that area in the near term.  Despite the city’s well intentioned efforts to bring population near downtown and midtown by advocating for mixed use, young families have and continue to move to the hillside and Eagle River area, according to the report.   

     The good news for all areas and population groups is that the average commute to work for Anchorage residents is fairly short, around 18 minutes.  Anchorage residents don’t have traffic jam nightmares from the Los Angeles 405 where the average commute is 29 minutes.  And who knew Seattle is now almost as bad as Los Angeles with an average commute time of 25 minutes?  But for those of you who regularly get stuck on the Glenn, you’re right up there with LA and Seattle with an average commute time of 30 minutes.

     Owner occupancy rates vary greatly across Anchorage from 80% in the Hillside, Turnagain, Eagle River area to less than 20% in Mt. View and Government Hill, two of the oldest areas of Anchorage and where redevelopment has not occurred to the point where it has had a noticeable impact on home ownership.  Homes built post WWII were in the Government Hill, Bootleggers Cove/Westchester and downtown core.  Then, in the 1960’s, Spenard, Woodland Park and Turnagain area began to grow.  In the 1970’s, a lot of building occurred in East Anchorage, both in the single family and multi-family categories.  During the 1980’s, the lower and upper hillside areas along with Chugiak and Eagle River saw rapid growth.  Since then, the majority of growth has occurred in the Mat-Su Borough and Anchorage residential development has been left to smaller five and 10 acre in-fill sites farther out of town.  However, those opportunities are becoming fewer and fewer and, thus, more costly, creating increased pressure for more affordable and work force housing throughout the Anchorage Bowl.   

Alaskans Have a Lot to be Thankful for When It Comes to Real Estate

by Connie Yoshimura

     You still hear it often in local conversations, the ‘We’re not like the lower 48’ and thank goodness for that when it comes to our local residential real estate market which has experienced fewer highs and lows over the past eight years than our neighbors to the south.  Our 2008 real estate recession was mild in comparison to the 25% drop in home values found in many parts of the lower 48.  But now some of those communities that were hardest hit have rode a wave of rapid appreciation in 2013.  Riverside, California, had a 16% increase in appreciation; Las Vegas 22.3%; Phoenix, a haven for Alaskan snowbirds, a whopping 24% (I wish I had bought a condo on my credit card) and our Seattle neighbor to the south 17%.  While back home in Alaska, our rate of appreciation was a modest 4%. 

     But, that rate may change in 2014 due to the ever dwindling inventory of homes for sale.  For the last week of December 2013, there were only 375 active homes on the market, another historic low.  My prediction for 2014 is that Anchorage may experience an appreciation rate as much as 6 to 7% due to a lack of available land for new residential developments and a drying up of any remaining foreclosed or short sale properties. With another increase of 4%, no homeowner who purchased at the height of the market should be underwater.  That’s good news for local Alaskans while Florida, for example, still has over 200,000 zombie (vacant) homes.   Our appreciation will occur despite a rise in interest rates come March and April as the Feds finally pull back their bond buying activity.  However, keep in mind that a mortgage rate in the 5% range is still very low.  On a $200,000 mortgage, that is only an increase of $160 per month.   

     New construction will lead the way for our local appreciation as builders and buyers scramble to find home sites for which there is a dwindling supply. Some of the handful of residential developments that did get started in 2013 did not get finished in the fall and so there will be a lack of home sites until well into the third quarter of next year. Plus, everything that goes into an Alaskan home comes from the lower 48 and as that market rebounds, material and shipping costs are certain to increase.  New natural resource developments around the state bring higher wages and subcontractors who are normally content to work in residential construction take higher paying jobs which require residential builders to pay more for labor. 

     None of that, however, will stop the local home buyer from wanting to find a home of their own as rents continue to skyrocket due to only a 3% vacancy factor which is in essence no more than the time it takes for one tenant to move out and another to move in.  The local condo market, which has basically been flat lined the past few years, will also take a sizeable rebound as more first time homebuyers give up living with their parents and make their entry into the market.  The ideal move-up single family home will be 2,400 square feet and have four bedrooms, all on the same floor, a great room plus den/office on the first floor, a triple car garage long enough to park a full size pick-up, and despite our six months of winter, oversized outdoor decks for brief summer barbequing.  Laundry rooms will be on the same floor as the bedrooms and everybody wants more storage, via mud rooms, tall crawl spaces or a basement.   Starting price:  $450,000, without the basement.            

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503