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Coming Real Estate Trends in 2019

by Connie Yoshimura

Although we Alaskans  still like to think we’re different than our cousins in the lower 48, there are some housing trends and economic factors that will affect even us in Alaska as we move forward into 2019 from rising  mortgage interest rates to the color of bathroom fixtures in new homes. After almost forty years listing, selling and developing residential real estate in Anchorage, I’ve lived and worked through almost every imaginable trend both positive and negative.  Just imagine selling a home with a mortgage interest rate at 15.75 % in the early l980’s.  Yes, people do buy homes at that rate because people buy homes not because of the interest rate but because of personal factors like marriage, births, divorce, death and job change. Just imagine that Anchorage once built over 6,000 housing units in one year which was more than the city of Phoenix where I am writing this column from, visiting with my Japanese-American family for Thanksgiving dinner. Then, imagine when you could buy a Foxwood condo for $29,000 just by putting it on your credit card. Now, they are worth $132,000 and I sure wish I would have bought one then!  I know one builder who told me he wished he had kept every home he had ever built.  And I know another builder who did keep a percentage of them and did very well when he sold them off several years later.

So moving forward into 2019, you can expect to pay more for a mortgage.  Interest rates will push to 5% plus but hopefully will not hit 6%.  Home owners who bought or refinanced at 3.25% will be smug that they hit the market right. But who can really complain  when it’s three times less than 15.75%?  Labor shortages, rising material costs thanks to tariffs on soft wood from Canada and steel and sheetrock from China, will push new home costs up as well as rising regulatory costs—a national trend, not just a local one we all bemoan that no organization or elected official can seem to do anything about. And don’t forget about those rising interest rates.  Most speculative building and development rates have already hit 6% and will keep rising in 2019, another factor that will increase the cost of a new home.

Now, about the color of those bathroom fixtures.  Remember turquoise, gold and gray?  Yes, I said grey.  Regardless of how you spell it, grey is out  whether its on the walls or the stand alone tub.  If you have grey in your home and are fighting our dark winters, turn it into grayish by  adding some white pillow accents, painting a wall white, and increasing the wattage of your lighting.  Natural wood is back in 2019, whether it’s a fireplace mantle, a beam or cherry cabinets.  And that kitchen island which is at the center of all Thanksgiving dinners?  It’s big and bold with a quartz waterfall.  The stove top and sink returns to their rightful place along a wall.

Now, I’m off to enjoy Thanksgiving Dinner with my multi-generational/cultural American made family and I hope you have all had a Happy Thanksgiving Dinner with your family and friends.

How Dining Rooms and Kitchens Have Changed

by Connie Yoshimura

Thanksgiving is one of the few days in the year when homeowners actually use their dining rooms. For the rest of the time, most of us have become more casual and eat around the kitchen island. Gone, too, is the formal living room, replaced by the great room in contemporary plans.  But, in buyer surveys the dining room still emerges as one of the most desirable ‘must haves’, particularly for General X and Y families who hold on to their childhood memories of holiday meals. Even downsizing boomers and seniors hesitate to give up their dining room. How big that space needs to be usually depends on the size of the table and its’ shape. Popular round tables require a wider width. In today’s market a dining room that is 10 by 12 would be considered adequate for most holiday dinners. That’s a cozy ten or twelve seats around a rectangular table. You would be surprised how often a builder’s plan gets pushed and pulled to accommodate a family table, hutch and side board.  

However, the dining room isn’t the only room that gets more attention during the holidays.  For days before slicing that perfectly roasted turkey, it’s all about the kitchen and appliances. Most new ovens will accommodate a 20 lb turkey but you need more than one oven for the dressing, roasted brussel sprouts or that famous green bean side dish. Double ovens is probably the most asked for upgrade in a new home kitchen. There are now 32-36 inch stoves and stove tops with five burners so those big commercial Viking ranges aren’t nearly as necessary as in the past. But if there’s more than one cook, a 42 inch cook top alleviates a lot of bumping elbows. The MOA requires a minimum of thirty-six inches between counters and islands but what cooks really need is at least a forty-two inch space to maneuver around. If you’re planning a new home or a kitchen remodel, consult a kitchen designer. They are like occupational therapists. They can tract a cook’s movement and design around it in the most efficient way possible. The triangle concept between the kitchen, fridge and stove remains a good place to start the planning process. Even in million dollar homes, I’ve seen designs where when you open the dishwasher, you can’t stand in front of it because the island is in the way.  Walk in pantries are also a must have in any home over $500,000 and you should make sure the builder includes adequate lighting. 

Kitchen designs have changed significantly over the past thirty years. First, there was the galley kitchen. Then, it opened up to a U-shaped kitchen. Then, came the small center island in the middle of the U-shaped kitchen. Now, the most contemporary kitchens are wide open with a detached island that is all one height without an appliance in the middle. It is like the galley kitchen without the walls and usually even bigger. It’s where the family gathers at the end of a long work day except on Thanksgiving when we all sit down around the dining room table to give thanks that we are fortunate to have family, friends and a more than enough to eat.      

 

Number of New Housing Units Continues to Decline

by Connie Yoshimura

It seems like I have written this article again and again. The September building report for single family, duplex and multi-family permits clearly demonstrates the continued downward spiral of housing starts.  Through the third quarter of 2018, there have been ten fewer single family starts compared to 2017; twenty-six fewer duplex units started; and twelve fewer multi-family units permitted. The total number of housing starts through the third quarter was 404 in 2017 and 356 in 2018 which is a decline of 11.88% percent. Even with one quarter left, the residential construction season is basically over except for a few brave single family builders who are fighting the November chill and wind to put in a handful of foundations so that they can be ready for the spring market. The average permit value for a new single family home was $403,586 which does not include the cost of the lot.

But, that’s not all the bad news. The total value of ALL construction permits, including commercial alternations, change orders for residential, commercial and government plus any new commercial permits has declined by 8.15% percent. This year to date total is $327,445,809 compared to $356,491,103 in 2017. So does anyone wonder why subcontractors have left Alaska for the lower 48 where the market is better, wages are comparable or better and the climate is at least thirty degrees warmer and they can build 12 months a year? 

However, there is one statistic in these reports that continues to stand out and that’s the number of residential and commercial alterations or in lay man’s terms: remodeling. Just take a drive around mid-town and you can witness older buildings being remodeled with new paint, textures and contemporary facades and entries, the most prominent being the new REI anchor in the old Sears Mall. Residential remodeling is not quite so dramatic. The most common home remodel is the kitchen, followed by the bathrooms. Both require electrical and plumbing upgrades which need permits. Structural additions can include increasing the size of the garage, adding an artic entry or a family room at the back of the home or above the garage. 

Unless you are adding an auxiliary dwelling unit (ADU), which is now allowed with some restrictions in all R1 zones regardless of the square footage of the lot, remodeling doesn’t add housing units which is what our city needs in order to keep its millennial and boomer population. Anchorage has lost 3,000 residents over the past few years. Whether that loss was to our neighbors to the north, Boise Idaho, Tucson Arizona or Palm Springs, doesn’t matter. It has created a loss of circulating income and left a void in our civic and social activities that will be hard to replace without more affordable housing.               

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503
907-646-3600