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Alaska Rental Vacancies Hit Five-Year High

by Connie Yoshimura

According to the annual Alaska Rental Market Survey, vacancy rates crept up in 2017 to 5.08% in Anchorage which is almost identical to the national average. Fairbanks, Kenai Peninsula Borough and Wrangell-Petersburg all have vacancy rates double Anchorage’s and have for the past several years. Valdez-Cordova and the Juneau Borough have the lowest vacancy rates with 4.55% and 5.68% respectively. According to one local property owner, Bethel has a vacancy factor of zero. Overall the state vacancy rate stands at 7.33%, the highest it’s been in the past five years—the low being 5.8% in 2016. The 2017 survey, conducted by the Department of Labor, surveyed 16,550 units out of the approximately 92,000 housing units in the state. It’s a reliable survey of the rental market with one exception and that is it does not differentiate the vacancy and rental income between units built since 2000 when building codes and energy ratings began being upgraded and the majority of those built during the early 1980’s housing boom. 

New multi-family units, whether subsidized or market, are few and far between, given the historic low of multi-family permits the past five years. In Anchorage, the handful of new multi-family units being built with five-star energy ratings and thus, lower utility costs, are renting for $1,500 to $1,600 per month, almost 30% more than the adjusted median rent of $1,200 per unit as reported in the survey. Increased utility costs add to the cost of housing either for the tenant or the property owner.  In Anchorage, you can expect the reported eight per cent increase in natural gas rates to be absorbed by the property owner. Heat is paid by 73% of the property owners surveyed. The exception is the Fairbanks-North Star Borough where only 2.8% of units have natural gas. In Anchorage, water and refuse are paid by 49% of owners and sewer by 94%. This is typical of three and four story multi-family structures whereas duplex condos and single family rental units are usually separately metered, at least for heat, and electric and paid for by the tenant. On a statewide basis, only 20% of landlords pay for lights. Depending on the type of structure, snow removal is included by 80% of all surveyed units.  The 20% exception most likely due to single family or duplex units. 

Similar to the report in the May issue of Alaska Trends, Alaska is showing a stability and resiliency in the rental market as well as the for sale housing market despite the stalemate of the Alaska Legislature over the state’s budget woes.

What Are Home Buyers Looking For?

by Connie Yoshimura

The National Association of Home Builders recently published a book on Home Buyer Preferences based upon age, income and other factors. So whether you’re thinking about buying a new home or remodeling, here’s a quiz to keep you up to date on what buyers are looking for.

1. It’s all about the kitchen so rank these four features by their desirability.

A. Central Island    B. Granite/Natural Stone Countertop    C.  Walk-In Pantry    D. Table Space for Eating 

 

2. Kitchen features to avoid:

A. Laminate Countertops (in expensive kitchens)    B. Wine Coolers (in modest homes)    C. Glass Front Panel    D.  Trash Compactor

 

3. All buyers would like to have what features in their kitchen?

A. Double Sink    B. Walk-In Pantry    C. Drinking water filtration    D. Recessed cans

 

4. What type of cabinets do buyers prefer?

A. stained wood cabinets    B. Contemporary Styled Cabinets    C. Traditional Style Cabinets?

 

5. Next on any remodeler’s or builder list is the master bathroom. What are the ‘must-haves’ for master baths?

 

6. Moderate income buyers want the following—yes or no?

A. Both Shower Stall and Tub in Master Bath    B. Linen Closet    C. Double Vanity    D.  Ceramic Tile Walls   

 

7. High income home buyers (over $150,000 income) want the following—yes or no?

A. Whirlpool tub      B. Dressing/make-up area       C. color tub, toilet and sink        D. skylights

 

8. So now you’re finished with the kitchen and master bath. What are the other most essential decorative features?

A. Ceiling Fan    B. Exposed Beams    C. Window Seats

 

9. Do buyers prefer a wood burning or gas fireplace?

 

10. What room do 94% of all home buyers find most desirable?

A. Laundry Room    B. Breakfast Nook    C. Two Story Entry Foyer

 

11. What percentage of home buyers in all income levels prefer the following:

A. Dining Room    B. Great Room    C. Living Room    D. Home Office

According to the national survey, 48% of home buyers in all income ranges want a mud room. In Anchorage, I bet that number jumps up to 100%. Not all builders and remodelers can do everything identified in the survey.  Everybody has a budget to work with so my advice is to start with the kitchen countertops and replace them with quartz or granite, add a ceramic wainscot in the master bathroom and a cool haiku ceiling fan in the living/great room. 

 

 

 

 

 

 

The Evolution of the Laundry Room

by Connie Yoshimura

When I built my home on Campbell Lake, the architect and I forgot the laundry room. It eventually ended up in a tall crawl space—on a wooden platform surrounded by bare studs and insulation. When I downsized and moved to South Addition, the laundry room became a closet for a minimum sized stack washer/dryer in the master bathroom where the laundry basket sits in the unused Jacuzzi. Obviously, I never thought a laundry room was very important until I read ‘Home Buyer Preferences by Age, Income and Other Factors’ recently published by the National Association of Home Builders and discovered the laundry room is THE most wanted feature in a new home, regardless of income! 

You can usually tell the age of a home by its laundry room location. For years, the laundry room off the kitchen was preferred in two-story homes and was frequently part of a mud room off the garage.  Then, buyers and builders wised up and put it on the second floor where all the bedrooms are located so no more hauling laundry baskets up and down stairs.  Today, luxury homes may have a private stack washer/dryer in the master bedroom closet or bath area with a full-sized laundry room near where the secondary bedrooms are. 

So what makes a good laundry room? A window. Laundry takes time and natural light is a big plus in any room. Paint it a fun color or give it a theme. Add a laundry sink for delicates or spotting stains.  Build a shelf or cabinets for detergents, fabric softeners, stain remover, et cetera. Add a closet or rod to hang damp clothes on and a countertop for folding. Cabinets don’t need to be expensive and not necessarily the same brand or color as in the kitchen or master bathroom. Better yet maybe an open shelf for easy dispensing of soap and softeners. Although popular, particularly with buyers coming from the south, tile floors are generally cold in Alaska and a sheet vinyl, the same color as the hall carpet, works just fine, particularly if you are trying to stay in budget. If you are working in a small space, stack the washer/dryer so that you at least have room for folding and hanging. And don’t forget a space for laundry hampers.

Some new home plans continue to minimize the laundry room by placing it in a hall closet with bi-fold doors opening into a hallway. According to NAHB that’s not going to help sell new homes. If you are thinking of remodeling, start with the laundry room. It’s an inexpensive room to remodel and will help sell your home in the future.  

Home Buying Preferences Based on Age, Income and Other Factors

by Connie Yoshimura

If home builders are wondering what type of housing they should build in 2017 and beyond, all they have to do is read the recently published book by the National Association of Home Builders. The 124 pages with 156 pages of addendums is a blue print of home buyers’ wants and needs in all age groups and income categories. So let’s get started with breaking some myths. Despite planners and developers love of higher density, single family homes remain the preferred choice for buyers of all incomes. Nearly 70 percent of moderate-income buyers like suburban communities. At least 70 percent of high-income buyers also like suburbs that are near trails, parks and retail space. In Anchorage that destination is southeast and southwest areas for new homes. 

Higher income buyers prefer new over existing homes. They understand and are more readily able to pay the higher price per square foot for new so that they don’t have maintenance and repair expenses in the future. This is particularly true of the baby boomers who are reaching retirement age and looking for their final ‘destination’ home. More moderate and lower income buyers are still seeking more square footage at a lower price. 

Here’s another myth. Lot size is not an issue for more than 20 percent of buyers, irrespective of income. That’s good news for Anchorage where single family lot sizes are getting smaller and smaller due to high development costs. Whether it creates an attractive streetscape or not, larger homes on smaller lots are here to stay. Unless, of course, you can afford to move up to the hillside. Otherwise, developers need to work harder to control architectural details on the front elevation of homes and landscaping to make a cohesive and attractive small lot community. 

Moderate income buyers do not care about the popular two story elements seen in many Alaskan new homes. They’d prefer more square footage. As an alternative to the two-story great room or entry hall, buyers want 9 foot ceilings, even on the second floor. The powder room no longer exists in most new homes. Instead, it is replaced with a full bath on the main level. This is a preferred choice for both moderate and high-income earners.  

Everyone talks about technology in the home. We have programmable refrigerators, fans, et cetera. But what are buyers willing to pay for? Moderate income buyers want a wireless security system and a programmable thermostat like ‘Nest’. Technology pretty much stops there unless you are a high-end buyer. Finally, the dilemma faced by all home builders is size versus amenities. So, here is the answer. Most buyers prefer high quality amenities such as solid surface countertops. If new means smaller square footage, it needs to be accompanied by luxury finishes. Smart builders understand the differences between new and old and build accordingly.

Stability Factors in our Housing Market

by Connie Yoshimura

Anchorage isn’t the only city that’s suffering from a lack of housing.  According to the Department of Labor’s ‘Market Trends’ report published in May, the 2,100 new housing units built stateside represented a 12.5% decline from the year before.  Anchorage’s new units declined more than in other areas.  Only 423 new units were built in 2016 compared to 850 the year before.  These numbers represent single family, duplexes and multi-family units.  The increase and decrease of these numbers can be attributed to multi-family starts which are generally low income and subsided housing units.

The low new construction starts has created stability in our market with continued low inventory of available homes for sale or rent.  There are approximately 92,000 rental housing units statewide, or about one third of our housing inventory.  Rents have stabilized with only a one per cent increase in Anchorage.  The average two bedroom apartment rents for $1,238 plus utilities.  That’s a statewide average with a vacancy factor of 5.8 percent.  Single family homes can rent for as much as $4,800 in Anchorage.

Another factor contributing to our stable housing market is the lack of Alaska foreclosures which was less than one percent in 2016 (0.60) compared to the national average of 1.53, despite Alaska’s job losses the past two years.  Low interest rates are also contributing to the stability of our local and statewide housing market.  Although projected to increase in 2017, they have remained stable at 4% for a 30 year fixed rate.    Many buyers are putting 20% down to avoid mortgage insurance and there are a surprising number of cash buyers in the market. Due to the lack of rental housing, many move-up buyers are considering renting out their existing home rather than selling it.  

Every housing market has its nuances but this market is particularly steady in value and sales despite the gridlock over our state budget crisis and the pink slips filtering through  our work force.  From a housing perspective, it appears our citizens have more faith in Alaska’s economy than its elected state officials. 

Displaying blog entries 1-5 of 5

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