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Meeting the Challenge for More Housing

by Connie Yoshimura

     Interspersed amongst the many colorful pages of Mayor Ethan Berkowitz’s Transition Committee Report are several proposals and public comments that would enhance the accessibility to more housing in Anchorage, from homeless ‘housing first’ solutions, to creating a system for better coordination between the developer, AWWU, CEA, ML&P and the MOA. Perhaps, the most important and most difficult recommendation to implement is:  “Change the culture in permitting to ‘How can I help you?’ from risk adverse strict adherence to code”. In the words of the transition report, “making zoning and permitting more flexible and entrepreneurial”. A hard challenge for any new mayor, but Anchorage’s housing shortage and high cost has now become a top-of-mind issue for all community leaders. Too many times, builders and land developers are told ‘what can’t be done’ due to the strict interpretation of code without being offered affordable and alternative solutions.

     Besides, a change in culture, there are several specific steps that could significantly improve our local housing market which now has an average sales price of $380,000+, out of reach for many local Anchorage home buyers. Only 13 percent of For Sale MLS listings fall in the range of $350,000 to $399,900. Here are a few suggestions from the Mayor’s transition report that would help our housing crisis. Some are simple and can be implemented immediately. Others will take time. All could be implemented during Mayor Berkowitz’s first term.

     Digital plan reviews for civil engineering submittals would save rolls of paper and time. Currently, engineers must submit 30 sets of plans of road designs to be individually reviewed by various departments. Establish and adhere to a deadline for responses to plan submittals. Do not allow staff to submit late comments which delays the approval, which delays the construction of roads, water and sewer, which delays the ultimate home building process, which ultimate increases the cost of the home—because time is money and the interest clock is ticking.

     Home buyers see the final product–the number of bedrooms, the length of the garage, whether the interior wall color is gray or light beige and the height of the cabinets. What they don’t see is the process and cost to extend the pigtail (the extension of the water and sewer) to the foundation which has increased from $1,200 to over $3,500 in five years due to a required AWWU change in material, the amount of gravel in the trench and road bed, and the cost of the haul. One recommendation is to consider the State of Alaska collector road standards for undeveloped areas. Currently, Anchorage residents drive on three different types of road —state standards, MOA standards and private development standards. Needless to say, the private development standard is the most strict and expensive. Any road grade variance, even a 1% difference, can take 4 to 6 weeks for approval. Home builders have learned how to heat and tent foundations, and are able to build all winter. Building roads and installing water and sewer pipes has a limited calendar, from May until October 10, when the asphalt plants close. MOA delays can mean loss of a season, resulting in higher lot costs and thus higher home costs to the home buying public.

     Changing the culture to ‘How Can I Help You?’ would create more opportunity for new home construction and at an affordable price. We are a community that is short on new housing and the vast majority of our housing stock, both for rent and sale, is over 30 years old, requiring not only cosmetic remodeling, but health and safety upgrades as well. The only solution to our housing shortage is to build more housing. That can only happen with a change in culture and attitude. Let’s hope the new administration can meet the housing challenge.

Understanding the Value of a Lot

by Connie Yoshimura

     Not all lots are created equally, even within the same subdivision. Lot size, width and location are all factors to take into consideration when purchasing an undeveloped lot or a pre-owned home. Of primary importance to many home buyers is southern or western exposure, and where that sunlight falls in relationship to the home’s living spaces. Avid gardeners will not consider buying a home without southern exposure in the backyard. Even if you’re not a gardener, at the end of the day, the gathering place for families is the kitchen which is almost always at the back of the home and so sunshine becomes a primary factor for many families. However, a popular plan is a reverse two story with a vaulted ceiling in a great room with an open kitchen. In that home plan, buyers like the southern exposure in the front of the home.

    Cul-de-sac lots have a perception of greater value and higher desirability. However, the narrow width at the bulb of the lot sometimes requires plans that are longer and narrower. Most trees in a new subdivision, regardless of how heavily forested before construction, are ultimately lost, particularly if the newly created lot is only 50 feet wide. A publicly dedicated road is 60 feet wide, including the right-of-way, which must be cleared. In Eagle River, shallow utilities are placed at the front of the lot which makes saving any trees virtually impossible. In Anchorage, electrical easements are at the back of the lot which makes landscaping and the streetscape more aesthetically appealing. Mature trees play a major role in a desirable streetscape and most new homeowners and land developers are beginning to recognize their value by planting larger trees and fewer shrubs, although foundation plantings of shrubs are becoming very popular and add to the aesthetics of any new home.

    Corner lots are considered more desirable by some, but not by others. Some buyers would prefer to have the drive-by car as an intermittent neighbor, to a noisy one with a barking dog. Corner lots frequently don’t have much backyard, and have front and side yard setbacks, minimizing usable yard space and putting constraints on home design. However, if a corner lot is your preference look for one that is slightly larger than the other lots in the subdivision. Most savvy developers are creating larger corner lots which make them more desirable and provide an aesthetically more attractive spatial feel to the community at entrances or intersections. Ranch homes are a good plan for corner lots.

    Lot sizes vary in a subdivision, perhaps by as much as two to three thousand square feet and will be priced accordingly, but the location of that square footage is very important in establishing value. Lot width dictates the value of a lot more than its depth. Current construction costs for lot frontage with public water, sewer and a publicly dedicated road is about $1,600 per lineal foot. Also important is the relationship of the lot to its immediate neighbors. Does the back lot line match up with the adjoining lot? Or does it straddle two lots making for two backyard neighbors? Occasionally, a lot may actually have four or five neighbors, rather than the traditional three with one on each side yard and in the back. The more adjacent neighbors the less value to the lot.

    Dedicated green or open space and mountain or inlet views are, of course, the most highly sought after and most expensive amenities. How much would you pay for an unobstructed mountain view? $20,000, perhaps. What about an inlet view? $100,000? River or lakefront? $200,000? Even a peek-a-boo view creates a shorter marketing time when it comes time to sell the home.

Alaska’s Communities Have Abundance and Shortages of Housing

by Connie Yoshimura

     The Alaska Multiple Service (MLS) is a statewide organization that publishes a weekly market activity report of all new listings, pending (buyer and seller agreed) and sold transactions. Although it may not reflect all activity in a market, it clearly represents the vast majority of residential transactions and provides insight into local housing activity and whether or not the market in certain communities has balance defined as an equal number of new, pending and sold properties. For example, last week, Wasilla had 363 current active listings with 34 new listings, 33 pending transactions and 33 closed. Although the number of for sale units is high in relationship to its population (even if you include the entire Mat-Su Borough), it is considered a balanced market.

     Another balanced market is Anchorage which had 521 homes for sale with 53 new listings, 64 pending and 58 sold. The Anchorage market in relationship to its population of just over 300,000, although balanced in terms of activity, is constrained due to its overall lack of for sale inventory. However, despite the lack of inventory, you would consider the market balanced, the same as Wasilla, with approximately 10% (slightly more or less) of for sale homes being sold on a weekly basis.

     Eagle River had 126 homes for sale last week. According to the MLS market activity, it also had 17 new listings, 18 pending and 27 sold. With more than a 10% turnover, it is the most active real estate market in the state. Like Wasilla, Eagle River has become the bedroom community for the employment center of Anchorage. Not only is there more available land in those two communities, but the building permit process, or lack thereof, saves not only time, but thousands of dollars, making homes on larger lots more affordable than its more urban neighbor, Anchorage. For many people, it’s worth the commute. Palmer, however, doesn’t fair as well and lags behind with less than 10% weekly absorption of available inventory. With 133 homes for sale and 16 new listings, it had only 10 pending sales and 6 closed transactions.
Last week, Fairbanks had 65 homes for sale with 3 new homes for sale, 4 pending and 2 sold. Using the ten percent absorption formula, its market is not balanced with less than 5% turnover on a weekly basis. North Pole, its Santa Claus neighbor, fairs better with 22 homes for sale, four pending and four closed.

     Homer, a popular go to recreational area for Alaskans and tourists, has 133 homes for sale, but very slow absorption with 3 pending and 2 sold last week. Across the bay, Halibut Cove has five homes for sale and no activity.

     Some smaller and more rural communities have no market. Cordova, Delta Junction, Glennallen, Haines, Indian, Healy, Moose Pass, Sitka, Valdez, and Wrangell report no active new listings, pendings or solds thru MLS. Valdez has only one home listed for sale so you’re more likely to find one there by talking to a friend or co-worker.

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Dwell Realty
3230 C Street Suite 100
Anchorage AK 99503
907-646-3600