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A Perspective on the Anchorage Housing Market

by Connie Yoshimura

Despite Alaska’s three years of economic recession, the Anchorage housing market has remained stable with no noticeable decline in values except in isolated circumstances. So, unlike our neighbors to the south where both Portland and Seattle have seen recent rapid appreciation above 30%, Anchorage remains an affordable place to live with an average sales price of $365,000. Anchorage’s housing problem is not really affordability but rather what a buyer can purchase for the average sales price. Anchorage housing stock is aging and not like a fine wine which gets better with age. Seventy-five percent of our housing was built between 1970 and 1990 making it not just cosmetically but functionally obsolete.

The 1970’s was the decade of the split entry or the ‘breeder box’ as it was called by some. It had a small entry and a set of stairs going up to the living/kitchen area and two or three bedrooms. Down the stairs was a family room and extra bed/bath. Then came the more luxurious two story homes of the 1980’s which had a larger first floor entry with a nearby powder room for guests. These homes had a formal living and dining room on the first floor. The back of the home had a kitchen, breakfast nook and family room. Upstairs was three or four bedrooms. The oversized master bedroom became the parents’ hideaway and was frequently as large as 16 x 20. Over time, these homes grew in size from 2,000 square feet to over 3,000.  

The nationwide real estate recession of the 2008 to 2010 changed the way not only people thought about home ownership but how they wanted to live. Something changed in the American psyche and it was reflected in the homes that were built. Gone was the formal living and dining rooms. Instead, it became all one great room. Home offices became important as more people chose to work from home. So did flex rooms—that added extra space somewhere whether off the entry or a loft upstairs for a quiet space. The kitchen grew larger—even though food take-outs grew in popularity. The kitchen was no longer the heart of the home but the heartbeat. It was no longer a galley or U-shaped configuration but an open concept with a view of the entire first floor. And the islands grew even larger—whether bi-level, flat or curved, it was where the family gathered not just for meals but homework and storytelling at the end of the day. Paint colors changed along the way as well. From white to beige, to gray, to grayish and back to white again. Master bathrooms have become home spas and are almost as large as the master bedroom. Today’s spa bath no longer has a built-in jacuzzi or soaking tub but a sleek freestanding tub.    

The need for more car storage also grew over the decades from a carport in the 1960’s to the single car garage in the 70’s and the mandatory double in the early 80’s. The 90’s brought the big triple and many of today’s giant garages of over 1,000 square feet. Alaskans love their toys and not only do they want to ride, fly, kayak and fish but want to keep them covered in their own garage as part of their home. 

The August issue of Alaska Economic Trends has confirmed what we’ve known all along and that is home prices haven’t dropped during Alaska’s three year recession. However, they do have a good take on why that hasn’t happened. As previously discussed in their July issue, Alaska migration patterns with Anchorage at the epicenter has helped keep prices stable. Plus, some job losses, particularly in the oil industry, have been among nonresidents who don’t own homes in Alaska. If you’re a frequent flyer on Alaska Airlines chances are you’ve probably sat next to some of these itinerant jobbers who may live as far away as Florida and commute to and from the North Slope.  

Interest rates still under 5% for a 30 year fixed rate mortgage has also helped keep our market stable although I maintain the five basic reasons people buy and sell homes have nothing to do with interest rates but changing factors in an individual or family’s life. Those are marriage, birth, death, divorce and job change. Obviously job change is a dominant factor—both positive and negative as most buyers need a verifiable and steady source of income in order to qualify for a mortgage, although I am continually amazed at the number of cash sales that occur in all price ranges. Alaska has a lot of quiet wealth.  We are also seeing some equity extraction from the stock market as investors turn to real estate. With uncertain and changing economic policies, many investors, large and small, turn to the old time staple of real estate investing.

The report used the term ‘controlled’ building as one reason for our housing stability. “Controlled’ requires me to ask the questions of who and why is doing the controlling. I would not want to think this market is being deliberately controlled by forces unknown to me or others in our industry. Instead, we have a lack of home building due to the continued high cost of development, lack of land and an unwillingness of our local government to loosen the oversight requirements for vertical home construction and horizontal residential development which go far beyond the need for protective health and safety regulations. 

The reality is that our lack of new home construction is hitting a crisis point. The six month building report recently published by the MOA shows more than a fifty percent drop in new housing starts compared to last year’s six months report. Only 121 housing units were permitted compared to 300 in 2017 for the same time period.  That number includes permits for single family, duplex and multi-family. Less than one hundred single family homes were permitted.  Only twenty-eight duplex units and not one multi-family permit had been issued through June. Alaska’s population is projected to stabilize and may even have slow growth as a result of increased births. But, what happens if and when Alaska comes out of its three year recession?  Where will an influx of population or growing families live in Anchorage?  

Come Learn Everything there is to Know about Condos

by Connie Yoshimura

A condo can be a single family home, a flat or a side by side duplex.  You can’t always tell by looking at the structure what it is and how it is defined. Do you own the air space around the building or only the interior  space between the walls?      What is a limited common area and who maintains it? Who pays for water and sewer and what if a water pipe breaks in the building?  Is it your responsibility or the homeowner’s association? What is the responsibility of the HOA management company? Does your board of directors have insurance?  How to find out about upcoming special assessments before you buy a condo?

 

Find out answer the answers to these questions and more by  attending this Dwell Realty sponsored class “A Condo Is a Condo or Is It?  It’s open to the public  and if you’re a licensee will provide you with three hours of elective continuing education. I’ll be there along with Natalie Travers-Smyre who has over ten years of home owner’s association management experience and Jim McCollum, attorney at law.

  •     Friday, August 10th
  •     9 am - 12 pm 
  •     First American Title
  •     Breakfast Provided
  •     Free Admission!
  •     Sign Up Today 646-3600 

 

Call in your questions to the new INSIDE REAL ESTATE show on 650KENI every Thursday at 2 pm. This week we will be with Anita Bates talking about the various roles that the Alaska MLS, Board of Realtors & the Real Estate Commission  play in the real estate industry.

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