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Highlights from the Fall Parade of Homes

by Connie Yoshimura

It was a small tour with only nineteen homes in comparison to other years where there have been as many as thirty entries. That small number is no surprise because Anchorage home builders continue to struggle to find buildable homesites at a reasonable value due to the high cost of land development, particularly when it comes to water/sewer/road extensions which in many communities is shared between the developer and the local government but not in Anchorage. Add looming tariffs, and for builders, higher interest rates on their lines of credit, due to economic risk, plus the high entry fee of $1,000, and so it’s no surprise the Anchorage tour was small this year. 

But despite all that there were some outstanding homes to visit. They were more contemporary with shallow roof lines, expansive floor to almost ceiling windows and larger secondary bedrooms with their own walk-in closets. The open living floor plan is now a constant whether it’s an entry level condo in the $300,000+ range or the million dollar home. Three of the four entries in the million dollar category had panoramic inlet views from almost every room! Well worth their asking price as these builders went all out with custom cabinetry, Bosch appliances, luxury flooring and the wet room in the master bath. Wet room? That’s when you combine the shower and the stand alone tub in the same area, surrounded by luxury tile and a floor to ceiling glass enclosure.     

Years ago when I was building my first home, my architect told me that in Alaska you can’t keep guests out of the kitchen so ‘tear down that wall’. Today, the kitchen is still the heart of the home and all other rooms and activities revolve around it. The kitchen remains front and center and may even be visible from the entry.  But now the kitchen question is ‘Are white cabinets still in?’ According to the recently released annual survey from the National association of Home Builders, medium brown is now tied with white cabinetry. It’s not the dark or walnut stained espresso from fifteen years ago but a medium brown. It’s warm, inviting, has a neutral palette and doesn’t take a lot of energy to live with. Almost all of the Parade homes over $600,000 had brown cabinets while white lightens and adds visual space to smaller kitchens in the affordable home category.

‘Grayish’ is still the preferred wall color for most homes although my personal preference remains one of the dozen or more choices for white. Particularly, with our six months of diminishing or lack of sunlight, builders and homeowners doing a remodel can’t go wrong with white walls. 

Highlights from the Fall Parade of Homes

by Connie Yoshimura

It was a small tour with only nineteen homes in comparison to other years where there have been as many as thirty entries. That small number is no surprise because Anchorage home builders continue to struggle to find buildable homesites at a reasonable value due to the high cost of land development, particularly when it comes to water/sewer/road extensions which in many communities is shared between the developer and the local government but not in Anchorage. Add looming tariffs, and for builders, higher interest rates on their lines of credit, due to economic risk, plus the high entry fee of $1,000, and so it’s no surprise the Anchorage tour was small this year. 

But despite all that there were some outstanding homes to visit. They were more contemporary with shallow roof lines, expansive floor to almost ceiling windows and larger secondary bedrooms with their own walk-in closets. The open living floor plan is now a constant whether it’s an entry level condo in the $300,000+ range or the million dollar home. Three of the four entries in the million dollar category had panoramic inlet views from almost every room! Well worth their asking price as these builders went all out with custom cabinetry, Bosch appliances, luxury flooring and the wet room in the master bath. Wet room? That’s when you combine the shower and the stand alone tub in the same area, surrounded by luxury tile and a floor to ceiling glass enclosure.     

Years ago when I was building my first home, my architect told me that in Alaska you can’t keep guests out of the kitchen so ‘tear down that wall’. Today, the kitchen is still the heart of the home and all other rooms and activities revolve around it. The kitchen remains front and center and may even be visible from the entry.  But now the kitchen question is ‘Are white cabinets still in?’ According to the recently released annual survey from the National association of Home Builders, medium brown is now tied with white cabinetry. It’s not the dark or walnut stained espresso from fifteen years ago but a medium brown. It’s warm, inviting, has a neutral palette and doesn’t take a lot of energy to live with. Almost all of the Parade homes over $600,000 had brown cabinets while white lightens and adds visual space to smaller kitchens in the affordable home category.

‘Grayish’ is still the preferred wall color for most homes although my personal preference remains one of the dozen or more choices for white. Particularly, with our six months of diminishing or lack of sunlight, builders and homeowners doing a remodel can’t go wrong with white walls. 

Demographics Dictate Buyer Preferences

by Connie Yoshimura

Did you know seniors are more willing to accept smaller lots?  Younger buyers want more square footage?  And all buyers want a full-sized laundry room!  All this and more is what you can read about in the National Association of Home Builders 2019 housing survey.  Seniors and boomers, having raised their children and barbequed in their backyard, are now pretty much indifferent to lot size.  Over a quarter of boomers and seniors have no minimum lot requirement at all.  In other words, they are ready for townhouse or condo living where all exterior maintenance and lawn care are taken care of for them.  They are part of a ‘lock and leave’ demographic.  They frequently travel to visit grand kids or might even have a second home in the lower 48 to get away from Alaska’s dark winters.


Younger buyers, however, are more interested in lot size.  Thirty-eight per cent of millennials and 37 per cent of Gen X want at least an acre of land.  Although this is a national statistic, it is especially true  in Alaska where having a  piece of the great outdoors is one reason people come to and stay in Alaska.  In Anchorage, that means moving to the hillside where the minimum lot price for an acre is about $130,000.  Then, add well and septic and the cost increases to nearly $200,000. Depending on the size of the home, buyers are now looking at somewhere between $650,000 and $800,000 for a home on that acre plus lot.


These buyers also want more space in their home and garage.  Most likely it’s a triple car garage at least 24 feet in depth to fit that F-150 full bed truck.  There’s also that  extra ‘flex’ room with a yet to be determined use.  It’s just the idea of having more space than in the two bedroom condo or three bedroom townhouse they are currently renting or owning.  The open living concept is  strongly preferred by 49% of these buyers.  Another 37% prefer the kitchen and dining area partially open.  In other words, builders should throw out those plans that  segregate first floor living space.  Today’s buyers could care less about a formal living or dining room.


It’s no surprise that boomers and seniors want single story living.  Here in Alaska over 15% of all sales reported by MLS in 2018 were ranches.  In popular new subdivisions like Huffman Timbers in southeast Anchorage almost a third of the fifty foot wide lots have ranch homes built on them.    


According to the report, basements are more popular in cooler climates and, again, Alaska is no exception.  Almost all new homes in Alaska are built with at least a four foot crawl space rather than the slab on grade that’s popular in warmer climates. The most popular basement is a walk-out followed by a daylight.  A minimum eight foot ceiling height is important and so are lots of windows to maximize livability.


Now, back to that full-size laundry room.  I was surprised to find out that   70% of all home buyers now prefer it on the first floor.  It seems like just ten years ago we moved it upstairs to be near the bedrooms!  I’m going to have to take my own Alaskan survey on that one.

New Mortgage Opportunities for Alaskans

by Connie Yoshimura

First time home buyers account for 31% of all home sales, according to Lawrence Yum, chief economist for the National Association of Realtors. This percentage is down from around 40% of the market from years past.   One reason for this downturn is because  student debt has tripled just over the last decade.   Providing additional frustration is the limited amount of  inventory for new starter homes as builders have focused on more expensive homes.   Despite the fact that interest rates are at near historic 3.35% lows (think back two decades ago when a mortgage rate of 8% seems like a good deal) the needle hasn’t moved up much when it comes to millennials buying their first home.

 

However, help is on the way, at least here in Alaska.  This week Wells Fargo announced a $3.3 million program for Alaskans seeking to buy a new home.   In conjunction with Neighbor Works, which will administer the program and provide education, buyers who qualify with a maximum income of $104,900 for a family of four, are eligible for up to a $10,000 down payment assistance.  Veterans, service members, teachers, law enforcement officers, firefighters and emergency medical technicians, may receive $12,500 in assistance within eligibility requirements.  The only caveat is that  buyers must own and occupy the home for five years in order for the grant to be forgiven.  This program will help 300  Alaskan families purchase a new home and I’m predicting will be quickly absorbed by the end of the year.  Combined with a permanent fund dividend (the amount yet to be determined!) buyers, and particularly millennials, will have an opportunity for home purchase.   

 

Alaska also has a HUD 184 program for Alaska natives which allows them to purchase a home with a down payment as low as 2.25%. The program, which is for all eligible Native Americans, has more flexible borrower qualifications and lower interest rates than conventional rates because the Department of Housing and Urban Development guarantees the loan.   Both of these programs are available through specific lenders so buyers should do their shopping before making any commitment to a mortgage lender.

 

Not eligible for any of these programs?  A recent survey revealed that a third of all first time homebuyers received assistance from a family member.  So forgive and forget all those petty quarrels!  Your lender may actually be sitting next to you at this coming Thanksgiving dinner. 

 

And on a local level, Raven Mortgage, an affiliate of Hultquist Homes, is offering $8,000 in buyer paid closing costs on some of their affordable and finished inventory.  I wouldn’t be surprised if other builders also followed suite during the upcoming Parade of Homes.

 

Combined, these opportunities should help absorb some of the inventory that may be coming on the market as a result of the state’s budget cuts to local programs and schools.  Last week our inventory for single family homes was only 625 so despite all the sunshine and fishing, now may be just the right time to go shopping for a new home.       

How Important is Technology in the Home?

by Connie Yoshimura

Maybe not as important as we are lead to believe with all the gadgets now available from video doorbells to remotely controlled smart refrigerators. A 2018 survey by the National Association of Home Builders ranked security cameras as the most desirable of all technology features, followed by a video doorbell.  I have recently had both installed so I am part of the almost 50% of home owners/buyers who are concerned about security which is a national trend. So its no surprise that three out of the four most desired features are directly related to security.  Can you guess which is the fourth?  It is a feature that helps owners run their homes more efficiently by automatically adjusting  room temperatures, based on the use and time of day.  In other words, a programmable thermostat which 44% of buyers want. Think ‘the nest’ which I  had installed a couple of years ago and am still trying to figure out how to make it work!  That’s about as far as my investment in home technology goes. I do not have a voice activated assistant or a remotely controlled smart oven.  But some tech savvy homeowners/buyers  are also interested in lighting control systems, remotely controlled washer/dryers, even a charging station for their electric car.  But would you be surprised to know that 30% of homeowners have no technology? 

Over the past eleven years, technology features in a new home have gone from zero to almost 50% on the new buyer wish list.    But, you might also  be surprised to know that millennials  are not necessarily the ones for more pushing technology features.  Different generations have different interests in technology.  For example, only 29% of millennials are interested in multi-zone HVAC system, energy management system display and only 34% are interested in lighting control system.  Seniors, on the other end of the generational divide, are more interested in a lighting control system, energy management and here is one that I thought everyone had forgotten about—a central vacuum system. 

One reason why millennials may not be as interested in technology features in their home is affordability.  Seniors expect to pay more for their home and have more financial resources while millennials struggle with student debt and finding or saving funds for the down payment.  It’s not that they don’t want the savvy smart home, it’s that they can’t yet afford it.    

How Important is Technology in the Home?

by Connie Yoshimura

Maybe not as important as we are lead to believe with all the gadgets now available from video doorbells to remotely controlled smart refrigerators. A 2018 survey by the National Association of Home Builders ranked security cameras as the most desirable of all technology features, followed by a video doorbell.  I have recently had both installed so I am part of the almost 50% of home owners/buyers who are concerned about security which is a national trend. So its no surprise that three out of the four most desired features are directly related to security.  Can you guess which is the fourth?  It is a feature that helps owners run their homes more efficiently by automatically adjusting  room temperatures, based on the use and time of day.  In other words, a programmable thermostat which 44% of buyers want. Think ‘the nest’ which I  had installed a couple of years ago and am still trying to figure out how to make it work!  That’s about as far as my investment in home technology goes. I do not have a voice activated assistant or a remotely controlled smart oven.  But some tech savvy homeowners/buyers  are also interested in lighting control systems, remotely controlled washer/dryers, even a charging station for their electric car.  But would you be surprised to know that 30% of homeowners have no technology? 

Over the past eleven years, technology features in a new home have gone from zero to almost 50% on the new buyer wish list.    But, you might also  be surprised to know that millennials  are not necessarily the ones for more pushing technology features.  Different generations have different interests in technology.  For example, only 29% of millennials are interested in multi-zone HVAC system, energy management system display and only 34% are interested in lighting control system.  Seniors, on the other end of the generational divide, are more interested in a lighting control system, energy management and here is one that I thought everyone had forgotten about—a central vacuum system. 

One reason why millennials may not be as interested in technology features in their home is affordability.  Seniors expect to pay more for their home and have more financial resources while millennials struggle with student debt and finding or saving funds for the down payment.  It’s not that they don’t want the savvy smart home, it’s that they can’t yet afford it.    

Anchorage Lacks Multi-Family Housing

by Connie Yoshimura

National home ownership rates fell in the second quarter of this year, according to a recent report in the Wall Street Journal.  The  rate is currently 64.2%, down from 64.3% a year ago.  Here in Alaska, the most recent statistic shows home ownership rate at  63.7%.  That’s a slight increase from the 2017 rate of 63.5% but still below the national average. 

 

But here’s the bad news.  Anchorage’s home ownership rate is only 60.1%--well below the national and state ownership rate.  What exactly does this number mean?  Anchorage has a population of 291,538.   Therefore, assuming the statistics are correct, there are 116,324 residents who do not own their own home in Anchorage.   So where do they live?  They are renting an apartment or room, sharing a single family home or doubling up in some way  or are even homeless.    

 

People tend to rent when there is instability in an economy—whether on a national and/or local level.  Although Alaska is a wealthy state our inability to adequately and effectively  govern our financial and natural resources has a recurring and negative impact  on our  low ownership rate.  Unfortunately, even low mortgage rates hasn’t moved the needle to  increased home ownership. 

 

Adding to our growing housing problem is the lack of newly constructed multi-family housing.  Over 82,000 of our multi-family units were built between 1990 and 1960.  Even the ones built in the 1980’s are now almost forty years old!  And it wasn’t until 1992 that new building codes began to recognize the need for more energy efficiency. These older units add to the renter’s cost for electricity and home heating.  Many are beyond repair by landlords who lack the knowledge or financial capability to bring them up to a standard of acceptable living conditions.

 

But from 2014-15, there were only  668 multi-family units permitted.  From 2016-2018 that number declined by over 30% to just 400 units.  I would be curious to know if these numbers actually replace the units damaged or destroyed by fire and earthquake.   Much of that decline is also a result of the Title 21 rewrite which required new design restrictions for multi-family units.  Few developers can afford the time and consulting hours to work their way through the 836 single spaced pages of restrictions and requirements for a new build. 

Anchorage needs a reset of its priorities.  We are beginning to look like a worn out community and can no longer hide behind hanging baskets and bike paths.  That beautification is only skin deep.

 

Visit me on Saturday in Heather Wood and Sunday  in WestGate from 1-4 pm or email me with comments and questions at [email protected] 

Take this Real Estate Quiz!

by Connie Yoshimura

1. The cost of living in Alaska has increased by

A.  3%      

B.  4.2%     

C.  Decreased by 1%

 

2. What are the major components of cost of living?

A.  Medical

B.  Transportation

C.  Housing

D.  Energy

 

3. Housing is the largest expenditure for the average Anchorage household.

A.  True

B.  False

 

4. What was the average sales price of a single family home in June 2019?

 

5. According to MLS records, this was the highest average monthly sales price since January 2011.

A.  True

B.  False

 

6. How many single family homes in all price categories were for sale in June 2019?

A.  858

B.  958

C.  1038

 

7.  Is this inventory higher or lower than June 2018?

 

 

8. Has the number of residential sales for the fist six months of 2019 increased or decreased compared to 2018?

A.  Increased by 7%

B.  Decreased by 7%

C.  Remained the same

 

9. Over the past 13 months, on average how many million dollar homes sell in one month?                         

A.  Less than one

B.  One

C.  More than one

 

10. How many homes sell between $400,000 and $500,000 in one month?

A.  20

B.  15

C.  36

 

11. Is the average sales price of an Anchorage condo increasing or decreasing?

 

12. What is the average sale price of an Anchorage condo?

 

13. Name three reasons why you should buy a condo?

 

14. Identify three ‘hot spots’ in the Anchorage market where those MLS districts have beat the average market stats?   

 

15. Including single family, duplex and multi family, how many housing units were permitted through May 2019?

A.  150

B.  250

C.  350

D.  More than 350

 

 

Answer Key: 1. A  2. All of the Above   3. True   4. $390,000   5. A   6. A   7. Lower   8. B   9. C   10. C   11. Increasing   12. $228,195

 13. Excellent Rentals, No Yard Work, Increase in Value   14. Girdwood, DeArmoun/Potter and Spenard   15. A

A Look Back at the 2019 Housing Market

by Connie Yoshimura

The cost of living in Alaska has increased by 3% according to the most recent Alaska Economic Trendsreport. The cost of medical, transportation, energy and housing all contributed to the increase with housing being the major factor. So it’s no surprise that the average sales price for a single family home in June reached $390,000, the highest price from the MLS tracking report since January 2011.  

June 2019 also saw more than a 10% drop in available inventory from the prior year—858 compared to 958 homes so it’s no wonder buyers remain frustrated in finding a new home. Lack of inventory being one reason sales have decreased 7% during the first half of this year.  For the month of June, 36 homes sold between $400,000 to $500,000. Million dollar homes sold on average 1.4 per month over the past thirteen months which remains a surprisingly strong number.

Location plays a significant part of where sales occur. Three locations where sales have bested the prior year include DeArmoun/Potter Marsh, Spenard and Girdwood. Spenard is considered a revitalization neighborhood, particularly with the curvy new Spenard Road with attractive new landscaping (let’s hope the MOA keeps watering it during their heat wave). Spenard is organically the arts and crafts community rather than Mt. View, despite all the public and private money invested in Mt. View. Girdwood is a happening place with contemporary new homes either as second homes or year round retirement residences. And why not?  it has recreational facilities and gourmet dining, including Jack Sprat, and the Bakery as my favorite breakfast spot with its homemade orange marmalade, sour dough pancakes and that dreamy breakfast roll with a touch of orange zest. FYI, you can buy a quart of that orange marmalade and take it home for morning toast.

Southeast Anchorage continues with its popularity both in new construction and the resale market. Huffman Timbers has less than a handful of lots/homes to sell and Hultquist Homes just purchased Bruin Park, on the west side of Lake Otis between O’Malley and Huffman. It has a total of 19 lots with an approved plat already in place and horizontal construction to start early fall. These lots are larger and wider than the remaining lots in the Terraces and Huffman Timbers. But the May builder report still falls way below what’s needed for new housing starts with only 78 single family permits, albeit it is up 6 units from last year. Duplex units have doubled, an increase to 30 units vs. 14 for the same as last year, thanks to the continued growth of WestGate, a popular duplex condo development in southwest Anchorage with ranches and two-story homes.

So that’s the recap for the first six months of this year. It’s hard to predict about ‘tomorrow’ for all the pros and cons over the governor’s vetoes and the state budget woes. But having listed/sold/developed housing during the last two economic downturns over the past thirty years, all I can say is smart investing starts now, particularly with mortgage rates hovering in the 3.5% range and FHA/VA rates even lower, making first time home buying a real opportunity.

Older Alaskans Need More Ranch Homes

by Connie Yoshimura

Alaska’s senior population is growing.  According to Alaska Economic Trends, Alaska has an estimated 87,304 seniors, up from 54,938 eight years before and more are on the way.  Anchorage/Mat-Su added more than 17,000 seniors, representing over half the state’s overall increases.  The report goes on to identify many seniors as well-educated boomers who arrived in the 1980’s and have made Anchorage and Alaska their permanent home. Nearly one in four live alone and 57 percent of those are women.   Eighty-two percent of Alaska seniors live in owner-occupied homes compared to 64% of Alaskans.  Home ownership is an important part of their well-being and lifestyle. An interesting note is seven percent live with grandchildren and about two percent are responsible for their care.

 

The challenge for our housing market, however, is what type of housing is available for them to age in place.  Even the fifty plus year olds I meet at open houses worry about climbing stairs to bedrooms because of their hips and knees.  More buyers are asking about a two-story home with a first floor master, a hillside ranch or a smaller ranch home.  Large lots no longer interest them due to the time and expense of lawn care.  These buyers prefer new so that there is not the unexpected cost for roof, furnace, hot water heater replacement, et cetera. They also recognize the benefits and savings of Alaska’s five star energy rating for new homes because they most likely live in a four star home built in the 1980’s. 

 

In 2018, 2776 single family homes sold in Anchorage and Eagle River and l5% or 440 were single family ranches.  I found that number hard to believe but trust me, we double checked it.  The average price was $252,000.  But, here is the problem.  Today’s new construction ranch  home has a median price of $450,000.  The majority of them are located in the Eagle River/Chugiak area where land is more available and, thus, prices slightly lower lot costs. If Anchorage wants to keep its older population, we need to increase the maximum 40% lot coverage ratio that currently exists in Title 21.  Smaller lots with increased lot coverage ratio for single family ranch homes will bring the cost of home ownership down for Anchorage’s senior citizens. 

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