If you’ve been out looking for a home in the dark Alaskan skies and driving on slippery roads, you know the Alaskan housing crunch has finally come home to roost right smack in the middle of winter.   Last week’s current inventory of all types of residential units was an historic low of 491 units.  According to the cumulative permit activity through October 2013, single family permits are down by 73; duplex permits down from 80 last year to 37 and multi-family units down from 299 to 221.  All this downturn in activity is occurring while overall sales volume is up 19% in Anchorage and the average time on the market has dropped to 46 days.  Heading to the Valley for more choice? Think again. Wasilla/Palmer sales volume has increased even more to 30%.
 

     There is some good housing news and that is sale prices have only increased by 2.27% and only slightly more at 3% in the Valley.  However, what these modest increases do not project is the increasing cost of new construction, both in land values and vertical construction.  It’s going to be hard to find a new home for less than $400,000 next year and for a larger lot on the hillside, think $750,000.  Resale homes offer lower purchase prices but these thirty year old plus homes require remodeling, both functional and cosmetic.  Most remodeling costs are paid for either with cash out of pocket or financed at a higher rate of interest than the first mortgage.  A buyer may be lucky enough to find a pre-owned home which has already been remodeled but it may not be to the specificity of their taste and lifestyle. 
 
     In 2014 you will see a lot more three story condominiums and townhomes to make up for expensive land costs and more three and four plexfamily.   For single family homes under $400,000 the narrow lot and narrow home with a garage front will come back with a vengeance despite the Title 21 rewrite which takes effect next year and will require the narrow home  to be a few feet wider with more windows other bells and whistles and, thus, more expensive.     
 

     Affordability versus aesthetics is a very complex dynamic. The new Title 21 which regulates our local land use took ten years to get approved and its first year of implementation is 2014.  Think back to 2004 and our market was radically different with more inventory and a robust economy.  If shoppers are thinking and buying essentials like towels at Wal-Mart for Christmas what is our city thinking about with new ‘enhanced’ requirements?  Not all shelter needs to be created equally.    Subsidized low income and affordable housing is frequently held up as an example of what ‘attractive’ housing can and should look like but that housing is subsidized with federal, state and local grants and even tax abatement.   Private developers can only dream about exterior flower boxes below windows.   With one or two exceptions who are no longer building homes, I can’t think of any builder or developer who does not want to make his homes more attractive and on a meandering curvilinear street.  However, with an average Anchorage sales price of $345,000 that is a financial impossibility in 2014. 
 

     So buyers are going to be left with a very difficult choice.  Pay nearly $100,000 more for a brand new home built to a mandatory five star energy rating or buy an existing home and face the prospect of out of pocket remodeling and repairs.  And many of those repairs will also have new guidelines and be subject to new Title 21 regulations as well, particularly if a buyer chooses to add square footage to an already existing structure which will require a building permit.