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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. 

So Why Buy a Condo?

by Connie Yoshimura

 

Because you won’t need a lawn mower! Or a snow shovel! Exterior maintenance and lawn care are done for you by the Homeowner’s Association and property management company. Yes, there is a fee for all that worry free living, that ‘lock and leave’ mentality but it’s a small price to pay for your freedom from every day outdoor maintenance. I hear those comments more and more from boomers but also from many millennials who would prefer to climb flat top on a sunny afternoon than mow the lawn.   

And now is a good time to buy a condo. It is one area of the market that has held steady over the past two years for sales and average price.  One reason for that stability is because there have been very few new rental properties built since the last real estate recession of 2008. Plus, the majority of Anchorage’s apartments were built between 1970 and 1990 and unless you own hundreds of units like one or two investors do, most small investors who own a four-plex struggle to keep up with maintenance and repairs let alone cosmetic renovations. So, for buyers a brand new condo looks very attractive with white cabinets, wood laminate or vinyl plank flooring and painted white trim with lever door handles. Plus it’s more energy efficient with lower utility bills. Many older apartment owners require tenants to pay for their own gas and electric so the increasing costs for utilities adds to their average $1,250 per month rent for a two bedroom, one bath flat.  Might as well buy something brand new that will hopefully appreciate in value while creating a more attractive and carefree lifestyle.

The average sales price of a condo is $203,113 according to the June MLS statistics. That price is a 3.35% decline from last year’s $209,116, making it a good time to invest. So how much does it cost to buy one of these condos?  FHA offers a 3% down payment. On a $205,000 condo that’s $6, 150. And some builders, looking to get rid of their summer inventory before putting in fall foundations, are offering as much as $8,000 in closing costs.

Today’s 30 year fixed mortgage rate is as low as 3.50%, depending on your credit score. That makes a buyer’s payment your payment as low as $1,543, including principal, interest, taxes, insurance, and condo dues which will cover some of your utility costs. Hardly any more than what a renter pays for a a 30 year old apartment! And it’s fresh and modern! 

Entry level condos are a worthwhile investment at today’s value, whether as a first time buyer or as a modest investment. Inflation, tariffs are all going to pull up condo prices. Smart buyers buy at the bottom of the market. And you won’t have to buy a lawn mower!     

So Why Buy a Condo?

by Connie Yoshimura

Because you won’t need a lawn mower! Or a snow shovel! Exterior maintenance and lawn care are done for you by the Homeowner’s Association and property management company. Yes, there is a fee for all that worry free living, that ‘lock and leave’ mentality but it’s a small price to pay for your freedom from every day outdoor maintenance. I hear those comments more and more from boomers but also from many millennials who would prefer to climb flat top on a sunny afternoon than mow the lawn.   

And now is a good time to buy a condo. It is one area of the market that has held steady over the past two years for sales and average price.  One reason for that stability is because there have been very few new rental properties built since the last real estate recession of 2008. Plus, the majority of Anchorage’s apartments were built between 1970 and 1990 and unless you own hundreds of units like one or two investors do, most small investors who own a four-plex struggle to keep up with maintenance and repairs let alone cosmetic renovations. So, for buyers a brand new condo looks very attractive with white cabinets, wood laminate or vinyl plank flooring and painted white trim with lever door handles. Plus it’s more energy efficient with lower utility bills. Many older apartment owners require tenants to pay for their own gas and electric so the increasing costs for utilities adds to their average $1,250 per month rent for a two bedroom, one bath flat.  Might as well buy something brand new that will hopefully appreciate in value while creating a more attractive and carefree lifestyle.

The average sales price of a condo is $203,113 according to the June MLS statistics. That price is a 3.35% decline from last year’s $209,116, making it a good time to invest. So how much does it cost to buy one of these condos?  FHA offers a 3% down payment. On a $205,000 condo that’s $6, 150. And some builders, looking to get rid of their summer inventory before putting in fall foundations, are offering as much as $8,000 in closing costs.

Today’s 30 year fixed mortgage rate is as low as 3.50%, depending on your credit score. That makes a buyer’s payment your payment as low as $1,543, including principal, interest, taxes, insurance, and condo dues which will cover some of your utility costs. Hardly any more than what a renter pays for a a 30 year old apartment! And it’s fresh and modern! 

Entry level condos are a worthwhile investment at today’s value, whether as a first time buyer or as a modest investment. Inflation, tariffs are all going to pull up condo prices. Smart buyers buy at the bottom of the market. And you won’t have to buy a lawn mower!     

How 'Silly' is This?

by Connie Yoshimura

The photo below is an example of the current required driveway width in residential single family subdivisions.  According to Title 21: Land Use Planning, page 7-133, the “total width of driveway entrances to a residential lot from a street shall not exceed 40 percent of the frontage of the lot or 33 percent of the frontage if the platting authority or traffic engineer finds that conditions warrant it”.  

The intent of these limitations is to provide adequate space for snow storage within the right of way, to have space for on-street parking where appropriate, and to discourage the majority of the front area of a lot from being paved and/or used for vehicle parking.”

All this sounds reasonable until it’s put to an on the ground application. For example, under these regulations a fifty foot wide lot is allowed only a 20 foot wide driveway.        Most garages for new homes are a minimum of 22 feet wide which thus requires an indentation at the street curb and property line as seen in the photo in order to be compliant. Driveway width compliance on cul-de sac lots which are very popular with home buyers is even more challenging.  Many of these lots have only a 30 or 40 foot street frontage. Accordingly, the driveway at the mouth of the street can only be twelve or 16 feet wide.  

Although unattractive, builders have found a clever way around this requirement which allows them to widen driveways to the width of the garage.  But, unfortunately, the frustrated homeowner ends up with the problem. Some owners elect to pave the area after the certificate of occupancy has been issued; other fill in the space with gravel or lawn.  They cannot, however, add trees, shrubs or rocks because that prevents the snow plow from doing its job.  The final result of this requirement is an unattractive streetscape as well as traffic congestion in cul-de-sacs.     

Covenant, codes and restrictions for a subdivision can easily address the ‘parking lot’ appearance resulting from wide driveways used for car storage.  They can also address on-street parking restrictions.  This policy, although well-intended, is an overage of MOA requirements and has done the opposite of its intended purpose which was to create a more attractive street scape in new home communities.  

The idea of appealing to the platting board or the traffic engineer is not a reasonable alternative for a builder or individual homeowner as it creates time delays and extra costs in an economic environment that continues to face increasing material and labor costs for new homes.

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