A Look Inside Anchorage’s Housing Stock

According to the U.S. Census Bureau, American Community Survey, there are approximate 104,980 occupied housing units in Anchorage. Seventy-five percent of those units were built before 1990, making Anchorage a haven for remodelers, but a frustrating home search experience for buyers who can’t afford the remodelling costs associated with a 25-year old home. The problem of our aging housing stock has been exacerbated by a lack of residential building permits over the past decade. Anchorage’s neighbour to the north, the Matanuska-Susitna Borough, has led the state in single family construction. From 2003 to 2013, 4,797 new single family homes were permitted in Anchorage versus 10,588 in Mat-Su. Why? Land is cheap and there is lots of it. Plus, the permitting process is abbreviated or, in some instances, does not exist, allowing for faster and thus less expensive construction. So buyers have willingly traded drive time for a larger lot and more house, all at a lower cost per square foot.

Although the MOA encourages multi-family development of medium to high density units per acre, only 28% of existing homes in Anchorage are multi-family, 6% duplex and 4% mobile homes (our at risk low income housing). A whopping 62% are single family, according to a housing report published in the February 2015 issue of Alaska Economic Trends, a publication of the Alaska Department of Labor which reinforces our residents’ strong preference for single family homes.

For the past several months, Anchorage’s for sale inventory has averaged less than 400 single family units per week. Inventory is usually seasonally low during the winter months, but in past years low inventory has been in the 600 unit range, not below 400. Homes priced under $400,000 are a quick sale with frequent competing multiple offers. Our recent population growth has been due to births and so there is a strong move-up market from two bedroom condos and townhomes to single family homes. Within the single family home market, there is also a strong preference for four bedrooms to accommodate the expanding family and the need for home offices. The majority of our aging housing stock is three bedrooms. Builders with four bedroom models, all on the second floor, sell well because there is less resale competition, even with the higher cost of the home due, in part, to additional square footage.

Despite the perpetual threat of state budget cuts, January and February MLS statistics showed only a decline of 1.82 percent when compared to the 2014 average sales price. For now, this decline can be attributed to the time of year. New home starts usually create a bump in sales price but that normally doesn’t occur until early June, once the ground has thawed and builders are able to dig foundations without heating and tenting. For the first two months of this year only 29 single family homes were permitted in Anchorage.

Anchorage residents like to move more frequently than their national neighbours. Thirty-three percent of Anchorage residents have moved in the past five years, compared to only 27% with our neighbours in the lower 48. One reason for this internal community migration is the sales price of the average home in Anchorage, after adjusted for inflation, rose 48% from 1993 to 2013, making home ownership an excellent financial investment. Whether or not that good investment in home ownership will continue depends upon a steady economy and continued growth in population.