A Look into the Future for Housing

On March 30, 1867 William Seward purchased the territory of Alaska from Russia for $7.2 million.  It sold for 2 cents per acre and added 586,412 square miles to the United States.  Without a doubt, the best real estate deal ever!  On January 3, 1959 Alaska became the 49^th state, making it larger than Texas, California and Montana combined.  So here’s my question?  Who owns Alaska’s 365 million acres and how do we, as private citizens, get a piece of the action not for more parks or four lane highways but more housing?  

Alaska Native corporations own 44 million acres or about 10% and are entitled to more.  The federal government owns about 65% and the state of Alaska owns 24.5%.  Our opportunity for private ownership is extraordinarily small in comparison.   So where is available land? The Mat-Su has a 16,186,000 acres and the MOA has 1,092,000.  That discrepancy makes it hard to compete for housing when right now the Mat-Su has three times the amount of land for sale listed in MLS.  The opportunity for private ownership in the MOA is .42 acres per person based upon its 287,600 population.   If you live on an acre plus land, or even a half acre or a 10,000 square foot lot count yourself lucky because single-family lots are getting smaller. Six thousand square feet will soon be the maximum a developer can afford to create. Yet, Anchorage remains, at least for now, the commercial and cultural, center of the state.  But, we also have an extraordinarily small developable land base which is surrounded by mountains, the inlet and the military base to support those activities.

My passion is not so much for higher density along transportation corridors  but mixed density with a portion of development for home ownership units.  I say ‘with’ home ownership because most higher density or mixed density units become rental properties.  We all need to think smaller.  Not every home needs 4 beds, 3 baths and a triple car garage.  Approximately every five years, wall colors change, laundry rooms move from the garage to the mud room to upstairs and now back to the utility room on the first floor, next to the triple or quadruple garage.  Anchorage has a choice.  The mayor wants 10,000 housing units in ten years.  That ambitious goal will require financial participation for offsite infrastructure. Residential developers cannot provide the cost of offsite infrastructure, even if its paving an alley, let alone bring a residential collector to a new neighborhood or extending water and sewer.  Developers should be responsible for all on-site infrastructure within the boundaries of the development. That should include roads, drainage, sewer, water, pigtails to the lots, gas and electric. 

So the question is how to help pay for offsite infrastructure? During the l980’s there was a lengthy public discussion for an Anchorage sales tax.  The Anchorage Chamber of Commerce came out strongly against a sales tax. That opposition was led by a well-known and popular retailer.  I can’t help but wonder if Anchorage would not be in a ‘fiscal gap’ had that sales tax passed 40 years ago.  In defense of today’s need for a sales tax, how many of you when making your vacation decision based it on what state has the lowest or no sales tax? If nothing else, please support a seasonal sales tax to help offset one of the highest residential real estate property taxes in the United States.

Homeownership remains the American dream for all of us.  As we transition in life from marriage, birth, death, divorce and job change—the motivation for housing types change as we climb up  and down the housing ladder.  Anchorage’s housing stock is over 42 years old, the majority of it built before building codes in l992 were required.   Remodeling or tear down and rebuilding cost per square foot is more expensive than new construction. We need to add housing of all kinds for tomorrow’s new generation or we will lose them to the Valley.