A Perspective on Our Current Housing Market

There was a time long ago between 1980 and 1984 when Anchorage had a record of 18,168 new housing starts. The real estate crash of the late 1980’s followed shortly thereafter and between 1985-89, permits dwindled to less than a thousand per year. During another up tick in activity between 2000-04, 7,062 more housing units were built. These numbers included single family, duplexes and multi-family. Fast forward to 2015-2017 and there were only 888 units built, according to Susan Fison who prepared the data from the MOA Building Property Appraisal Records.

The recently published Building Safety Activity Report for the first quarter of 2018, continues to show Anchorage on a trajectory of historic low residential permits, although single family increases can be counted on one hand with an increase from 27 to 32. Duplex units actually decreased by 5 from 12 to 7 for the first quarter. There are, however, 54 multi-family units permitted so far this year, an indication that Anchorage’s dwindling land base is forcing higher density development. Nevertheless, it is unheard of for a city with a population of over 198,000 to continue to have such a shortage of new homes.

The difference in value between a resale home and a brand new home has reached an epic spread according to Multiple Listing Statistics. In 1998, the difference was $43,630. In 2010, MLS reported a difference of $110,995 and in 2016, the reported average price of a home sold was $360,000 while MLS reported new construction well above $600,000.

Obviously, I like numbers and as some people will argue, you can make them do whatever you want but the best use of numbers is to look at trends through an historical prism and so the numbers are pretty compelling if Anchorage, and Alaska, has any sort of positive economic bump, our shortage of housing will reach a critical status, if it has not already. Today’s buyers are faced with the dilemma of buying a home that was built in the 1980’s which is now more than thirty-five years old or buy new and pay more for the security of energy efficiency, lower maintenance and no major or unexpected repairs or replacement costs.