An April Fool’s Joke

Published in the Anchorage Daily News on 4.4.24

By Connie Yoshimura

On April 1, 2024 there were 133 residential properties for sale (excluding condos and mobile homes) and that number is not a joke and no one is laughing, least of all the spring buyers looking for a home in Anchorage.  Whether  it’s a newly arrived oil company executive; a first time home buyer hoping to jump onto the first rung of the housing ladder; a retired Alaskan wanting to  downsize to a ranch home or a young family needing that fourth bedroom and a backyard, It’s no joke that Anchorage’s lack of housing has landed at the front door of the housing crisis and no one’s home.  How we got to here doesn’t really matter except to learn from our past mistakes.  We are all to blame.   Not Covid, not mortgage interest rates, not the 2018 earthquake, not the $9  barrel of oil we remember.  We, as a community, allowed our residential roads to be built to a higher standard than what the Department of Transportation requires.  Builders were required to put fake windows  above garages, not to bring in more light into living areas, but to improve the ‘aesthetic’ look of a home. We’ve built roads but failed to extend basic infrastructure for water/sewer beside them so that residential land could be developed at a reasonable cost.   As a community we refuse to implement even a seasonal sales tax on our 1 million plus annual visitors which could be used to offset our residential property taxes which are some of the highest in the nation.  So its no joke that our neighbors to the north have stolen the Anchorage housing market.  We’ve been blindsided by nimbyism and over regulation for the past 20 years.    

 Of those 133 homes for sale on April 1, 38 were built before l980 with the oldest listing built in l945.  On average our aging housing stock is 42 years old.  Older homes have larger lots, landscaping, appliances and if properly maintained are a welcome opportunity compared to new construction costs per square foot.  The buy-in is less based on the lower purchase price but buyers need to be prepared to replace water heaters, roofs, furnaces, appliances  and understand that the cost of a remodel is more expensive on a price per square foot than new construction due to the tear out and the unplanned for discovery of what’s behind the flowered wallpaper. The average sold price of the home in the last six months has dropped to $477,167 which is almost a 6% decline.  Inflation has cooled.  According to the April issue of Alaska Economic Trends, the south central rate of inflation was only 1.6%. Our market is leveling off, if only temporarily.  Buyers have come to realize that the 2.75% mortgage rate during Covid was a missed opportunity and doesn’t negate the need for a home purchase at twice that rate.  They are learning to make adjustments to their wants and needs because home ownership is a driving force not just in the economy but of an individual’s sense of self and security.  It’s the foundation of an American community.   

But unfortunately, that foundation is becoming out of reach for many.  Of the 133 homes 80 were over $500,000 and 22 of those were over $1 million.  Increased costs for utilities and property taxes as well as building and  land development  is making Anchorage a home for the affluent only.  Some home builders are moving north and east.  There are new construction homes being built for under $500,000.  You just have to look a little farther to the east and north. Spinell Homes is building single family two-story homes and ranches off DeBarr and Wihsperwood. Troy Davis is building homes in Birchwood. These home sites are as small as 3,230 square feet but are fee simple.    It’s the beginning of a new reality for less than 6,000 square foot lot.  And so we are headed in the right direction even if it is north and east. Smaller is becoming better and more affordable. If you are looking for a new construction home be prepared to pay a minimum of $436 for a single family home located on a smaller lot in East Anchorage or Birchwood. Go east where more land is available all the way to Palmer, Wasilla and Willow.