The Journey for Home Ownership

In 1935, the U.S. was mostly a nation of renters. Only one in ten households owned their home and the down payment for a home was 50%. That’s when the Federal Housing Administration (FHA) initiated a mortgage program to encourage home ownership by lowering the down payment to 5%. After the close of World War II, as embattled veterans returned home, the Veterans Administration initiated the zero down mortgage to encourage home ownership. Today, that zero down program has a maximum loan amount in Alaska ranging from $806,500 to $1,209,750 for active duty and qualified veterans. The FHA offers a 3.5% down payment for non-veterans. There are also specialty loan programs for the medical community for up to $1,500,000 with zero down. All of these programs have been initiated to help bolster the home ownership rate in the U.S. which, according to the 3rd quarter of 2024 stands at 65.6%. Home ownership has come a long way from 10% to 65.6% in the past 90 years.

Now, let’s fast forward to April 8, 2025, when the Municipality of Anchorage adopted AO. 2025-35(s) a minimum of a 15 year tax abatement for multi-family properties, which specifically has an exclusion for ‘owner-occupied properties’. In other words, it excludes single family, condos, townhomes and owner occupied duplex, triplex and four plexes. Historically, I think we can all agree that home ownership is a critical wealth building tool, particularly for those who otherwise might not have an opportunity for less leveraged investments such as stocks and bonds. So the question has to be asked, “Why exclude home ownership in the city’s new construction tax abatement program?” This tax incentive is for multi-family units of 10 or more which undoubtedly means apartment style units of three stories or more. No one disagrees that the need for more housing, including rentals, is an important component of a community but to exclude owner-occupied units from a 15 year tax abatement so apartment developers can build more units seems a bit lopsided.

I’ve previously proposed that multi-family apartment buildings could have top floor condo units with ten foot ceilings for sale and the first floor could be configured for the handicapped accessible ranch style units for sale. I recently heard that a fifty year old ranch home sold for $30,000 over asking price and had 17 offers. Ranches are particularly popular for the aging Boomers. The financial incentive for ‘sale’ of multi-family units would reduce long term debt on a building as well as provide ownership op¬portunities for those who wish to own rather than rent. This abatement is also for mixed use so why not for sale mixed density? The tax abatement would then be available for at least a limited number of home ownership opportunities while not excluding rentals. All agree more rentals are an important step on the housing ladder but should not to the exclusion of home ownership opportunities. Mixed ownership in a multi-story building, along with mixed use, can and does exist here in Anchorage. The Petersen Towers is a prime example, with fee simple condos for sale, retail and office suites for lease. It just takes a little more creativity and work on the part of the developer and financing.

I am an advocate for renters. My first home in Anchorage was a one bedroom apartment in Spenard; then a bigger basement apartment off Old Seward and then finally my very first home ever, a Lakewood Terrace Townhome. My journey to home ownership was not unlike many newcomers. You work to own your own home.

Renters get caught in inflation just like homeowners. Landlords pass on increased costs for utilities, taxes and property insurance. Not all tenants have a short term commitment to their neighborhood but many do. I confess that I certainly did. There are many good reasons to rent including lower maintenance responsibilities. It’s easier to relocate and provides more flexibility versus stability. The major drawback is no equity or investment growth. Renting does not build wealth. And you have no guarantee that your costs are not going to increase once your lease is up for renewal.