Lack of Affordable New Housing Continues

Here at Berkshire Hathaway HomeServices Alaska Realty, we have just analyzed the single family permits from January 1 through July 24 2020 and the news is not good for buyers wanting to  purchase a newly built home for the average sales price of $391,235 as reported by MLS for the same time period.  In fact, over 35 of the 112 residential permits year to date have an average value of $690,959.25 and this number does not include the cost of a homesite.  In this value range, the average cost of a home site would be at least $250,000, including well and septic, or a luxury homesite with all utilities and potential inlet views.  That puts a total home value to be built at a million dollars. This  luxury market activity is also supported by MLS statistics.  There have been 18 closed sales year to date in the million dollar range and currently there are 9 pendings. Seven of these sales appear both in the MLS and permit activity reports.  Nevertheless, this luxury home market has had more closed sales than at any time during the past five years.  It is thriving despite the pandemic  and concerns about our overall state and national economy.  

Further analysis of the permits shows no new single family homes being built with a potential average sales price of $391,235, the MLS average of closed single family sales.  No wonder there is a flight to the Mat-Su where for many years 50% of all new homes have been built in Alaska with only 15% of the population. and where the average sales price is $311,686, almost $80,000 less than Anchorage.  Anchorage has a housing crisis not just for the homeless but for the working  family; the retired grandparents who want to live near their adult children and grand kids; and even the college educated millennial looking for a backyard for their toddlers and Siberian huskies.  Our historic low mortgage interest rates have enabled many buyers to purchase their first home or upgrade to the home of their dreams.  But even low mortgage  rates won’t solve Anchorage’s housing problem when the city refuses to address overreaching regulations adding thousands of  dollars and costly delays to  the price of new homes.  Finally the continued reticence of the MOA to adopt new land use regulations allowing for smaller lots and mixed residential zoning within a new home community is the underlining impediment for affordable housing.