Thoughts on Real Estate Today & Tomorrow…

The first two months of 2022 have seen buyers continue to grapple with extremely low inventory of for sale homes. According to Alaska MLS, there is now less than a half month’ supply of available inventory. The only significant change in the market is the extreme decline in active condo inventory. In 2021 there were 491 condos for sale in Jan/Feb; in 2022, there were 176. Other than that, the market remains stable and tight. So now is a good time for sellers to consider extracting their equity. In fact, the market is so tight, we are actually seeing homes selling above list price without the usual ‘refreshing’ or remodeling. Sellers should not be afraid to sell their homes ‘as-is’ without remodeling or refreshing (i.e. carpet and paint).

In June 2020, I was at the senior loan committee for the development of Sandhill Reserve—on the very day oil went negative. Covid has changed the way we think about our homes and interact with our neighbors, friends and co-workers. But, people buy and sell homes for some very basic human needs—marriage, birth, death, divorce and job change. These changes are human needs regardless of the price of oil or the mortgage interest rate. Count yourself lucky if you bought at a 2.5% interest rate or a home in 2012. The need for shelter is universal. And in most cases it’s pure luck if you get it just right. You never know when the bottom or top of the market is until it has passed.

Alaska is unique. We’re a huge state with big natural resources and international corporations. We know our elected officials who are only an arm’s reach away at local events. Due to the high rate of appreciation, aging boomers do have more housing choices than ever before when they decide to extract their equity. There are resort communities; urban communities next to major universities for those who are intellectually curious or physically active in the lower 48. In Alaska, there is the Valley, Homer, Girdwood and Willow.

Unfortunately, if we are to stop the loss of Anchorage’s population we have experienced in the past few years, we are going to have to rethink housing. In the past, Anchorage has pit neighbor against would be neighbor. It’s more than the NIMBY issue (not in my backyard) because it goes deeper into economic segregation based on zoning restrictions. The question is if you live in a single family neighborhood should the local government be allowed to add an accessory dwelling unit on the lot next door. Should you be able to have a duplex as your neighbor rather than another single family home? These are hard questions for a neighbor and a community to answer. But the answer is yes, with moderation. If we as a city are going to remain the commercial center of Alaska with new businesses and population. Anchorage has more trails, more open space than any US city our size. With careful planning, we can create more housing with mixed use and mixed density and still maintain the beauty of Alaska.