… … A Ramble … on Housing … … …

By Connie Yoshimura

 

I have been very fortunate over the past few decades to work for buyers and sellers who have benefited from home ownership as a stepping stone to financial stability. Over 23% of Alaskans who bought their home in the ‘70’s and ‘80’s now own their home free and clear. Unfortunately, that opportunity is currently eroding for those who still share that universal dream of home ownership. For Alaskans, the reasons are both local and ones we have no control over. The reasons are many. Higher mortgage interest rates. Increased costs for homeowners insurance. Increased utility costs. Local property tax increases even if only a dollar or two at a time. Rising utility costs. These ‘inflationary’ costs don’t move the needle for increasing homeownership which in Alaska and the U.S. has remained stuck at approximately 62% of our population. Yet, the American dream of homeownership persists. Our immigrants wash our cars, clean our houses, take our order at our favorite food kiosk and may work all three jobs in order to afford to purchase their first home.

 

But now, we are faced not only with the higher costs for entry into homeownership but a basic lack of opportunity. The U.S. and Alaska has been under built both in rentals and home ownership opportunities for the past few decades. Here in Anchorage, lack of inventory is acutely apparent. On March 19, 2024, there were only 133 single family homes for sale. With the YTD average price of $461,000 there were only 53 homes available under $500,000. Our neighbor to the North, which when I talk about housing, I consider it the elephant in the room that no one wants to see and hear about because an elephant’s walk is silent when it walks in the jungle, in March had an average sales price of $400,000. That price and lower property taxes is what fuels over 50,000 cars per day to the Mat-Su, reaching all the way to Willow. The ‘Valley’ out of a total current inventory of 292 homes for sale this past week has 148 homes available at or below their average sales price. Their average current inventory is 2.19 months compared to Anchorage’s less than .76 months. As a residential land developer and broker, I now spend one business day a week in the ‘Valley’. And it should be two but I like coming back at the end of the day to the home I have lived in for almost 28 years. Even though like many, I have struggled these past three weeks with a leaky flat roof. I can’t see the sky but am getting familiar with my trusses. Since the majority of our housing stock was built in the 70’s and 80’s, many of us are now grappling with the maintenance and repairs of an older home. But not only do we have a lack of for sale housing but our rental market also has very little vacancy and faces the same inflationary pressures as our for sale market. The majority of our rental units consists of two bedroom flats, the majority of which were built before 2000. Their average rent is now $1,470, according to last year’s published reports. Alaska, along with the U.S., has had the highest annual inflation rates in decades. This has a significant affect on a landlord’s operating costs for maintenance, property taxes and utilities. For the tenant, it’s hard to save money for a down payment on a condo when over 40% of your take home pay goes to rent. The lack of rentals for tenants has also been exasperated by the conversion of long term rentals to ‘active’ rentals meaning the property is booked for at least one night during a given quarter. These active, short term rentals increases the cash flow for landlords and are particularly popular in the small unit rental market (duplexes, triplexes and fourplexes) but leaves the long term tenant with fewer options.

 

I am not an economist but the only way out of Anchorage’s acute housing crisis is to build more single family homes, townhouses, condos and rentals of all sizes and shapes from Chugiak to Girdwood. On the hillside, downtown and mid-town. That’s a public struggle between those who already own their home and reside in a quiet neighborhood and are opposed to change versus those forward thinking planners who recognize change is needed not just for growth but stability and opportunity for our citizens. Maybe, just maybe, Houston, Texas, got it right. Let the market create its own zoning. That’s a radical idea for a community that has 15 different residential zoning districts and is strangled by over municipal regulation as a result of the failed title 21 rewrite ten years ago. Now is the time for change or that stealth ‘elephant’ in the jungle will out walk us all.