What Home Buyers Really Want…..Continued

Published in Anchorage Daily News on 5.15.2024

By Connie Yoshimura

   Housing affordability has buckled under the weight of a 30% increase in home prices, according to a National Association of Home Builders 2024 study.  Here in Alaska that increase is more like 35% since we have virtually no manufacturing to support housing construction.  Add that increase to the highest interest rate in over 20 years which currently hovers around 7% compared to 3.5% during COVID and local home buyers are faced with the difficult choice of buying a 42 year old home with continual maintenance and replacement issues or making painful compromises for a new construction home. So what  are South Central home buyers willing to compromise? We all know Alaska is different when it comes to choices.  For example, the bigger the garage the better as demonstrated by the interest in the local BARDOMINIUM—a type of housing even the NAHB survey doesn’t yet recognize.  But there are some universal truisms and housing compromises that even Alaskans recognize as important beyond the full bath on the first floor and upgraded kitchens.  

Two-thirds of buyers prefer single-family detached homes. But where? Buyers still prefer the suburbs and today 70% of them prefer to be near retail space.  That’s surprising to me given the influence Amazon has had on our shopping habits. My only explanation is that the pick-me-up needs for milk, bread, diet coke are immediate and that the retail shopping experience has become recreational of sorts.  Just look at the Fred Meyer parking lots either in Anchorage or the Valley to recognize the desirability of in person retail.  

Sixty-six percent of buyers rate a park area as essential or desirable.  Alaska has the highest percentage of parks per capita in the nation.  Its hard not to find a place to walk your dog or take a hike!  Only 39% percent think a Homeowners’ Association is desirable or essential.  With that I have to disagree and it’s not because that is part of our business model.  Unfortunately, attached housing without an HOA means little or no enforcement regarding exterior paint color, junk cars, dead landscaping if any, barking dogs. Sustainable community value is what a potential buyer sees when he/she drives by eight times before making a final decision on location.  That community value doesn’t happen without an HOA. 

Mark Twain said “Buy Land.  Because they can’t make any more of it.” And the size of the homesite continues to be a defining buyer factor and cost. Eighty percent of buyers care about the lot size of their home, according to the NAHB survey.  Of those, 47% are satisfied with lots of one half acre or less, 23% want 1 acre and 18% prefer 2 plus acres.  Alaska has 365,000,000 acres of land but most of it is owned by a governmental entity or by the native allotments.  Only about 8% of Alaska’s land is privately owned. Anchorage is surrounded by parks, water, mountains and the military—leaving little land for actual  housing development except on the hillside where new construction homes now start at $1M which brings me once again to the flight to the Mat-Su Valley for affordable housing. Here’s the question “Do You Typically Work from Home at least 2 days a week?” that NAHB included in their survey.  And 43% of
respondents said yes.  Anecdotally, I know that’s true for many employees in the medical profession, the airline and transportation industry as well as the oil industry.  Lower paying retail jobs and administrative support positions still require on site five days per week.  And, unfortunately, that’s the weakest link on our housing ladder.     

Finally, Anchorage’s acute housing shortage continues, despite all the committees and discussions on both sides of the political aisle.  It’s not really about interest rates because buyers make compromises and adjustments to their lifestyle. Last week Anchorage and Eagle River had a total of 177 residential units for sale.  Wasilla and Palmer had 288. These two combined areas are yet very similar, yet distinct in their population and commercial growth patterns and housing opportunities.  Anchorage, by itself, has become a city for the well to do and the under served.  As for me I have been very fortunate in my real estate career to work with those who can afford to buy and/or sell a home.