The Right and Limitation to Homeownership in Alaska
This Fourth of July weekend seems like the perfect time to reflect on our right to own property. The Declaration of Independence specifically recognized the inalienable right to life, liberty and the pursuit of happiness. However, as originally drafted by Thomas Jefferson, it was life, liberty and property. Today, the right to own property is the backbone of our democracy. For families and individuals, the first step towards financial independence and wealth building begins with the ownership of their first home. Sixty-two percent of U.S. citizens own their home. The Veterans Administration and the Federal Housing Authority (FHA) have mortgage programs that encourage entry level home ownership in support of our right to own property.
Here in Alaska, approximately 8% of our land is privately owned, the smallest percentage of any state. A significant portion of the 8% is owned by Alaska Native corporations, both regional and village, as a result of the Alaska Native Claims Settlement Act. The remaining 92% is in the hands of various federal, state, and local governmental entities. In 2010, the Municipality of Anchorage did a survey of buildable residential land. After subtracting ‘prohibitively constrained land’ they determined there was 5,824 acres of buildable residential land in the Anchorage Bowl and 14,189 acres in Chugiak-Eagle River. Based upon my experience in both selling and developing subdivisions and housing in Anchorage and Eagle River, I have to question the accuracy of those numbers. In my opinion, there is far less availability of developable residential land than acknowledged by the MOA. Recently, a seasoned and well respected developer asked me the definition of ‘prohibitively constrained land’ and although I couldn’t provide him with the MOA definition, my definition would include slopes greater than 30%; wetlands (including Class C which are becoming prohibitively expensive to develop and require payment into a wetlands mitigation bank which was $70,000 per acre two years ago); adequate accessibility to undeveloped land via collector roads for which the MOA previously shared in the cost with private developers but terminated their participation over thirty years ago; lack of public water and sewer extensions and main infrastructure which would allow for more affordable homes and slightly higher density; and lastly new and ever changing rules and regulations required by the MOA Design Criteria Manual for roads that has no public review process, making private development roads significantly more costly than either state, federal or local road standards.
So it is no wonder that for the first half of 2017, the Anchorage housing market remains stable, despite job losses in the oil industry and a 2,000 estimated population loss. There is a 13% reduction in overall inventory for single family homes compared to one year ago and the average sales price of $363,000 remains in a virtual dead heat with last year, depending upon age and condition of the property. So for those home buyers sitting on the fence, waiting for the market to collapse, lack of land and its high cost of development, will keep prices stable because as Mark Twain said, ’Buy Land because they don’t make any more of it.’ And without developable land, there can be no more housing.