Do you believe Anchorage Homes are Affordable?
If you said yes, you are correct. According to a recent Housing Opportunity Index, seventy-five percent of Anchorage residents with a median income of $89,000 can afford to buy a home. The percentage gets even higher if you live In Fairbanks where ninety-one percent of citizens with a median income of $70,000 can afford to purchase a home. That places Fairbanks first in the metropolitan northwest affordability index and Anchorage fourth. Yuma, Arizona and Pueblo, Colorado bracket Anchorage with a ranking of third and fifth, respectively.
So if Anchorage is one of the top four locations in affordability what is the problem with our local housing market? It’s inventory. The latest available MLS statistic shows the average price of a sold Anchorage home in September was $374,159. This week there are currently only 23 homes between $370,000 and $385,000 for sale. If you are lucky enough to find one, it will most likely have three bedrooms, two baths and a double car garage on a fee simple lot with an average lot size of 8,300. That all sounds reasonable. However, the second problem is our aging housing stock. The affordable home described above is most likely 38 years old which means it has reached not only its cosmetic obsolescence but functional as well. It will most likely need a new roof, new water heater, new furnace—all expensive items that either the seller will need to replace in order to make the home competitive in the market or a buyer will have to accept the home in an ‘as-is, where-is’ condition. Either way, someone will have to pay for the property’s significant replacement and repairs if not to facilitate the sale but shortly thereafter. These potential costs do not take into consideration today’s buyer who wants the latest white cabinets, quartz countertops and luxury vinyl tile flooring. Keep in mind the kitchen and bathrooms are the most expensive rooms in any home to remodel.
Anchorage can’t expect new housing starts to add any affordable inventory with the average lot price of $140,000 with public water, sewer and on publicly maintained paved road. In fact, the latest single family permit report shows the average value to be $392,257 which doesn’t include any land costs. After two years of declining values, 2018 has seen a 2.53 rate of appreciation. So regardless of the age of the home, the color of the cabinets, NOW is a good time to buy an affordable home. They are not going to cost less in 2019.
This Thursday at 1 pm, I will be teaching a class on residential land development. My guest speakers will be Brian Harten from Hultquist Homes and Andre Spinelli from Spinell Home, representing Alaska’s two largest home builders. Join us to learn more about the Anchorage market at the Anchorage Home Builders Conference room at 8301 School Street, Suite 200. If you are a realtor, you can earn three ECE credit hours. The cost is $20. Call Dwell Realty, 646-3600, to make your reservation. Seating is limited so call now.