INSIDE REAL ESTATE: Report shows $40M drop in permits
The Municipality of Anchorage’s six-month building activity report was published last week and it’s not good news for the construction industry.
Overall permits are down by $40 million. This year’s total to date is $241 million compared to $282 million in 2017. That number is inclusive of residential, multi-family, commercial and alterations. It includes both government and private party permit valuations.
Despite all the talk about Anchorage’s need for more housing, the number of new dwelling units continues to decline. Ninety-three single family units were started compared to 95 in 2017. Duplexes units took almost a 50 percent decline.
Only 26 units have been permitted thru June compared to 52 in 2017. The sharpest decline came in multi-family where no new units were permitted compared to 153 last year. That’s a telling number as the city continues to face a shortage of affordable homes. For purposes of permits, multi-family is classified as any building with three or more units.
The MOA does not differentiate between for sale or for rent units for either duplexes or multi family. But from a market perspective, duplex and multi-family units are where most first time home buyers frequently begin their search. At this rate, it is doubtful that the MOA is even replacing units lost to fire, demolition or condemnation.
The average permit value for a single family home is now $407,371. That number does not include any land cost. Add another $140,000 for a lot and buyers in today’s market will be lucky to find a brand new home for less than $540,000 in 2018.
Anchorage’s most popular subdivision, Resolution Pointe subdivision, has had nine new single family starts this year and its lot inventory is now sold out. Resolution Bluffs, which opened this summer with luxury homesites bordering both Cook Inlet and Campbell Creek Estuary, has a dozen home sites from $239,000.
WestGate, a popular duplex condo community, bordering the proposed Lucy Park, had the most duplex starts with eight units. In east Anchorage, Checkpoint had four starts and Eagle Crossing had two. (Disclosure: Dwell Realty has listings in Resolution Bluffs and WestGate)
Anchorage’s most prolific builders continue to be Spinell Homes and Hultquist Homes, along with Troy Davis, a popular builder in Eagle River and who also builds in the Valley.
Lack of buildable land continues to plague homebuilders. In Anchorage, the only new subdivision with public, water and sewer coming online this year is Heather Wood, at the corner of Dimond Boulevard and West Park Drive.
Its first phase will be 23 lots with lot widths varying from 70 to 80 feet. In southeast Anchorage, the last phase of the Terraces is rumored to be developed but no announcement has been made. Some new lots with public services are being developed in Eagle River near the north Eagle River exchange and a small six lot community with well and septic at the North Birchwood Loop turnoff is now available.
Various vacant parcels on the hillside are being offered for sale by private parties and the MOA but none are expected to be developed this year.
Lack of land and new homes has kept the Anchorage housing market stable, despite Alaska’s three-year recession. The average sales price, according to Multiple Listing Service, has varied only by a couple thousand dollars over the past three years, hovering around $366,000.
That’s a far cry from a projected $540,000 for a new single family home. And with no hope of closing that gap.