Shrinking land a growing problem for Anchorage market
Constrained by mountains, Cook Inlet and military bases, the Anchorage “bowl” is down to just 5,800 buildable acres, far from enough to support expected housing demand over the next 20 years.
The largest city in the largest state has almost devoured its compact tract of land.
A 2012 Municipality of Anchorage study bears out that fact. The study evaluated anticipated housing demand for the Anchorage bowl and Chugiak-Eagle River areas from 2010 to 2030.
The Anchorage Housing Study is clear in the outlook for the city: “The mismatch between future housing demand and land supply is serious and needs attention.”
In 2010, there were 5,800 buildable residential acres in the Anchorage Bowl — space for about 11,000 new housing units under standard development practices. Demand for housing over the subsequent 20 years is expected to reach 18,000 units.
“It looks like we have all of this land, but in reality we don’t. We’re surrounded by ocean, mountains and military land. Most of the land that is quote, ‘buildable,’ has to be repaired,” Cook Inlet Housing Authority President and CEO Carol Gore said.
The rental housing market may already be showing the signs of a market nearing full capacity. A 2012 survey of the rental costs in Anchorage by the Alaska Housing Finance Corp., or AHFC, found the average monthly price for a one-bedroom apartment to be $954, a 34 percent increase over the 2005 price of $709. The cost of an average two-bedroom apartment increased 42 percent from $977 to $1,394 over the same time. Three and four-bedroom apartments each averaged near $2000 every month.
According to AHFC, rental unit vacancy in Anchorage fell from 7.6 percent in 2005 to 2.6 percent in 2012.
Gore said such low vacancy is essentially a rental market at full capacity — one tenant immediately replaces another, she said.
Bill Popp, president and CEO of Anchorage Economic Development Corp., said roughly 45 percent of households in the city are putting 30 percent or more of their monthly income towards housing. Spending those amounts on housing reduces the money people have to save, Popp said.
“We’re America and people work hard to get ahead, I understand that, but this is starting to become a real barrier for getting ahead — seeing upward mobility in our community,” he said.
Both Popp and Gore said those who often need affordable housing the most are young people starting careers and families —the future of Anchorage.
“We read all over the country that kids are graduating from college and they can’t find a job. Well, I think we have jobs but it’s not affordable to stay here,” Gore said.
The cost of living in Anchorage has historically been about 125 percent of the national average because of the city’s location and climate, Popp said. Housing costs, he said, are increasingly becoming a driver of that cost. U.S. Census Bureau data reports that housing costs in the city were 143 percent of the national average in the third quarter of 2012, making housing in Anchorage more expensive than the large metro areas of Chicago, Philadelphia and Seattle.
“We suffer a burden that is disproportionate to our population size,” Popp said.
A notable disparity exists in prices between the Municipality of Anchorage and the Matanuska-Susitna Borough. The average price of an existing residential property at the end of the third quarter of 2012 was $338,000 in Anchorage; and in the Mat-Su Borough it was $233,000, according to the Alaska Department of Labor and Workforce Development.
The National Association of Realtors reports the national median sale price of an existing single-family home in December was $180,000, while in Anchorage it was $309,000
Gore said data gathered by Cook Inlet Housing Authority, or CIHA, indicates an annual income of $71,800 is needed to afford a house in Anchorage at the median sale price. To afford a $1,000/month apartment, she said, an individual must earn a minimum of $41,400 annually, or $20 per hour.
According to CIHA, the yearly salaries in Anchorage for common professions are: $58,900 for an elementary school teacher; $56,900 for a police officer; $47,000 for a licensed practical nurse; $27,800 for a janitor; and $26,700 for someone in retail sales.
“It’s a very significant challenge for a lot of our service industries — hotels, restaurants, (and) retail,” Popp said. “For them to be able to find workers, workers have to be able to afford to live here.”
If current trends continue, Anchorage’s tourism industry, which relies heavily on entry-level service positions, could find itself shorthanded, he said.
According to the study, the cost of new home construction may be partly to blame for the increasingly tight market. It cites a short construction season, the high cost of raw materials, a small labor force and necessary removal of peat as contributing factors to construction costs that are 37 percent higher than the national average.
Some have pointed to a bridge across Knik Arm or more development in the Chugiak and Eagle River communities as solutions to Anchorage’s problem. Gore said while the areas have more available land, they lack appropriate infrastructure for large development and do not account for associated transportation costs.
She noted that a Knik Arm crossing wouldn’t be finished in time to meet growth needs in Anchorage. Gore stressed that the high cost of housing in Anchorage has far-reaching implications for the city.
“This is a city issue, a community issue. It’s not just because (CIHA is) in affordable housing. The top need of virtually every social service in town is affordable housing,” she said.
The ongoing revision of Anchorage’s zoning regulations, known as the Title 21 Rewrite, is an opportunity for the city to change the course of its housing future, Gore said. Examining the layout of the city and determining where multi-unit housing is appropriate. Being near jobs is key, she said, and its up to Municipality officials to make those decisions.
According to Gore, Anchorage does not need to do anything other cities haven’t already done. She said property tax deferrals and abatements for developers are ways to encourage redevelopment on what she called “blighted properties.”
Gore also said she hopes the Municipality will consider CIHA’s proposal of a transition period to allow developers to work out issues regarding new zoning regulations when they go into effect.
“We’ve been an advocate for a two-year standing committee where a developer can say, here’s an unintended consequence of this code,” she said.
In addition, Gore said CIHA supports a transition period for any new zoning regulations. It would give developers a year in which they could comply with either the new or old regulation, preventing a “Friday to Monday” rule change, Gore said.
Regardless of what is going to happen, CIHA is doing what it can to provide Anchorage residents with affordable housing.
As a part of its Mountain View Neighborhood Revitalization efforts in Anchorage, from 2002 to 2012 CIHA demolished 130 deteriorated and condemned units and replaced them with 233 single-family homes and duplexes. Plans are for 54 more units to be built in 2013, Gore said.
In June 2012, CIHA began opening the doors to its Loussac Place apartments on West 20th Avenue in Anchorage. Rent in the development for a one-bedroom apartment started at $751/month.
Gore said CIHA builds only five-star energy rated buildings in order to minimize energy costs for its tenants.
CIHA is able to “buy down” the cost of development through tax credits, low-interest loans from private lenders and its own capital, Gore said.
Officials at Alaska Housing Finance Corp., or AHFC, are also working to solve the housing squeeze. AHFC Director of Public Housing Cathy Stone said the organization disperses approximately 2,400 vouchers each month to Anchorage residents as part of the U.S. Department of Housing and Urban Development’s Housing Choice program. Vouchers are given to low-income individuals to help pay rent. Stone said qualification for the program is tiered based on income and family size, but average voucher given in Anchorage is $587/month.
“In Anchorage alone, (Housing Choice) brings over a million dollars each month into private landlords’ hands,” She said.
Alan Budahl heads Lutheran Social Services of Alaska. He said his organization provided $57,000 in utility assistance money in 2012 and hopes to up the figure to $75,000 this year. The money comes from state and federal grants and United Way donations, he said.
When assistance money runs out, Budahl said Lutheran Social Services uses its food bank and others in Anchorage to do what it can to help families in a tight spot.
“We can say, go pay your utilities; pay your rent; stay housed and we’ll help feed your family,” he said. “We’ve been able to help people out that way without having rent or utility assistance available.”
Elwood Brehmer can be reached at email@example.com.