Connie Yoshimura

INSIDE REAL ESTATE: When buying or renting, how much is ‘pretty’ worth to you?

Buyers zip through online websites looking for the home of their dreams. They discard homes based on the exterior photo and move on to a dozen or sometimes a hundred different properties. At open houses, probably 50 percent of those who thought they were interested in the home, simply drive right by it, rejecting the outside appearance of the home. So, yes, pretty does matter whether it’s for a single family home and for a small investor looking to make his first duplex or four-plex investment. Anchorage’s housing stock is old. Really old. Not only does it suffer from economic and cosmetic obsolescence but it doesn’t always look that good, either. In the world of botox and LA inspired cosmetic surgeries, “pretty” adds value, but giving a home a new facelift can be expensive and return on value is usually 50 percent or less. What “pretty” does provide, however, is a faster marketing time or a slightly higher rental rate. However, probably nowhere in our housing stock is a “facelift” more important than in our local rental market, where the vast majority of which was built in the 1970s and 1980s. With a vacancy factor of 3.9 percent, a creep up from 3.5 percent in 2015, the vacancy rate is still below the national average but the average Anchorage rental rate for an apartment has only increased by $5, signaling a stall in rates while at the same time the existing housing stock needs that facelift. While on the other hand, builders and investors are hesitant to build and buy brand new rental units. In order to compensate for the higher cost of construction versus existing square footage values, units have to be built smaller but also “pretty.” Apartments built in the 1980s usually had two bedrooms and one bath in about 1,000 to 1,200 square feet. Today, there is considerable demand for three bedrooms and two baths packed into 1,000 square feet. You can count on the “micro” rental unit coming to Anchorage in the not too distant future, although it may be larger than the 200-square foot units recently approved by the New York City zoning commission. Small has value. Less square footage to heat. Better and more efficient mechanical systems. Better insulation. Less reserves for maintenance and repairs the first five years. As our market readjusts itself from the last few years of appreciation, more and more buyers will turn to owner-occupied duplexes and four-plexes. They will like the 27.5 years of depreciation and the pro-rata write off for insurance, advertising, office supplies, landscaping and utilities. But, like any other buyer, they will want to buy “pretty.”  Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]  

INSIDE REAL ESTATE: Redevelopment may not solve affordability problem

Mark Twain said, “Buy land because they don’t make any more.” I always believed that but recent changes in housing may make that statement no longer as true as it once was. Robert J. Shiller, Professor of Economics at Yale, wrote an interesting article in July 2006 about the devaluing of land over several decades. Because land is the largest single cost component of any housing structure, does that mean the cost of housing will ultimately decrease in Anchorage and create more “affordable” housing, the topic of conversation that seems to be on every citizen’s mind, along with our balmy weather and the Permanent Fund Dividend?  Shiller categorized land into three residential groups: country, suburban and urban. The first was country such as Midwestern farmland adjacent to suburban areas that has been transformed into large lots for single family homes like what is currently occurring in the Mat-Su Valley. These lots are usually larger than one acre and have minimum utilities to them (gas and electric) and function with well and septic systems. The second category was suburban land with public water/sewer and publicly dedicated and maintained roads, which is like the type of residential communities in southeast and southwest Anchorage. These lots are usually 6,000 to 10,000 square feet and are close to schools, shopping and entertainment. Urban land is his final definition and is where new land, i.e. the opportunity for more housing, is being created. This urban redevelopment with increased density is what is occurring in South Addition, one of the oldest subdivisions in Anchorage. Most South Addition lots were platted in a grid configuration with alleys and front streets and most were built out with single-family homes despite the underlying zoning of R2 (low density multi-family). Now, these single-family structures, built mostly in the l950s, are being replaced with duplex and four-plexes to be sold as individual townhouse style condos. Thus, creating more usable “land.” This urban new land is right in keeping with both the millennial and aging baby boomer home buyers who have a strong desire to be near community activities, cultural events, trails, parks and eclectic eateries. It does not, however, solve the “affordability” issue Anchorage faces in its housing as redevelopment is expensive and land prices are high on a per unit basis, costing as much as $125,000 per unit. Even the micro 200-square foot units being built in other urban cities are most likely not going to solve Anchorage’s shortage of affordable housing as the majority of baby boomers and “millies” still have a love affair with their F-150 long bed pick-up truck and snow machine. That’s why Alaska is different than Portland, Seattle or Minneapolis.        Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]

INSIDE REAL ESTATE: Anchorage home market shifts from sellers to buyers

According to the Multiple Listing Service, residential active listing inventory in the Municipality of Anchorage bumped up to over 900 units for sale in April and May, similar to the available inventory in 2010, turning the Anchorage market into more of a buyer’s market than a seller’s. Just a year ago, inventory was in the 600 for sale range for the same months. At that time, frustrated buyers dealt with competitive multiple offers on homes with some offering more than listed price. Not so today where homes are selling for 98.23 percent of adjusted list price and that percentage does not include any buyer-paid closing costs by the seller. Adjusted list price means any reduction from the original listed price, and that percent sale to original list price is 95.98 percent. Anchorage is a small market with 2,860 single family homes selling in 2014 and 2,993 in the past year. It is hard to generalize and put percentages on any specific home or subdivision but midway through 2016, the trend is pretty clear. Inventory is up but sales are still strong. Through the first five months of this year, there have been only 69 fewer sales than in 2015 for the same time frame. So with inventory up, the approximately same number of buyers have more choices and are taking more time to make a decision. This is reflected in longer days on the market with the six-month average of 51 days on market compared to 44 the past 13 months.  Sellers, whether builders or private parties with pre-owned homes, need to do more to make their homes attractive. That includes fresh touch up paint, cleaning out the garage so that it appears more spacious and the important lawn and landscaping care. First impressions are the most important. If the exterior of the home is not attractive and well cared for or looks exactly like the same of every other home on the block, that buyer is going to drive right by, whether they are with their realtor or by themselves. An unkempt lawn or dead bushes make a negative impression that is not retrievable. Once the home is in market condition, it is all a matter of price. Sellers need to look not what the home down the street sold for six months ago but what is currently on the market that competes with the home they are selling.  Every home has attractive features which is why the sellers bought the home in the first place. Although Zillow and Trulia are for many buyers the first online stop, they don’t provide enough detail as to what was an important feature to the seller and prospective buyer. Buyers shopping only online may miss out on the home of their dreams. This summer is one of our best for sunny skies and warm temperatures. If you’re looking for a new home, get in your car, on your bike or walk around the neighborhood where you would like to live. You might be surprised at what you find. Connie Yoshimura is the Broker/Owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]  

INSIDE REAL ESTATE: Test your knowledge of the Southcentral real estate market

1. Has the average sales price of Anchorage homes increased or decreased year-to-date when compared to the 2015 average price? 2. By what percentage has this increase or decrease occurred? 3. Has the number of residential sales for the first four months of 2016 increased or decreased when compared to the same time last year? 4. How many home sales have occurred in the first four months of 2016 as reported in MLS? 5. In the last six months, how many million-dollar homes listed in MLS have sold? 6. What price range has the highest percentage of inventory? 7. How negotiable do most sellers have to be in order to sell their home?  In other words, what is the percentage sales to original list price the past six months? 8. What is the average sales price of an Eagle River single family home and is that higher or lower than Anchorage? 9. How many homes priced over $749,999 are for sale in Eagle River vs. Anchorage? 10. What is the average sales price of an Anchorage condo? 11. How many condos are for sale in this price range? 12. How many condos are for sale over $400,000? 13. Have Anchorage residential building permits increased or decreased YTD when compared to last year? 14. What is the average listed price for a home in the Mat-Su Borough? Connie Yoshimura is the broker/owner of Dwell Realty. Read more columns by Connie at www.cyalaska.com. Contact her at 907-229-2703 or [email protected]     Answers 1. Decreased        2. 2.5%, wiping away the 2015 appreciation rate of 2.27%       3. Minimally decreased. 52 fewer home sales       4. 722 5. None 6. $500,000 to $749,999, 21% of all MLS Anchorage inventory       7. 4.33% less than original list price.       8. $362,688, almost identical to Anchorage’s at $360,978        9. 4 in Eagle River; 75 in Anchorage       10. $213,070 11. 29 12. 33 13. Decreased.  Still waiting for the MOA to post April and May permit info but rough data indicates a continued decrease in activity    14. $284,400    

INSIDE REAL ESTATE: As you may have guessed, Anchorage home listings on rise

As you might have suspected, Anchorage inventory has continued to increase over the past few weeks. Spring and early summer is the time of year when sellers like to put their homes on the market and our uncertain economic outlook has no doubt helped increase Anchorage’s inventory. A snapshot of a week’s inventory of available homes in May when compared to the same time in 2015, shows a 64 percent increase in active for sale single family homes. On May 2, 2015, there were 428 homes for sale; on May 2, 2016, there were 702. Not all Alaska communities are showing such a dramatic increase in inventory and some inventories have actually declined. Wasilla, as you might expect, has had a 32.36 percent increase in inventory, an increase from 343 to 454. Kenai had a 55 percent increase, from 60 to 93. Chugiak has increased from 30 homes to 49 and its neighbor, Eagle River, has gone from 134 homes for sale to 171, an increase of 27.61 percent. Big Lake, originally a cabin and recreational community, has developed into a year-round community with larger lakefront homes. It’s had a 39 percent decline in available homes. There are now only 37 homes for sale compared to 61 a year ago. You can expect that market to further tighten up as the summer recreational season takes hold. Likewise, Homer has had a 14 percent decline in available homes, from 114 to 98. Homer and Halibut Cove have established their communities as the go to place for upscale visitors as well as Alaskans. Sitka and Seward are also stable with little or no movement up or down. So it’s a mixed bag of supply and demand. It’s hard to explain why Talkeetna and Willow have a decreasing supply of homes for sale while Wasilla, the hub of the Mat-Su, has had such an increase.  However, neither Anchorage nor Wasilla has reached a saturation point of oversupply. Anchorage, in particular, is still a long ways from the high water mark of 1,299 homes for sale in June 2007. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-229-2703 or [email protected]

INSIDE REAL ESTATE: Anchorage’s housing shortage continues

Anchorage, Alaska’s largest metropolitan area, continues to face a housing shortage due to the lack of new construction activity that has been exacerbated by the implementation of the new Title 21 land use regulations. As the chart demonstrates, new single family permits have been at a steady decline since 2013 and the decline from 2015 to 2016 is a whopping 50 percent. For the first quarter of 2016, Anchorage had only 26 single family permits, a historic low. Only 14 duplex units were permitted compared to 26 just a year ago. The most dramatic decline, however, came in multi-family permits for new units. In 2015, there were 148 first quarter units permitted compared to only seven in 2016. This low number is particularly discouraging for moderate and low income residents and is indicative of struggle all market segments are having with the new regulations. To put these historic low permit numbers into a wider context, let’s take a look at other communities with similar populations, some of which have also been affected by the struggling oil industry. Tulsa, Okla., has a population of 391,906 and for the first quarter had 118 new single family permits. Arlington, Texas, has a population of 365,438 and had 66 single family permits. Both of these communities are influenced by the health of the oil industry and yet proportionately in relationship to the population are creating more new housing starts than the Municipality of Anchorage. The difference can only be attributed to our newly minted land use regulations. Henderson, Nev., has a population of 257,729 and had 500 new single family permits for the first quarter of 2016. Nevada, in general, has had a rebound from the recession of 2008, and although one can’t expect Anchorage to have a comparable first quarter of single family permits, it has actually been years since we have had 500 new single family permits annually. There is no easy solution to the problem that the planning department and the Municipal Assembly has created. Repeal is most likely not going to occur. Instead, hundreds of hours and thousands of consultant dollars will be spent trying to peel the onion off the over regulations, one layer at a time. And, as for all those purported homes coming on the market, as a result of oil industry layoffs? We need them to fulfill the shortage of housing created by the new Title 21. It is not that lenders will not lend and builders are afraid to build, it is a simple fact that the new regulations are making it more expensive and creating delays to getting sticks in the air. Read Connie Yoshimura at www.columnsbyconnie.com. Contact her at 907-646-3670 or [email protected]  

House or condominium, know your rules for landscaping

This is the time of year when everyone’s thoughts turn to landscaping and outdoor maintenance. Whether it’s buying that Bell’s hanging basket for your deck or installing a brand new yard, each homeowner and condo association is unique in their rules and requirements when it comes to landscaping. Prospective homebuyers should carefully review the public offering statement or resale certificate prior to their purchase so they are aware of what the homeowners association, or HOA, expects of them regarding the installation and maintenance of landscaping. Well-maintained landscaping adds cohesiveness in the community and adds to a planned, attractive and well laid out streetscape. It also adds real value when it comes to the resale of a home. In some new home communities it is the developer’s responsibility to install four to six inches of top soil, hydro-seeding and a specific number and type of trees and shrubs as part of their platting approval. Other new home communities leave the landscaping to the initial homeowner and must be completed within a specific time period, usually one year after occupancy. Some subdivisions may require an actual dollar amount be spent on landscaping a new home while others may actually dictate the height, trunk caliber and type of tree for the front yard. One new subdivision in southeast Anchorage is requiring foundation landscaping at the front of each home, as recommended by Anchorage’s new Title 21. In pre-owned homes, where the initial landscaping has already been installed, the issue becomes one of maintenance. HOAs require that the landscape design for the community be maintained on each lot, the enforcement of which is the responsibility of the landscape committee. Enforcement can include the timely removal and replacement of dead trees and shrubs. If the committee is not knowledgeable on landscaping, disputes can arise over dead trees and lawn maintenance. Some associations have the ability to fine homeowners if their landscaping is not in conformation with the covenants, codes and restrictions. Other associations may limit how many times an owner may fertilize in a growing season due to the run off into ecological sensitive areas. In condominium developments, the association takes care of the landscaping for all common areas, including signage, unless an area is designated as a limited common area adjacent to a particular unit when it becomes the responsibility of the individual condo owner. Associations have no authority over limited common areas. The association board generally hires a landscape contractor and is paid for out of the monthly dues. The contractor is responsible for spring and fall cleanup, aeration, fertilization, watering, raking, weed control in beds and lawns, mowing and trimming. For many owners, it is a small price to pay for an aesthetically attractive community. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]  

INSIDE REAL ESTATE: Friendlier building permit regime gives Mat-Su an edge over Anchorage

According to the latest census data for 2015, Anchorage has lost 1,458 residents when compared to 2014 while her popular neighbor to the north, the Mat-Su Borough gained 1,801. How many of Anchorage’s lost neighbors became residents of the Mat-Su is hard to calculate, but anyone who’s driven the Glenn Highway in the past 12 months can attest to the growing long line of traffic back and forth. According to the same census information, the Mat-Su has now become the second most-populated region in the state, surpassing the Interior to which like the Municipality of Anchorage, or MOA, has also continued to lose population. What makes the Mat-Su so attractive is the almost over-abundance of developable land resulting in more affordable home prices. But, it is not just the small ranch home that beats Anchorage home prices between $50,000 and $100,000, but also the more attractive and custom homes as well. With large lots, many with views and some with lake frontages, the Mat-Su has also become a fast-growing luxury home market. However, just like there is plenty of land to develop, there are also plenty of homes for sale. As of last week, Anchorage had 638 homes for sale, an increasing number, but not unusual for this time of year. That number reflects one home for sale per 468 residents. In the Mat-Su, with a population estimated at just over 100,000, there is one home for sale per 168 residents or more than 2.78 times the choices if you’re looking for a home to purchase. Needless to say, lack of home-building regulations in the Mat-Su Borough makes building faster and more affordable. Only the city of Palmer actually has building permits. The rest of the borough is wide open with the only regulation coming from private inspectors in order for a home buyer to obtain long-term financing. Buyers should be aware that all homes are not created equally, and a popular home plan built in the Mat-Su versus the MOA may, for example, have fewer electrical outlets than the same home in Anchorage. However, fewer restrictions are also available in Girdwood, Eagle River, and Bear Valley. The flight to the Valley is understandable but worrisome from a residential real estate perspective. While the Mat-Su may be too loose without permits and adequate oversight, Anchorage is going in a different direction with new Title 21 regulations requiring even a strict percentage of windows on the front elevation of all new homes, and the continual upgrading of the Design Criteria Manual, that little-known document governing the requirements for the construction of roads, without any public review process. Somewhere in between the development philosophy of the Mat-Su Borough and the MOA should be a reasonable compromise so that both communities can fulfill the housing needs of its residents.      Read Connie Yoshimura at www.columnsbyconnie.com. Contact her at 907-646-3670 or [email protected]  

INSIDE REAL ESTATE: Anchorage condo market holds steady so far in 2016

Condo sales in the Municipality of Anchorage have remained consistent year-to-date when compared to the same time as last year, and prices are stable with only 0.82 percent increase from 2015. This bodes well for the first-time homebuyer and downsizers who are looking to scale back their square footage and utility expenses. It is also indicative of the continued interest and activity in the lower price ranges of the Anchorage market. Single-family homes have actually fallen in average sales price by 4 percent when compared to the average price of $366,585 in 2015. In general, the average condo days on the market has decreased by 33 percent. The number of condos sold for the first two months of the year has remained consistent at 132 and 134 respectively. This decline in days on the market is consistent throughout the Municipality of Anchorage, or MOA, including Girdwood, Eagle River, and Chugiak/Peters Creek, which is somewhat surprising as it is not unusual for perimeter sales to fall when an economy slows or stalls due to the indecision by the legislature on how to handle its budget shortfall. One major factor contributing to the stability of the condo market is the lack of new construction. Multi-family starts are down and only one duplex was permitted in the first two months of this year compared to thirteen last year at this time. This downward trend in condo starts will undoubtedly continue at least through the first half of the year as developers grapple with the new Title 21 regulations. The new Title 21 impact is going to be felt most in this entry level market as the MOA’s desire for denser development can’t help but increase costs not only for construction but design time as well. It is a common misconception that building up is less expensive than row or townhouse style lower density. Interior corridors have to be heated and maintained. Four story buildings must be built to commercial standards. For appraisal purposes, condo square footage is measured interior paint-to-paint of the living area only and common areas are never taken into consideration when evaluating the value. Although there is some market demand for flats in three and four story buildings with interior corridors the vast majority of buyers, including millennials, are still looking for a garage attached to the living area as opposed to a common garage area where the buyer is assigned a stall which may, or may not, have a storage area nearby. Buyers also want access to a private backyard even if it is only a couple hundred feet. The MOA, on the other hand, requires more shared open space and even designates its configuration and location. I would challenge planners to tour communities that have shared open space to see if and when it is used. The most popular amenities to single family or condo development are sidewalks, trails and connectivity. In today’s world, where security is becoming more and more an issue in neighborhoods, buyers want their children to play within eyesight and walk their pets on frequently-used sidewalks and trails. Townhouse style condos with attached garages, whether old or new, will continue to have excellent absorption in 2015.   Read Connie Yoshimura at www.columnsbyconnie.com. Contact her at 907-646-3670 or [email protected]  

Why 2016 is not 1986 for the Anchorage real estate market

There’s been lots of talk from a wide variety of experts about the demise of the housing market in 2016 and comparing it to the real estate crash of 1986. But, there’s one important difference that everyone seems to have forgotten. In 1986 mortgage interest rates were 10.19 percent for a 30-year fixed rate loan. Today, that rate is 3.75 percent for the same loan. When comparing the rate on a $500,000 mortgage, the math is shocking. At today’s interest rate the payment is $3,283.95, including principal, interest, taxes, and insurances. At 10.19 percent the payment would have been $4,880.65 — a difference of $1,596. Even more importantly, a buyer’s income would have needed to be $6,000 more per month to qualify for the mortgage. In 1986, Anchorage had literally thousands of unsold homes, an inventory glut that took the 1989 Exxon Valdez oil spill to suck up. Now, with a population hovering at 300,000, Anchorage has on a weekly basis only about 500 homes for sale, and despite the potential increase due to Cartus and Brookfield relocation homes filtering into the marketplace, any significant increase in inventory is not likely. Why? Because Anchorage builders are definitely “feeling the burn” of the enactment of the new Title 21 regulations. For the first two months of this year, there have only been 13 single-family building permits compared to 21 in 2015. Both are dismal numbers for a community our size, which is why the Cartus and Brookfield relocation homes coming into the market only bring a sigh of relief to frustrated buyers. In 1986, the majority of our inventory was in duplex and multi-family stacked condos. In 2015, we had 16 duplex units built. In 2016, we’ve had two. The “burn” is real for Anchorage builders as they struggle to redesign and re-engineer plans to conform not only to the new Title 21 but also to the International Residential Code of Building Standards which is currently anticipated to be passed by the Anchorage Assembly in April. Not only Title 21, but this new code adoption which will affect hold-downs and other structural items, will cost builders an additional $1,200 just to get them re-engineered, let alone increase the actual cost of construction. In conclusion, let’s take a walk down memory lane. In 1984, a Foxwood condo with two bedrooms, two baths, a stall garage, a fireplace, and approximately 800 square feet sold for $86,000. In 1989, it sold for $32,000. Today, one is on the market for $157,000. Does anyone really believe that this year or next, it will sell for $32,000 again? I certainly don’t and I’ve worked the highs and lows of the residential market place for over 35 years.  Contact her at 907-646-3670 or [email protected]

INSIDE REAL ESTATE: How to get what you want when building a new home

All across the nation (and Alaska being no exception), buyers are demanding extras, upgrades, and changes to stock housing plans that have been the mainstay of builders profitability for the past 20 years. In the financial uncertainty of homebuilding, repeating a plan provides a modicum of stability in maintaining a builder’s profitability. Lot costs, soil conditions, weather, and the cost of lumber and other materials, remain variables, but in general builders can predict and reach their profit margins by building the same plan over and over again, despite how boring a streetscape it may create. Most Alaskan builders are not custom builders. Unlike publicly traded home building companies that build thousands of units a year in multi-state locations, Alaska’s largest builders build between just 50 and 100 homes a year. In fact, in the Municipality of Anchorage, the No. 1 builder in 2015 was the owner-builder. The handful of truly custom home builders generally builds only one to eight homes per year. However, today’s buyers are demanding, thanks to Pinterest and Houzz, a custom home even if it is their first home. They want the railing, the wall color, the canopy hood, the window size and placement, even the towel bars of their choice. And given the growing divide between the cost of new homes versus resale, it is one of the few benefits buyers have in selecting a brand new home rather than the added expense after closing of the remodel of an existing home. So how can buyers get what they want in a new home without breaking their budget or the builder’s opportunity for profitability? First, get everything in writing, even down to the allowance for the plumbing fixtures or a tear sheet of the door knobs. The final set of plans needs to be initialed, dated and agreed upon between builder and buyer. This plan set should include size of windows and have room dimensions clearly identified. If there are to be cedar shakes or stone on the exterior elevation, the allowance and dimensions need to be identified as well. Buyers should be encouraged to visit a builder’s finished home to check out finishes, although they should be aware that many builders have differing standards for each subdivision. For example, the same house plan in two different locations may have varying allowances for carpet and cabinets. Whether or not landscaping is included also depends on the subdivision and local government requirements. Buyers should also pay special attention to the plot plan that shows the relationship of the foundation and driveway to the lot lines. Be aware that asking for an extra four feet in driveway length adds to the cost of the home. Builders get very frustrated with changes after construction has started. A change order late in the building process travels from the vendor to the accounting office to the superintendent, to the subcontractor and back. It can also hold up construction, which extends the cost of the builder’s daily interest rate. The bottom line for builders and buyers is to make all decisions for amenities and upgrades prior to the start of construction and to write it all down. Buyers need to know what they are buying and builders need to know what they are building. The clearer the plans and specifications the happier everyone will be.   Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

INSIDE REAL ESTATE: Anchorage’s mixed-use rules reflect mixed-up priorities

During the 10 years of negotiation and conflict over the new Title 21 land use regulations which finally became ordinance in January 2016, the Municipality of Anchorage planning department held firm on their vision of encouraging mixed-use development by creating new zoning categories as one avenue to solving Anchorage’s housing shortage. However, what works on paper and theory isn’t necessarily financially feasible in reality. In other words, mixed-use in Anchorage has yet to be “ground tested” on new, non-subsidized, vertically-integrated projects. Traditionally, mixed-use development has been developed as vertical construction with retail and offices on the ground and lower level floors and residences above. The best local example of this is the Petersen Towers that has retail on the first floor, several floors of offices above, and three top floors — each with six units — of luxury condos. At the time it was built in the early 1980s, Petersen Towers was a ground-breaking building with unobstructed inlet and mountain views. Since then, to my knowledge, there has been no vertical mixed-use development on that scale, although small, older buildings with grandfathered rights have seen some mixed-use conversions. Fire Island Bakery in South Addition shares space in a building with apartments and offices. Celestial Sweets on Spenard Road is located on a ground floor in a small building with apartments above it. Some older two-story buildings in the downtown corridor also have a handful of apartments above their retail space. New mixed-use developments include Cook Inlet Housing Authority’s projects in Mountain View and plans for a larger, mixed-use development on Spenard Road. The popular Rustic Goat restaurant on Northern Lights is considered a mixed-use project with detached apartments located on the back alley. These small mixed-use developments fit in well with local neighborhoods and contribute to economic and social diversity. However, higher density development as advocated by the MOA has many issues. According to Seth G. Weissman, a real estate attorney presenting to the Georgia Planning Association, “mixed-use works best in highly urbanized areas where the project (particularly the retail) can be woven into the fabric of an existing urban center. Mixed-use cannot survive without the density to support it.” Weissman goes on to explain that the residential housing component in mixed-use works best as a high quality rental product but still must be surrounded by density and local government contributions for alleyways, parks, and other destination amenities. Anchorage’s housing shortage is now a well-recognized and much-discussed fact. We are short hundreds of housing units. The solution, however, is not in high density vertical mixed-use where talk is cheap and construction is over $350 per square foot. Rather, the MOA should look at ways to encourage more affordable housing such as a small lot ordinance or low density neighborhood mixed-use through the use of variances and overlay districts. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

INSIDE REAL ESTATE: Anchorage housing crunch pushes buyers to multi-family

According to the National Association of Homebuilders, there are nine groupings of homebuyers in America. Those nine groups include the young single, older single, single parent, young couple, mature couple, older couple, young family, middle family, and mature family. Each group is then broken down by income, age, and family description, including traditional or blended, in the family category. Alaska’s demographics fit well into these various groups with a growing population of the mature family (aging baby boomers) and the emerging millennials as young single, single parent, and young couple (with or without children). However, unlike communities in the Lower 48, such as Las Vegas and Phoenix, which are once again experiencing growth in new home starts, Southcentral Alaska is falling behind and failing to meet the housing demand for all of the home buying groups. According to the recent Building Owners and Managers Association presentation, Anchorage lacks hundreds housing units not built over the past five years. Even taking into consideration an estimated population dip of 1,800 in Anchorage (with an average family size of 2.65) Anchorage’s shortfall is still critical. With remaining Anchorage land having poor soils, wetlands, and topographical challenges, along with the ever increasing cost for the extension of roads, water and sewer, due to changing regulations of the type of pipe and required road insulation, Anchorage’s housing shortage will continue to spiral out of the affordability index for most of the nine home-buying groups. As a result, more and more homebuyers are going to be forced to turn to multi-family housing if they want the convenience of living relatively close to employment centers. But even those multi-family choices are limited to older, attached zero lot lines without adequate covenant, codes, and restrictions to preserve value; or 1980s condos, many of which have inadequate reserves and may face special assessments in the near future. Most multi-family zoned land (R2, R2M, R3, R4) has been eaten up by the duplex style condo, a plethora of which was built during the 1990s. However, a small but emerging market some buyers may turn to is the owner–occupied duplex, triplex, or fourplex. Whether brand new (if you can find one) or an older property, mortgage financing is readily available with as little as zero down for Veterans’ Affairs financing, or 3.5 percent down payment for Federal Housing Administration. Mortgage loan amounts for owner occupied duplexes are as high as $800,000. Thirty-year fixed rate mortgages are at 3.65 percent, and the preferred 15-year mortgage, if you can afford the monthly payment, which will save you tens of thousands of dollars over the lifetime of the mortgage, is only 3 percent. Brand new duplexes or fourplexes are going to be expensive. The two most expensive rooms of any home are the kitchen and bathrooms, and multi-family doubles or quadruples their numbers. However, savvy homebuyers in all groups are beginning to recognize the value of letting a renter help with the mortgage. Even if the renter only provides enough income for the taxes, insurance, and the rising cost of utilities, it’s a monthly cash contribution to the homeowner. I belong to the aging baby boomer group. As a tenant new to Anchorage, I lived in a duplex on Barbara Street. As an owner, I’ve lived in a Petersen Tower condo, on the hillside, an attached townhome, and a luxury single family home. I also owned and lived in a Bootlegger Cove fourplex that I regret ever selling, and for the past 19 years a duplex just five minutes from my office. I’m a good example of how our housing needs change as we pass through the various home buying stages. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]  

INSIDE REAL ESTATE: Some takeaways from the International Builders Show

One-hundred-twenty Alaskans made the trek to the International Builders Show in Las Vegas last week, along with over 100,000 other builders, developers, remodelers, bankers, economists, suppliers, and a potty mouth Jay Leno, who opened the show. Three years ago, the IBS merged with the Kitchen and Bath Show and the Design/Build Week, creating the largest trade show in the U.S. In addition to the Alaskans, there were builders and developers from China, South Korea, and Europe. Whether they were there to gamble, eat a Gordon Ramsey burger, or see a show, you could hear a lot of foreign languages on the escalators. Although much of what was discussed and demonstrated was not applicable to the Far North, there were some definite similarities and take-aways for Alaskans. Alaska has its fair share of millennials and aging baby boomers — the two largest homebuyer groups in the U.S. Unfortunately, within these two home buying groups, there’s a lot of differing demographics, based upon family status, age, and income. The groups include the young single, older single, single parents, young couple, mature couple, older couple, young family, middle family and mature family.  The take-away for Alaska’s builders, virtually all of whom build less than one hundred units a year, is to focus on no more than three of these market segments. However, within our market place, there are some definite design trends that are noteworthy and applicable to Alaska. Like fashion, design trends change with the season, but there are some new ideas that will definitely last more than one season, even here in Alaska. Remember gray walls? They’ve been replaced with a Benjamin Moore off-white that better reflects sunlight. Good news for us who all suffer from light deprivation this time of year. Granite countertops have been replaced with a quiet quartz with little or no movement in the pattern. Selective wood accents have moved from the exterior to the interior with beams, barn doors, kitchen shelving, or a wood slab overlay on the quartz countertop. It’s a good contrast to the white cabinets that 80 percent of all homebuyers are selecting. The kitchen remains the heart of the home and that is not likely to change. However, more and more it looks like any other living area of the home with sleek, under mounted appliances. Can’t afford quartz? Try thick, four to six inch laminate countertops on an island with a waterfall side to the floor. And about that island: it is an island, not a peninsula, and must be six feet long, enough to seat at least four. The bi-level island is absent because it costs more to build and spatially interferes with small living spaces, particularly in the entry level condo market. And remember those plate glass mirrors in bathrooms? They’ve been replaced with a simple painted wood frame made onsite. Or, a Pier One fancy framed crystal mirror, chosen by the buyer. Because, the number one takeaway from the show is that whether it’s an entry level condo or a million dollar custom home, it is all about buyer personalization. Buyers want to make their own selections. The smart Alaskan builder will build a model home to demonstrate the latest in home design/interiors and then let their specs sit after dry wall so buyers can personalize their interiors to their specific tastes and homebuyer group.     Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

INSIDE REAL ESTATE: A snapshot of Anchorage housing as oil prices plunge

In Anchorage, a home in an upscale subdivision was recently put on the market for $25,000 less than the buyer paid for it 17 months ago. The seller is a relocation company most likely hired by an oil, or oil field service, company to dispose of a departing employee’s primary residence. The $25,000 amounts to a 3 percent reduction from the original purchase price paid by the employee to the builder.  Last week, for-sale inventory of single-family homes bumped up by over 20 homes. For the first time in several weeks, new inventory outpaced pending sales, according to recently published MLS statistics. So are these two scenarios indicative of a change in the housing market? The answer is both yes and no. As departing oil industry employees’ homes are sprinkled throughout the marketplace over the next few months, expect some good buys. Relocation companies do not like to hold inventory. It costs employers money, and depending on the relocation company’s contractual relationship with the employer, may reduce the relocation company’s profit. They like to sell homes “as-is where is” at a competitive price. If the average time on the market for a comparable home is 65 days, they like to price it to sell in 45. Their sold comps can drag a market down when used by an appraiser. But, like the home with the $25,000 price drop, most of these relocation homes are going to be priced over $500,000. It’s a good opportunity for the move-up buyer. The homes are generally newer, well cared for, and include appliances, window coverings, and landscaping. It is hard for builders to compete with these like-new homes, particularly when they are building in the same subdivision. The question is what remains when these well-priced homes are absorbed. Anchorage continues to have a housing shortage in all price ranges below $700,000. With a population of 300,000+, Anchorage should be building 900 new housing units a year. Yet, for the past several years, new housing units have averaged less than 500, including single family, duplexes, and multi-family. The new Title 21 rewrite, which went into effect in January of this year, will slow down any new permits for the first six months of this year as builders and developers grapple with the new requirements. Plus, there is no doubt that these new regulations will add to the cost of all housing types. It is not just a housing shortage but an affordability shortage as well. New homes under $500,000 will be in short supply and any four bedroom, 2.5 bath home with a double, or triple car garage, will be hard to find and ultimately, a good buy. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]  

Terrible timing for the 836 pages of Title 21 to take effect

The implementation of the new Title 21 scheduled for Jan. 1, 2016, couldn’t come at a worse time for builders and developers. Originally conceived during the housing boom of the mid-2000’s, it was meant to create a more aesthetically pleasing new age community. Ten years later it is bogged down in 836 pages of design criteria that is both expensive and impractical in today’s economic environment. After more than two years of discussion, the Municipality of Anchorage has finally recognized it has an affordable housing crisis of significant proportions. How ironic is it that at the same time this lack of housing has become accepted knowledge, the assembly has enacted a new Title 21 which is going to add to the cost of every new home built in 2016 and beyond?  Every homebuilder and residential land developer is now hiring engineers, surveyors, planners, architects, home designers, et cetera, to help figure out whether their current home plans and site plans meet the new requirements and if not, how they must be changed. The cost just for deciphering the new Title 21? Most likely anywhere from $75 to $225 per hour. For changes to exterior elevations, assuming the basic plan conforms, add an additional $1,500 per home for new exterior elevations. In total, add $2,000 to any new home for 2016. But changes to the land use regulations will also increase the cost of developing single family lots and condo tracts. The new regulations will force developers to create larger lots in order to accommodate double and triple car garages (number one on a new home buyer’s wish list). The wider the lot the more expensive it is to develop with roads, water and sewer. Add another $5,000 to $10,000 to the price of the lot and pass it on to the home builder and the buyer. In an environment where we need more affordable housing, we’ve now added anywhere from $7,000 to $12,000 to a new home in 2016. All this at a time when residential building permits remain at historic lows. Single family permits have declined over the past two years. Year-to-date through October permits have fallen to 237. Duplex permits have fallen to 92 units — a sharp decline from 160 YTD in 2014. And multi-family permits have fallen from 295 permits to 251. We are doing nothing to solve our housing crisis. Instead, we are adding to the cost of every new housing unit to be built in 2016. The new regulations will not only increase costs but also slow down permitting as the industry grapples to adjust. Last week, after reported pending and closed sales, there were only 497 single homes left for sale in Anchorage. Twenty-six percent of those homes were priced over $500,000. The new Title 21 will only add to that percentage in 2016, making Anchorage the Santa Monica of Alaska. With all due to respect to the planning staff who have worked for 10 years on this document, and the assembly’s well-intentioned vote of 9 to 2 to approve the new Title 21, everyone needs to take a step back and re-evaluate what they have created and the unintended consequences of the new Title 21 in light of our housing crisis. Now is not the time to burden home builders and developers with aesthetic reform. Do what needs to be amended to the existing Title 21 for the benefit of health and safety. The market place will make its own demands for design and aesthetics. Just log on to Pinterest or Houzz and see for yourself.    Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

Title 21 and tight inventory: A look at the 2016 market

There are five major reasons why people buy and sell homes. Those reasons are marriage, birth, death, divorce, and job change. Add (in parenthesis) the investor to that list and you have the universal buy/sell equation and Anchorage is no different. The real question in that equation is what will they buy as the Anchorage residential market continues to suffer from a lack of inventory, particularly for homes under $400,000. During the second week of November 2015, after adjusting for pending and closed sales, there were only 543 single family homes for sale in Anchorage in all price ranges. Not much to look at if you’re a family trying to beat the expected rise in interest rates come this December. This inventory of aging homes is lower than in 2009 or 2004, despite a population increase now at 300,000-plus. In October there were 290 sales reported through MLS. With the exception of 2013, when there were 311 recorded sales, this is the highest October number since 2004. So the Anchorage market place remains alive and well, despite the bad news coming out of the oil industry and Juneau. Departing oil company employees will create a smattering of housing inventory desperately needed. Both Cartus and Brookfield, third party relocation companies to the oil industry, price their homes to sell. They are always the best resale homes in any neighborhood. Unfortunately, 26 percent of available homes for sale are over $500,000 and you can expect this percentage to increase in 2016 due to the implementation of the new Title 21 regulations finally passed by the Anchorage Assembly. It’s true that in the past we have built some aesthetically unattractive homes and the new Title 21 now requires builders to add more windows, three different textures to the front exterior, less garage frontage and wider, covered entries. All this comes at a cost, however, not only for a bay window, stones or shakes, but also requires wider lots and thus, more expensive home costs. The underlying cost of any new home is the building site, which accounts for 20 to 28 percent of the total home value. Lot value is determined by the cost of the road and the extension of water, sewer, and storm drain. The average cost of a publicly dedicated road with public water/sewer/storm drain is now almost $2,000 per lineal foot, not counting the cost of the raw land acquisition, civil engineering, taxes, interest carry, et cetera. All this coming at a time when we have less than an average three-month supply of homes available between $225,000 and $500,000.  In the past decade, homebuyers fighting the cost of rising home prices in Anchorage moved to the bedroom community of Eagle River. Now, the average sales price of $371,500 in Eagle River is a virtual tie with Anchorage, forcing more and more homebuyers to commute to the Valley. As a result of the new Title 21 regulations, Anchorage will have better looking homes in 2016 but they will be more expensive and fewer of them. Already, this year’s single family permits through October are 36 fewer than 2014 permits. Counting in duplex and multi-family permits, the MOA is down 104 new housing units from last year. That downward trend will continue as builders and developers grapple with the new Title 21 regulations, consisting of 836 single spaced pages. Not the streamlined version as promised.     Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

How to decipher a condo homeowners association budget

Not all condos are created the same and therefore not all homeowners association budgets will be alike. A townhouse style condo generally sits on a single tract of land. But it can also sit on a platted duplex or four-plex lot. The road in front of the unit can be a private driveway or a publicly dedicated road. If it is a publicly dedicated road, it will be maintained by the municipality. Snow plowing and road maintenance will be paid for by the city. However, if it is a private road or driveway, it will need to be maintained by the homeowners association, or HOA. Dues and reserves will have to be established for its maintenance and ultimate replacement. Although water and sewer to the unit will be built to Municipality of Anchorage standards, if it is a public system, no dues will be needed for its repair and ultimate replacement. However, if it is considered a private system, even though it is built to the same standard, dues will need to be included in the monthly budget for its repair and replacement. Whether or not the monthly cost for water, sewer, and refuse is paid for in the dues, or by the individual condo owner, depends on how the association budget is set up. Having the individual property owners pay for those items reduces the dues and allows more buyers to qualify for the property. Qualifying for a single family mortgage does not take into consideration the cost of maintenance, water, sewer and refuse. However, HOA dues for condos are calculated into a buyer’s debt ratios. In some instances, for condo buildings with a central heating system, that cost would also be factored into a buyer’s qualification. The goal with dues is to keep them as low as possible but still provide the common services and, hopefully, carefree management. Site condos provide the lowest dues because the condo owner is responsible for all exterior maintenance, including driveway, roof and siding repair. Full service condos are just the opposite, and establish reserves, maintenance and management for all exteriors, including HOA owned fencing, monument sign and common element landscaping. With a full service condo, in most cases, you are buying the air space between interior walls, otherwise known as paint to paint.  All HOAs require management and very few are self-managed. The fee per unit for a professional property management company is usually around $20 per unit. Property managers collect the dues and pay all the bills. They seek competitive bids from vendors for work that the association needs performed. They also enforce the covenants, codes and restrictions. The property manager is hired by the HOA board of directors and maintains the records of the board meetings. Other fees in the monthly dues include association and property insurance, legal fees, taxes and licenses, tax prep and audit. Reserves for roads, exteriors, and water/sewer if applicable are based upon the remaining useful life. Water and sewer lines are estimated to have a 50-year life; roofs 25 years; and asphalt 20 years. The remaining useful life must be verified by a licensed engineer who was associated with the development. There is a cost for homeownership, whether a condo or a fee simple single family home, beyond the monthly mortgage payment of principal, interest, taxes, and insurance. Whether you write the check direct or to the association is the only difference. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected] 

Appraising the rules of the real estate appraisal process

Certified Real Estate Appraisers are regulated by State of Alaska Statutes and Regulations. Under these regulations, an appraiser who holds a valid certificate or license from a state whose requirements for certification or licensing meet, or exceed Alaska’s certification standards may be engaged to appraise property in Alaska. So what just happened to the old real estate adage “location, location, location”? Whether commercial or residential, the idea that an appraiser from Georgia, California, or Vermont (assuming they have the same or higher standards) can be issued a courtesy license to appraise a single family home or commercial property in Alaska, begs the question of how true market value can be determined without local knowledge. In some residential situations, real value is determined not only by city and district, but by subdivision and cul-de-sac. Without local knowledge, or access to it through the statewide MLS, it is impossible to give current value to a property. Another regulation allows a person who is not certified to appraise real estate for compensation if the person does not hold out to be a certified appraiser and if appraisal by a certified appraiser is not required by federal law. This regulation allows licensed real estate brokers and licensees to provide an opinion of value with a market analysis prior to listing a property for sale. It also allows a real estate professional to provide letters of opinion for sellers seeking market value for private purposes such as divorce or estate planning. This “opinion of value” is not for the purposes of either commercial or residential mortgage financing. Over the past decade, the requirements to become an appraiser in Alaska have been strengthened. An applicant for a general real estate appraiser must have 3,000 hours of appraisal work obtained continuously over a period of not less than 30 months. At least 1,500 hours of the appraisal work must be in non-residential. (Residential property is defined as one to four units.) Applicants must also pass an exam administered by the state. Applicants are under the supervision of supervisory appraisers who may not supervise more than three trainees at one time. The supervisory appraiser must sign each report and certify it meets uniform practice. What is questionable, however, is the requirement that the supervisor must personally inspect each property with the trainee appraiser until the supervisory appraiser determines that the trainee appraiser is competent and notifies the state in writing. There is no written standard other than the vague language of “competent.” At what point does the supervisory appraiser stop accompanying the trainee? The physical inspection of the property is a key factor in determining value. A well-kept and maintained property can contribute tens of thousands of dollars in value. First impressions do matter. For a property in poor condition, the opposite is true, although it may look the same on paper in terms of square footage and lot size. And what happened to the good old-fashioned idea of actually measuring the property to accurately determine its square footage? Tax records taken from building permits are less accurate than you might surmise. According to state regulations, public employees are not required to have an appraiser certification when determining permit values or tax assessments. Builders also sometimes take it upon themselves to add decks and square footage in the field. For the best real market value, ask the appraiser if they are residents of Alaska and are a member of the Multiple Listing Service. Ask them, also, whether or not they are a trainee and if so, if they have been registered “competent” with the state or if they are going to be accompanied by their supervisory appraiser. Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected]

Tight Anchorage housing market will absorb job losses

Although the need for housing creates jobs in finance and construction, real estate is a reactive industry. We live and work within the market. We do not create or control it.  Last week the 30-year fixed-rate mortgage unexpectedly dropped to 3.85 percent. This week, every eligible Alaskan will receive a record-breaking Permanent Fund dividend check of $2,072. For a family of four that’s over $8,200 — enough for a down payment and closing costs on a $300,000 home with a Veterans Administration loan. For a Federal Housing Administration loan, with a minimum of 3.5 percent down, the $8,000 will pay all but $400 of the down payment on a purchase price of $240,000 which is more than the Anchorage MLS average sales price of $211,000 for a condo. Now, Shell has announced they are pulling out of Alaska after spending $7 billion trying to drill for oil in the Arctic. Suddenly, the press and everyone else is worried about our housing market. And there’s fear of a real estate recession like the late 1980s when homeowners began leaving their keys on lenders’ desks. So, let’s take a deep breath and look at where we are today vs. the 1980s or even the mini-recession in Alaska of 2008. In October 1986, mortgage interest rates were 10.04 percent. That’s more than twice what they are today and the real cost of a home is not the purchase price but the amount of monthly interest payments over the lifetime of the loan. In 2008, the mortgage rate was 6.2 percent. If there is one thing the federal government is doing right, it’s keeping interest rates low as an economic stimulus. In 1984, the Municipality of Anchorage issued 6,000 residential building permits, more than the city of Phoenix. Commercial lenders learned their lesson from that excess lending and building boom. This year we’ll have less than 300 single family permits. According to the MOA’s housing study, Anchorage needs 900+ new housing units per year in order to house its population of over 300,000. The MOA has been underbuilt in housing for the past 15 years due in part to lending restrictions and overregulation. On any given week in 2015, there were less than 700 housing units for sale in Anchorage. Multiple offers are still being received on well-maintained homes with the average selling price of $368,000. Shell’s pullout of the Arctic, whether seasonal or permanent, will put some relocation homes on the market at a competitive price. These homes will be quickly absorbed due to the current demand. Unless Alaska begins to experience serious population loss, the need and demand for more housing will continue.  Alaska’s economy is far more diverse and therefore stronger than in the 1980’s. As Gov. Bill Walker has repeatedly said, we don’t have a wealth problem; we have a cash flow problem. In Anchorage, we have a housing problem. Although we don’t want to repeat the excesses of the 1980s, more housing will continue to be a real need, despite whatever the trickle-down effect on housing might be from the pullout by Shell.  Connie Yoshimura is the broker/owner of Dwell Realty. Contact her at 907-646-3670 or [email protected] 

Pages

Subscribe to RSS - Connie Yoshimura