INSIDE REAL ESTATE: Let’s talk about lots
Mark Twain said it best, “Buy land because they don’ t make any more of it.”
That still rings true to this day except for Dubai where they are creating islands in the ocean for high rise development. But, back here in Anchorage, buyers are frustrated even trying to find a lot on which to build a new home.
Our residential land shortage is becoming acute. Lots are getting smaller due to higher regulatory and construction costs while the vertically built footprint increases. Local builders and buyers continue to grapple with the 30 percent lot coverage ratio required by the Municipality of Anchorage for a maximum building footprint for two-story homes while ranches have a 40 percent lot coverage ratio requirement.
The greatest frustration homebuyers have today probably is finding a lot wide or large enough to build their new home on. Aside from the lot coverage ratio, lot width dictates the type of home that can be built.
The MOA requires a minimum of a five-foot side yard setback. On a 50-foot wide lot that leaves only 40 feet for the width of a new home.
Most move-up buyers want a triple-car garage which is 30 feet wide. That leaves only 10 feet for an entry plus a small flex room, if that.
New Title 21 dictates a 10 percent front window elevation. And buyers and the community wonder why all homes begin to look alike. Plus, covenants, codes and restrictions for a new home community may dictate exterior elevations and landscaping requirements. Streetscapes take 10 years to develop with Alaska’s slow growing season for trees and shrubs.
Trying to find a house plan and a lot that it will fit on is the No. 1 buyer frustration in Anchorage. It is no longer about price or location but finding the right combination. Today’s buyer would rather sacrifice yard size for more vertical space.
The boomer will accept minimum yard space and so will families without children. Anchorage is not alone in lot shortages. According to the National Association of Home Builders, the United States has record lot shortages. Lot prices are increasing while lot sizes are decreasing.
Western states, including California and Washington, have an average lot price of $78,000 but I bet those published prices are for lots only 4,000 square feet. Add another $50,000 for an Anchorage lot with public water, sewer and a publicly maintained street.
Currently, the only opportunity developers have for small lot development is through the cluster-housing ordinance.
However, that ordinance requires 30 percent open space which usually means you have to run water, sewer and a road through the open space without having the opportunity for a driveway/lot to pay for those extensions.
These construction costs then have to be pro-rated to the overall cost of development resulting in minimum benefit in reducing costs to the new homebuyer.
Anchorage doesn’t have national and publicly traded homebuilders or wealthy land developers with access to wealth investment funds to hire lobbyists or outside consultants to advocate for single family or small lot development.
Without our community coming together in an advocacy for single family development, which starts always with the land, we will continue to lose more and more of its citizens to the Valley. I have even heard some planners say that is an inevitable transition. I’m not willing to give up quite so easily on the American dream of single-family home ownership.