The mountain-and-fjord scenery of Alaska's capital city is terrific, but any visitor can see there's not a lot of flat land between steep mountains and the water.

In the city's downtown core, homes are even built up the sides of Mount Roberts and Mount Juneau and are reached by long stairwells. City officials constantly warn about building in avalanche chutes.

Much of Juneau's downtown is built on artificial land created by rock tailings from the big A-J gold mine when it was operating.

There is good, flat land north of the city in the Mendenhall River valley near Juneau's airport, but the area has long been built up to accommodate the city's recent growth.

There is good undeveloped land on the west side of Douglas Island, across Gastineau Channel from the city proper. Goldbelt Inc., the Juneau-base urban Native corporation, would like to develop this area for residential housing and light commercial development. Access is a problem, however.

The one bridge that connects Juneau with Douglas Island, where there are now many homes, is already a choke-point during morning and evening rush hours. The city and borough of Juneau is working on a long-range plan for a second bridge across Gastineau Channel to the north of the present crossing.

The second bridge is years away from reality, however, and any realistic hope of developing west Douglas Island land will have to wait for that.

In the meantime, the inevitable happens when demand is up and supply is scarce, price goes up. The average sales price of a home in Juneau climbed 13.5 percent in 2003, 11 percent in 2004 and is headed for another 13 percent increase in 2005, Juneau real estate agent Larry Telfer says.

In 2004, the average sales price of a home in Juneau was $293,900, Telfer said.

That puts buying a home virtually out of reach for young couples in their 20s and 30s who are just getting started or are at early stages in their careers, said Lance Miller, executive director of the Juneau Economic Development Council.

A lack of starter homes has become a problem in attracting and keeping bright young people in the community, Miller said. As Juneau's population ages, the capital city needs to attract young people to sustain and develop its economy. Housing is now an impediment, he said.

Juneau's existing homes do sell as people retire and move out, or long-time residents pass away, but with the local economy stable, the turnover of existing homes is slow. People looking for homes to buy have been known to go door-to-door through the community knocking on doors and posting notices.

As for new construction, Telfer said availability of land is a key problem and what land is available is usually expensive to prepare because of site conditions, given the extensive wetlands in the Juneau area.

Steve Gilbertson, land manager for the city and borough of Juneau, agrees. "Most of the easy-to-build land has been developed already," he said.

Site preparation can easily cost $40,000 to $50,000, which when added to the purchase price of even a modest-size lot means a builder of a new home can have $130,000 to $140,000 invested before construction even starts.

Juneau has a small number of local builders, but they are experienced and competent, Telfer said.

Once a lot is purchased and prepared for construction, home building costs are typically $120 per square foot, according to Mike Race, another Juneau real estate agent.

Race thinks the housing situation is not desperate yet, but it might become so if interest rates go up. "Right now a starter home price is incredible, but it's still acceptable as long an interest rates stay low. But if rates go up it could be a different story," he said.

Race said there are parcels of land in the community that will be available soon to ease things a bit.

Gilbertson said the city and borough of Juneau is working to make one tract of city-owned land available. One tract with 48 lots near Lena Cove, north of Juneau, will soon be available.

There are a number of private landowners making tracts available too, more so than in past years, he said. The largest tract is in the Mendenhall Valley, Juneau's bedroom community, where 75 new building lots will be available. There are about eight different parcels that are in various stages of approval before the local planning commission, ranging in size from 25 lots to 12 lots each.

The city is also willing to make more land available. The city and borough owns about 25,000 acres of land in the area. While much of the land is far out - for example on the south side of Douglas Island to areas north of the city - there is some that is closer in, Gilbertson said.

"The city does own a substantial amount of land, but the municipality is being careful to not eliminate opportunities for private landowners who want to get the best prices for their lots," Race said.