Inside Real Estate/For the Journal

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: 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]
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