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Make it Monday: A Good Home is Hard to Find

Anchorage Chamber of Commerce "Make it Monday" presentation on housing in Anchorage. July 15, 2013
by AEDC Anchorage, AK on 26 August 2013

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Transcript of Make it Monday: A Good Home is Hard to Find

Anchorage: A Good Home is Hard to Find
Anchorage Chamber of Commerce
"Make it Monday," July 15, 2013
Ron Pollock
Executive Director, Anchorage Community Development Corp.
Bill Popp
President & CEO, Anchorage Economic Development Corp.
Art Clark
Broker & VP, Real Estate Brokers of Alaska
Daniel Delfino
Planner, Alaska Housing Finance Corp.
Jerry Weaver
Director, Community Development Planning, Municipality of Anchorage
WHY ARE WE HERE TODAY?
WHY DOES IT MATTER?

Current Economic Conditions: Anchorage
Historical Trends
Excluding Eagle River & Girdwood
1995-1997
$1,119: Average rent in Anchorage
How do these rates compare to existing housing alternatives?
Monthly cost of Alternatives
to Renting
Financing Assumptions at 30 year fixed, 4.625%
5% down

10% down

20% down
$1,119
$72,813
Real Median Household
Income (2011)
Down 7.86% since 2008
Rental Vacancy Rate
2013 YTD
3.3%: 2013
Avg Monthly Rental Rate
Up 19% since 2008
4.7% unemployment
2.5% job growth in 2011
2.2% job growth in 2012
Employment
129.6: Anchorage 2012

152.8: Anchorage Housing 2012

100.4: Utilities
Cost of Living (COLI) 2012
$1,409

$1,358

$1,257
$1,991

$1,904

$1,730
Condo
Purchase Price $197,000
Single Family Home
Purchase Price $338,500
Housing Type
20% Down
5% Down
Condo
+$138
+$290
Single Family
Home
+$611
+$827
Monthly cost of Alternatives
over Average Rents
Assumptions - monthly costs of rental substitutes
1 - Condo dues average $250/month
2 - Taxes average 1.2% of Purchase Price
3 - Estimate exclude mortgage insurance costs
Rent Levels Sufficient to Support New Multi-Family Construction
Development Conditions
Underlying
Estimates
Serendipitous

Optimistic
$1,813

$2,241
62%

100%
Rents Required to Satisfy Assumptions
Increase
Over
Current
Rents
Sample Occupations and State Wage Levels in Anchorage
Assumptions - development conditions for unrestricted mult-family housing
1 - 80% LTV, 1,25 DCR, 5% Vacancy Rate, $5K/unit/year OpEx
2 - Serendipity assumes all-in-costs of $220k/unit, 6% debt at variable rate
3 - Optimism assumes all-in costs of $260k/unit, 7% debt at 30 yr fixed rate
What are the headwinds?
Despite a strong rental market, new construction of unrestricted multi-family rental housing is relatively modest.
Rents equal 30% of Annual Income at
$72,526

$89,649
Analyst/Programmer IV

Nurse II

Admin Assistant III
$5,230

$4,944

$3,903
$1,569

$1,483

$1,171
Monthly
Salary
30% of Salary
40% of Salary
$2,092

$1,978

$1,561
50% of Salary
$2,615

$2,472

$1,952
State Position
There is not enough buildable land to accommodate future housing demand (2010-2030) under
historical development patterns, current land-use policies and development options.
Building mid-rise residential and mid-rise mixed-use rental development is not financially feasible in current market conditions.
Ranked 20th highest in nation out of 307 cities
20th highest in the nation
Click to view study
Photo credit: Visit Anchorage/Frank Flavin
CHALLENGE IN ANCHORAGE?
DO WE REALLY HAVE A
HOUSING STOCK & HOUSING
AFFORDABILITY
IF YES,
WHAT IS THE
SIZE AND SCOPE
OF THE CHALLENGE?
WHAT IS THE TREND LINE
AS WE HEAD INTO THE FUTURE?
IS THIS AFFORDABILITY CHALLENGE ONLY A RESIDENTIAL REAL ESTATE PROBLEM?

DOES IT HAVE BROADER ECONOMIC
IMPLICATIONS AFFECTING
EXISTING BUSINESSES

BUSINESSES THAT ARE CONSIDERING
OPENING IN ANCHORAGE?
OR
WE HAVE A HOUSING AFFORDABILITY CHALLENGE IN ANCHORAGE.
DO
1.
2.
IT A
AND NOT EASILY SOLVABLE.
IS SIGNIFICANT CHALLENGE
3.
THE TREND LINE AND OUTLOOK IS GETTING
NOT BETTER.
WORSE
4.
HOUSING AFFORDABLITY IMPACT OVERALL ECONOMIC GROWTH & BUSINESS OPPORTUNITIES
DOES
5.
ADDRESSING "HOUSING AFFORDABLITY" IN ANCHORAGE IS A COMPLEX TASK AND THERE IS
NO SIMPLE ANSWER.
NO SINGLE ENTITY HAS THE POWER TO SOLVE IT ALONE.
THE BUSINESS COMMUNITY, PRIVATE SECTOR, GOVERNMENT SECTOR & VARIOUS HOUSING AGENCIES WILL NEED TO WORK TOGETHER FOR A SOLUTION.
Total Listings Avg/Yr Avg List Price
9,392 3,131 $162,000
1998-2002
Total Listings Avg/Yr Avg List Price
17,697 3,539 $196,000
2003-2007
Total Listings Avg/Yr Avg List Price
18,419 3,684 $285,500
2008-2012
Total Listings Avg/Yr Avg List Price
14,609 2,922 $324,500
Recent Trends
Excluding Eagle River & Girdwood
2011
Prop. Listed Avg List Price Median List Price
2,819 $319,000 $289,000
Sold Avg List Price Median List Price
1,404 $317,000 $288,500
2012
Prop. Listed Avg List Price Median List Price
2,810 $337,000 $306,000
Sold Avg List Price Median List Price
1,606 $338,000 $308,500
2013 YTD
Prop. Listed Avg List Price Median List Price
1,784 $346,000 $312,000
Sold Avg List Price Median List Price
1,077 $341,000 $305,000
Last 12 Months
CLOSED SALES
Total Avg Sold Price Days on Market
2,216 $340,000 50
Sold by Price Range
Range # Properties Avg./Month
$0 - $200,000
$200,001 - $350,000
$350,001 - $500,000
$500,001 - $750,000
$750,001 - $1,000,000
$1,000,001 - Plus
251
1,159
542
220
34
10
20.92
96.58
45.17
18.33
2.83
.83
Current Inventory
Range # Properties Avg./Month
$0 - $200,000
$200,001 - $350,000
$350,001 - $500,000
$500,001 - $750,000
$750,001 - $1,000,000
$1,000,001 - Plus
67
213
147
112
37
28
3.2
2.21
3.25
6.11
13.06
33.6
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