2023 AHBA Economic Summit Recap: Tough Times Prompt Change
The Anchorage Home Builders Association is committed to elevating Anchorage’s homebuilding industry. As part of its efforts to build up its members, the organization hosts an annual economic summit. The public is invited to hear the latest economic forecast for the building industry across Anchorage and the Lower 48. The event features local and national experts and policymakers. This year’s summit included some tough statistics for homebuyers in Anchorage.
“Housing affordability is almost at its worst ever,” said Eric Visser, AHBA’s past president and owner of Visser Construction.
Anchorage homebuyers are battling record-low inventory, sky-high home prices, high mortgage interest rates, expensive property taxes and restrictive building codes. But Visser says it’s not all bad news. These challenges have prompted conversations among policye akers and created grassroots campaigns.
“Housing affordability has gotten so bad that the only way to solve this problem is for dramatic changes to the building and land use codes here in Anchorage,” Visser said.
Anchorage Mayor Dave Bronson attended the event and agreed that changes need to happen at the government level. “We need to get government out of the way of building,” Bronson said. He said he’s working with the Anchorage Assembly on making changes to Title 21 and Title 23, which relate to zoning and safety. Visser praised the assembly for repealing parking mandates.
In the meantime, Anchorage residents are the ones paying the price for the lack of affordable housing. Connie Yoshimura, owner/broker of Berkshire Hathaway, said there were only 280 homes for sale in the Anchorage municipality in October 2023. She says this is a record low. About half of those homes were built before the 1980s. Over 30 of them were listed for over $1 million. When an entry-level home does make it to the market, realtors field multiple offers and it sells above the price point.
Affordable housing isn’t just an Anchorage issue. Homebuyers across the nation face many of the same struggles. Robert Dietz, the chief housing economist for the National Association of Home Builders travels the country giving economic forecasts. He visits Anchorage annually to provide important insight. Dietz agrees that Anchorage is not keeping up with the demand for housing. He said in 2022, there was an 80% decrease in single-family permits for the Municipality of Anchorage. He agreed this reflects policy problems.
“These are challenging numbers and policymakers need to take a look at this because it suggests long-run challenges when you can’t attract business because you don’t have housing,” Dietz said.
Nationwide, homeowners are battling inflated home prices, mortgage rates and homeowners insurance. Over the past year, mortgage interest rates have risen close to 8%. Dietz believes they’ve leveled off but says the Federal Reserve needs to assure homebuyers that they’re done raising rates. He predicts interest rates to normalize by mid-2024. He says homeowners insurance costs are always on the rise, especially in places that experience natural disasters like Alaska, where homeowners need to think about earthquake insurance.
While the U.S. never officially entered a recession, Dietz says there’s disagreement among economists and several markers to show an ongoing rolling recession. He cites changing oil prices, global trade and labor shortages. Dietz says unemployment rates never went up because employers didn’t have people to lay off. Dietz says this labor shortage will likely continue for the next decade.
While labor shortages continue to plague the construction industry, along with material shortages, the inflated price of materials has leveled off. The busiest sector of the homebuilding industry is remodeling. In 2022, remodeling accounted for 30% of projects, according to Dietz. He says the long-term forecast may be roughly 50%.
Dietz predicts the housing market will start to recover in 2024. He says the later part of this decade holds a lot of optimism for the housing industry. However, Dietz emphasized that government policies need to keep up to make it possible for builders to provide residents with the housing they desperately need.
AHBA continues to work on providing a unified voice for Anchorage’s building industry on these complicated issues; working closely with elected officials to defeat excessive regulations. AHBA will continue to educate the public and local, state and national policymakers to allow builders to create more housing.
“There’s hope but we just can’t let there be hope, we have to put in the work,” Visser said. “We’ll take some of the bad numbers and go fight for some of these changes that need to happen.”