Homer Alaska - Business

According to municipality of Anchorage building records, 148 single-family permits were issued in the first six months of 2010, a 32.1 percent increase from 2009. The total single-family permit value of $10.6 million is a 37.6 percent increase versus $7.6 million in 2009.

Single-family home construction was off dramatically in the last two years, with 107 permits issued through June 2008 and 112 permits through June 2009.

The city issued 158 permits in the first six months of 2007.

The uptick indicates a positive trend for an industry limited by the current economic climate and the geographic boundaries of the Anchorage bowl from ever returning to the boom days of 2005 and 2006, when 354 and 310 single-family home permits were issued.

"It's on a slow path to recovery," said Andre Spinelli of Spinell Homes, who also is the president of the Anchorage Homebuilders Association. "It's not going to get back to normal right off the bat."

Homebuyer tax credits of $8,000 for first-time buyers and $6,500 for repeat buyers gave the industry a boost. Spinelli said his company exceeded its sales goals in the months leading up to the credit expiration April 30.

"It definitely did help out," Spinelli said. "Since April, things have kind of died back to normal."

After the economic turmoil of the last two years, buyer psychology has recovered somewhat and historically low interest rates of less than 5 percent continue to make it "a great time to buy a house," Spinelli said.

A dwindling supply of available land for development means real estate prices in Anchorage will remain strong no matter what the national economy is doing.

Spinelli said the first-time buyer market is doing well in the $250,000 to $400,000 range, but with the limited supply of land, not many projects are being done in that price range.

The upper end of the market is "really slow," he said.

"The people with money are holding on to it," Spinelli said.

The lot market is "tightening," Spinelli said, with the low-end price range starting roughly $110,000 for a quarter-acre lot.

In the West Park subdivision in the Sand Lake area in southwest Anchorage, quarter-acre lots are going for $115,000 to $120,000. At the Terraces on Lake Otis, Spinelli said the same size lots are going for between $135,000 and $140,000.

Spinelli said West Lake, between Dimond Boulevard and Raspberry Road near Kincaid Park, is "one of the last big strongholds" of land in Anchorage, with room for 700 homes and two schools.

The lack of financing for "spec" homes, which are built before they are sold, is hurting a lot of builders, he said.

Spinelli said the National Association of Homebuilders has been lobbying to secure more access to acquisition, development and construction lending.

With less land available and economic uncertainty still playing a role in the industry, many homebuilders have discovered opportunities in the home remodeling business as owners elect to modernize or improve their homes rather than get into a new place.

But even that's not certain work. As the new building permits plunged the first half of 2008 through the same period in 2009, residential alteration permits increased by 22 percent from 281 in the first six months of 2008 to 343 in 2009.

Through June 2010, the number of alternation permits is down 6.4 percent to 321. However, the number of alternation permits issued in June was up 33 percent, to 87 from 65 in June 2009.

"A lot of people see what's left in Anchorage," Spinelli said. "Remodeling will be a big part of the future for homebuilders in Anchorage."

Cody Lee of Grayling Construction in Anchorage, which exclusively does remodeling, said business has picked up in the last few months.

Low interest rates and tax credits also have benefited the remodeling industry. Government credits are being offered for installing energy efficient appliances and many customers are taking advantage to upgrade their furnaces.

Lee said the most common thread to home remodeling projects has been modernizing to the standards of new homes with more complex systems.

Kitchens, appliances and home automation systems are the "biggies" people are doing now, Lee said.

"It's been pretty good, real steady," Lee said. "We're lucky for this market."

Andrew Jensen is a reporter for the Alaska Journal of Commerce.