Recently, a handful of local developers have justified proposals for subdivision projects by noting a need to meet the housing needs of young families with lower or moderate incomes.
This week, as part of a two-part series, the Homer News investigates what has happened to the housing market for low-income buyers in the past 10 years.
Besides the increasing demand for larger single-family homes and luxury housing options, real estate agents and lenders in Homer agree that a strong market for affordable homes exists.
There’s only one problem. There are virtually no affordable homes in and around town.
As a result, young families and single parents are moving to the Anchor Point area and beyond just to find a house they can afford, said Rhonda Johnson, a loan officer with AlaskaUSA Mortgage Company. She expects that trend to continue.
“I think we’re going to see (the area) between Anchor Point and Soldotna fill up with homes because that’s where land is affordable,” Johnson said.
Soldotna and Kenai have plenty of homes selling for under $180,000, she said. Those areas have average selling prices for single-family homes similar to Homer’s average assessed value of $190,000.
While the inventory for lower-priced homes is weak, lending options for prospective buyers are some of the best ever, Johnson said.
Still, there are very few homes selling for less than $180,000 south of Anchor Point, she said.
Analysts and builders say the price tag for land in the city limits, particularly land with access to water and sewer utilities and a view of Kachemak Bay, has more than doubled in the past 10 years.
Coupled with the increasing cost for construction materials, a home that was being built and sold for between $120,000 and $130,000 a few years ago is now going for $200,000, said Scott Bauer, a builder who focuses on putting up about four homes per year.
“It’s not as easy,” he added, referring to building a home that would be considered a “starter.”
After focusing only on homes for sale, Bauer is building rental units for the first time this year — two 800-square-foot rentals at the southern edge of the Meadow Wood Place subdivision, a tract of land east of town that created dozens of new home sites two decades ago.
It quickly became a popular place for homes worth between $65,000 and $80,000, said Annie Whitney, a real estate agent with the Homer-based Alderfer Group. A recent home in the neighborhood was listed at more than $165,000.
Kirk Olsen, an independent appraiser in Homer, compared four lots measuring one-quarter of an acre in Homer. The lots have increased in value by an average of 170 percent since 1996.
The Alaska Housing Finance Corp. offers low interest rate mortgages for families making $45,000 or less on the first $180,000 of a mortgage, according to Sherri Simmons, a spokesperson for the corporation. But of the 34 homes listed on an online statewide property listing service valued at between $100,000 and $200,000 on the southern Kenai Peninsula, less than a dozen were located in Homer. Fifteen were priced under $225,000 — the acquisition limit for mortgages under the AHFC’s first-time home buyers program. Most are fixer-uppers and won’t qualify for financing, said Deb Leisek, who owns Bay Realty.
With land becoming more expensive and the inventory of affordable homes running low, though, there is a definite market for options such as less expensive condominiums or duplexes, said Leisek. There are virtually none on the market, however — if there were, they would sell “very fast,” she said.
While options like duplexes or affordable condos split the cost of one lot of land between multiple buyers, Bauer said he’s not sure why more builders haven’t moved to building alternative, affordable housing options.
At the same time, the market is flush with people looking to Homer for a “second” home or a place to retire — and ready to pay more than low-income residents are, noted realtors and lenders. Many builders considering options might be more tempted to tap into that market, Bauer said, and he prefers building single-family homes to duplexes, for example, because that’s where he would prefer to live.
Bauer said he has always focused on building more “modest” homes, but he is certain there is more of a profit to be had in the “high-end” market.
Affordable housing projects could run into opposition from neighbors, as those projects can drag down neighboring property values, Whitney said.
Chris Eshleman can be reached at chris.eshleman@homernews.com.
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