Construction season has begun in Anchorage, with little sign that the dramatic year-long slide in oil prices is discouraging builders from putting up new homes or renovating older ones.
Ever-scarcer land and a growing population has brought multifamily housing to the forefront of the residential construction market. New condos are springing up in different parts of the city, wherever vacant land can be found.
In the pricey Bootlegger Cove neighborhood, a crane rises above the plywood shell of a boutique condominium development called The Alexis. There's no sign of the modest beige and green-trimmed home that occupied the lot for five decades. Even the address, 1336 West Sixth Avenue, has been changed to the more evocative 604 Ocean Place.
The most expensive of its seven residences has already sold for close to $900,000, said Bonnie Mehner, listing agent with RE/MAX Dynamic Properties. The last unsold flat is priced at $565,000.
"A lot of thought and careful planning went into this," Mehner said. "It's close to parks and the Coastal Trail. Our residents are excited about being able to walk out the door and go to restaurants downtown."
Multifamily housing has grown faster than any other segment of the residential building market, with the number of units tripling in the last several years. The Municipality of Anchorage issued permits covering 299 units in 2014, up from 98 in 2009. As of March 2015, 148 multifamily units have been approved, with more expected in the coming months.
Bob Kniefel, Anchorage's deputy director of community development, said he does not expect a drop in construction this year because the projects on deck have been planned and in large part financed.
"People did most of their homework last year before oil prices dropped and the fiscal climate changed," Kniefel said.
Overall, the pace of residential permitting this year has not changed much from March 2014: Planned single-family homes are down, but more multifamily units are in the works. Permitting for duplexes has stayed flat. Although the total value represented by the permits dropped from about $177 million in the first three months of 2014 to $120 million in the same period this year, Kniefel said the numbers are "not worrisome yet" given that permitting is ongoing.
A 2012 study commissioned by the municipality found that the city will need an additional 18,200 homes by 2032. With buildable land dwindling, employers fear the lack of affordable, solid-quality housing in Anchorage will become a major obstacle to attracting and keeping talented workers in the city.
Residential developments elsewhere in Anchorage include a 300-plus unit complex on Old Seward and 42nd Street by Weidner Apartment Homes and two senior-housing complexes by the Cook Inlet Housing Authority that will add a total of 49 units in Muldoon.
While multifamily housing has taken off, single-family builds have been consistent, with about 300 permits issued each year since 2012.
Elise Huggins, and her husband Gary Prokosch, are among those brave enough to have designed and built a new house from scratch. The shingled three-story structure west of Delaney Park Strip replaced a large, aging log house and has a commanding view of Mount Susitna.
The couple is worried that economic uncertainty will make it hard to sell their old house. At $765,000, the asking price is more than double that of the average single-family home in Anchorage. Still, they have no regrets about the project, which they undertook in order to downsize.
"We started the process before people were talking about the economy," Huggins said. "We've been in Alaska long enough to know that things go up and down and up down."
The price of oil is not the only economic force that influences construction in Anchorage. And despite the state's enormous deficit, economists are not yet seeing negative trends. Other key indicators are wages and employment, both of which are holding steady, and interest rates, which are low, said Karinne Wiebold, a housing economist at the state Department of Labor.
"We're going to learn a lot more as summer construction season picks up," Wiebold said.
Paul Michelsohn, Jr., owner of Michelsohn & Daughter Construction Inc., said he is seeing steady growth this year.
"I'm getting the same impression from everybody, saying that so far it's been a good spring," said Michelsohn, a former president of the Anchorage Home Builders Association."We can only hope that it stays like that. The $50,000 question is what next year will bring."