Downsizing and rightsizing are two corporate buzzwords that could be easily applied to the Anchorage real estate market. In our market, we've experienced downsizing (when inventory and foreclosures soar) numerous times: in the late 1980s and 1990s; in the 2008 financial crisis; and in recent years when layoffs spread through major employers in oil, professional services, construction and other industries.
If rightsizing can be defined as a proactive, continual approach to improve a situation, how do we rightsize the real estate market with housing inventory still relatively low, when many buyers are not able to find an affordable home? After all, 56 percent of the homes for sale are more than $350,000 according to the Alaska Multiple Listing Service.
One rightsizing idea is to focus on the largest growing segment of our population — seniors. According to a three-year outlook by the Alaska Economic Development Corp., the 65 and over age group grew 27 percent between 2012 and 2017, while other age groups decreased slightly.
Many seniors own family homes bigger than what they need, especially once kids have grown and moved out. While some may be waiting for a better market to sell, others may have a more pressing reason not to sell — the lack of something worthwhile to move into.
These active senior sellers would like to stay close to friends, family and grandchildren, especially during the summer months, and they definitely are not ready for an assisted living center. Unfortunately, Anchorage has limited choices of transitional properties for seniors moving from large family homes. This forces seniors to stay put or move out of state. Think of the number of family-sized homes (in a variety of price ranges) that could be freed up for purchase if transitional housing was available. Housing for active senior citizens might be condominium buildings with one-level floor plans of 1,500-plus square feet that are close to amenities and with adequate storage and parking.
Another rightsizing idea is to update older homes with the latest in technology. In previous years, the Alaska Housing Energy Rebate program encouraged homeowners to improve energy efficiency, which in turn stimulated needed interior upgrades.
Another pilot program underway is Solarize Anchorage. The program takes advantage of group purchasing power to get the best discounts on solar panels. The program also offers the expertise of a professional who knows the Request for Proposal process to review installers and the proposed equipment. Vetting the installers is important because they need to be able to handle the scale of a large project, the permitting with the municipality, and know how to work with the electric utility.
Once installed, the solar panels feed back to the grid for net metering. With net metering, if you generate more electricity than you use, your unused electricity is banked for later use. After a pre-established time period, what you don't use is returned as a credit to your account. While the credit amount is less than what you are charged, it does create a small revenue stream to help offset expenses.
Currently, more than 30 homeowners in Airport Heights took advantage this year of a group solar installation. Other neighborhoods, such as Rogers Park and Turnagain, are looking into participating in the program next year.
Whether you want to remodel, increase your home's energy efficiency, or are thinking of buying an existing home in need of energy updating, there are loans and home improvement loans available.
Check with your local lender about loan programs such as the Alaska Housing Program options before purchasing if a home needs a little extra work. One loan program, the Energy Efficiency Interest Rate Reduction, allows for a potential decrease of 0.125 to 0.625 percent of your interest rate. To get this incentive, in less than 365 days from closing, the new homeowner must get an initial energy rating, complete the improvements and obtain a final energy rating to show a change of at least a one step increase and a minimum of 5 points. With a little planning, you can be rewarded for the balance of your mortgage by completing work you likely would do anyway.
Renovation and home improvement loans loans are also available to pay for just the improvements. Even with potentially two more interest adjustments this year, interest rates are still at historic lows — making improvements still affordable to finance.
As we come out of this latest crisis, perhaps we can focus on rightsizing the real estate market in the coming years. If we help shape what we need in the housing market, we might be able to improve current housing stock to benefit all.