Home ownership is thriving in Juneau, but a shortage of available land for development is making it more difficult and expensive to find a home.
Low interest rates are attracting home buyers, but the average cost of a home in Juneau is around $280,000 to $300,000, said James Canary, a city assessor who determines the value of property in Juneau. He said that average price is up from about $220,000 just a few years ago.
"I can tell you that property values are increasing still," he said.
Land for development is scarce in Juneau and builders pass the expense on to the consumer, he said. The average cost of a lot without a scenic view runs approximately $75,000 before the house is built or infrastructure for sewers, sidewalks, gutters street lights and other amenities are installed. High-end lots can run upward of $350,000, Canary said.
But high prices aren't scaring away potential home owners, he said, adding that many homes on the market in Juneau sell within a few days.
"We had one that sold for just under $1 million and it wasn't on the market a long time, maybe two or three weeks," he said.
The city issued 80 permits for single-family homes in 2003, just below the 10-year average of about 83 permits a year issued for single-family homes. It also issued eight permits for condominium construction, 18 for duplexes, and three for apartment complexes with five or more units.
Two-hundred-and-five housing units, or the number of families housed, were permitted for construction in 2003, according to the city.
Low interest rates on home mortgages have prompted home buyers to refinance their mortgages and in some cases move into larger homes, according to Vickie Perry, branch manager for Residential Mortgage of Southeast.
Perry said interest rates were as high as 11 percent to 12 percent 15 to 20 years ago. First-time home buyers usually receive a lower interest rate as an incentive to buy, but Perry said rates are so low across the board now that first-time buyers pay the same, 5.625 percent, as rates for a 30-year loan. A 15-year loan is at 5.125 percent, Perry said.
"It's still a very strong market for both purchase and refinancing," she said. "Typically we see the market is not so viable in the winter or holidays. This year the Juneau market is still really strong. Personally, I think that's driven by the interest rates."
Although first-time home buyers don't get a deal in interest rates for fixed mortgages, Perry said some are turning to adjustable interest rate mortgages. Adjustable interest rate programs, which are currently at 5 percent, lock in rates for periods of three, five or seven years. The rate is adjusted up or down for these mortgages once the mortgage period ends.
"Now that they are so low it's a very attractive program," she said.
Real estate broker Tom Kohan said there might be a lot of interested buyers right now, but there aren't enough homes to show.
He said new housing developments in Juneau will provide more options for buyers, adding: "That doesn't satisfy the real need for Juneau, which is affordable housing. Opening up land and subdivisions isn't going to make that happen."
He said the solution is to allow developers to establish subdivisions with fewer improvements to the land. He said developers are required to install gutters, streetlights, sidewalks and other improvements before being approved to develop a subdivision.
"When you build a Taj Mahal subdivision you spend a lot of money," he said.
Several housing developers have submitted applications with the city for proposed subdivisions, according Steve Gilbertson, a city lands resource manager.
More subdivisions with up to 200 proposed lots from as many as seven developers still await approval by the city.
"In some cases the city is the developer and in other cases we sell land for a private developer to subdivide," Gilbertson said.
For instance, the city has developed the Lena Point subdivision, which contains 48 lots.
"The road has been constructed, water has been installed and we're trying to get a handle on sewage disposal," he said.
Timothy Inklebarger can be reached at timothy.inklebarger @juneauempire.com.