Just off of Redoubt Avenue in Kenai, longtime local home builder Clint Hall walked through the living room of a newly constructed, three-bedroom house. It’s not quite finished – there’s no lighting or flooring. But that didn’t hinder Hall’s enthusiasm.
“They all have a nice size deck on the outside of them,” Hall said. “They all have heated, finished garages. They have a lot of natural light.”
The home is the first on the block, and one of five that will soon be on the market. But they’re different from most home builds. They’ll be part of a soon-to-be-launched local program that restricts a home’s value.
Hall said that will keep mortgage and closing costs down when the home is sold between buyers.
“Development costs, land costs, have gone up,” he said. “So something really has to happen to keep affordable housing alive and to keep the workforce in town here, because with our restaurants — they need those people. Our stores need those people.”
Homes on the Kenai Peninsula have gotten more expensive over the years, and there's fewer of them to rent or buy. And higher costs for builders have made it hard to find meaningful ways to make a dent in the local housing market. Adding to the problem, only about 5% of Kenai Peninsula rental units were available last year, while the number of short-term rentals has gone up.
It’s bad timing. The Kenai Peninsula’s population has also grown by about 2,500 people in the last five years, according to the state’s Department of Labor and Workforce Development.
The issue isn’t totally local to the Kenai Peninsula. Home prices are increasing nationwide. Real estate brokers, like Marti Pepper with Redoubt Keller Williams Realty in Soldotna, say those higher prices are discouraging some would-be buyers.
“The statistics show they are not going down, and interest rates aren't going to dive down either,” Pepper said.
Pepper said the average cost of a home on the Kenai Peninsula has increased by more than $100,000 in just over a decade. And high interest rates only add to the volatility of the current market.
But in addition to higher interest rates, Pepper attributed the increase in home prices on the Kenai to a shortage of available workers to build those homes. Hall agreed, saying that many longtime Kenai Peninsula developers have retired.
The problem has caught the attention of local officials, too.
“This isn't the first time we've had housing shortages on the Kenai in the 40-plus years I've lived here,” said Kenai Peninsula Borough Mayor Peter Micciche. “However, this is the first time that the market was so slow to respond, the market being home builders.”
Micciche also said speculators, or buyers who don’t live on the Kenai Peninsula but buy up land that could be used for development, are a problem, too.
Pepper said right now, it’s cheaper to rent a home than make mortgage payments. But renting on the Kenai Peninsula is similar to buying – demand is high.
The Kenai Peninsula’s housing and rental market isn’t all bleak. One nonprofit has built over 100 homes across the peninsula. And borough and city governments have implemented some policies aimed at boosting access to affordable housing.
In the meantime, Hall, the local builder, said he plans to double his company’s home builds next year.
“The price of housing got out of the reach of the average wage earner here,” Hall said. “So that's too bad. The American dream is fizzling away.”
Hall hopes the homes he’s building now will be up for sale this fall.
