Finance changes augment booming Valley housing market

Spectrum, by Bill Allen

June is Home Ownership month in Alaska. In 2004, more Alaskans than ever before are able to pursue the dream of owning a home. Historic low interest rates, favorable changes to lending programs, including those at USDA Rural Development, and a generally healthy economic outlook in Alaska are contributing factors to this trend.

According to assessor Allen Black, there are just over 30,000 improved lots in the Mat-Su Borough. He estimates that 1,878 structures, including about 1,500 homes were built here in the past year. By way of comparison, two years before, in 2001, less than a thousand (total) structures were built in the Valley. The home construction business is booming.

At Rural Development, we are participating in that boom, and we want to do more. Our goal is to sharply increase the number of home starts in rural areas of our state. For the purposes of our housing programs, all areas of the state qualify as "rural" with the exception of Juneau, Fairbanks and the Municipality of Anchorage.

To boost awareness of our programs, we have launched a comprehensive outreach effort. Earlier this year we brought together realtors, lenders, federal, state and local officials in one room to discuss the challenges and opportunities posed by growth in the Valley. This was the first in a series of meetings on that topic. We have also met separately with representatives of the real estate community to discuss the speed in which we process paperwork submitted by Alaskans wishing to take advantage of our housing programs. I am aware that some real estate agents felt in the past that our turnaround time -- the time it takes to process an application -- was not as fast as it could have been. We have taken steps to address that concern, not only at our state office, but at our regional offices across the state.

Our guaranteed housing program is most successful. This program is similar to the federal student loan program that most Alaskans are familiar with. A bank makes a loan and our agency guarantees that in the case of default the bank will get its money. This program makes it easier for banks to make loans to credit-worthy Alaskans. So far this year, we have made more than $23 million in guaranteed housing loans in Alaska alone. We also have a direct leveraged loan program, aimed at low-income Alaskans who for one reason or another don't qualify for conventional bank financing. This year, for the second year in a row, I'm pleased to announce that the top income limit to qualify for both of these programs has increased. Under the guaranteed program, a credit-worthy family of four can now make up to $80,800 and qualify (up from $76,500). Our leveraged limit is increasing to $55,300 for a family of four. Also, thanks to the efforts of Sen. Ted Stevens and his staff, we have obtained an exception to federal law and do not consider the Alaska Permanent Fund Dividends of children under the age of 18 living at home to be household income.

Perhaps our most important housing program provides grants and loans to income-eligible Alaskans seeking to make "life, health and safety" improvements to their homes. Last year, in Alaska alone, we made almost $320,000 in grants and loans to homeowners so they could fix a roof, improve a foundation, install insulation, buy a furnace, install a septic system or drill a water well. Alaskans over the age of 62 who qualify are entitled to a one-time $7,500 grant. Qualifying Alaskans under 62 can borrow up to $20,000 at 1 percent interest.

We also offer multi-family housing programs, and a program to assist in the construction of clean, safe housing for seasonal workers in the commercial fishing industry.

Last, but not least, we offer a program called "self-help housing." This month, at Settlers Bay, nine low-income families, all renters, are working to complete single-family ranch style homes that they've been building for a year. These families, working under the direction of the Palmer-based Alaska Community Development Corporation, are required to complete 65 percent of the construction themselves. When they're done, they will each have $40,000 in "sweat equity" in their homes. There is no other program in the nation quite like it. We have received expressions of interest in the self-help program from other parts of the state and plan to expand this program in the future as part of our drive to sharply increase housing starts in rural Alaska.

President George W. Bush has pledged to increase minority homeownership by 10 percent by 2010. Here in Alaska, more than 22 percent of the home loans we made or guaranteed in 2003 were to minority homeowners. In Alaska, we will do our part to ensure the president not only meets, but exceeds, his goal.

As busy as we are, we are never too busy at Rural Development to meet with a prospective homeowner, a lender or a realtor interested in our programs. Our door is always open. We're in the Atrium Building at 800 West Evergreen in Palmer, or just call us at 761-7705. At Rural Development our slogan is "Committed to the Future of Rural Communities." We're ready to help and we're as close as your phone.

Finally, I want to thank Mat-Su Borough mayor Tim Anderson for declaring June "Homeownership Month in the Mat-Su Borough." The proclamation notes our agency's involvement in the local real estate market and the importance of the housing industry to the economic health of the Valley. It attests to the support we have from our neighbors as we work to ensure that every credit-worthy Alaskan achieves the dream of home-ownership.

Bill Allen is the Alaska state director of USDA Rural Development.