Section 1.1 Impacts of COVID-19 on off-site modular construction in Alaska

Giordano, Nikki. “Covid-19 and Alaska’s Housing Market.” AHBA, April 17, 2021. https://www.ahba.net/single-post/covid-19-and-alaska-s-housing-market.

This blog post briefly summarizes primary impacts of the COVID-19 pandemic on Alaska’s overall housing market, including supply-side and demand-side factors and differential impacts on home buyers, sellers, and builders. According to the author, the home construction industry was a “bright spot” in an otherwise economically and socially tumultuous and uncertain year, with homebuilding being designated as an essential service and continuing to operate throughout the pandemic. Demand-side factors fueling a “housing boom” in the industry included a demand for larger homes within those segments of the market with residents spending more time working and learning from home, and “record low” interest rates that led to the highest average single-family home sales in a decade, according to the Alaska Multiple Listing Service. Supply- and demand-side impacts of the pandemic on housing affordability, however, were largely negative. The increased demand met with long-term housing supply shortages, particularly in Anchorage, to dramatically increase competitiveness in the selling market. Building materials for new construction and home renovations faced shortages due to the increased demand and pandemic-related supply chain disruptions. These factors delayed projects and resulted in lumber price increases of up to 200 percent relative to pre-pandemic levels, according to the National Association of Home Builders.

Baxter, Adelyn. “Alaska’s Pandemic Housing Boom Driven by Interest Rates, Tight Inventory and Shifting Attitudes.” Alaska Public Media, May 17, 2023. https://alaskapublic.org/2021/03/12/alaskas-pandemic-housing-boom-driven-by-interest-rates-tight-inventory-and-shifting-attitudes/.

This article provides a nuanced view of Alaska’s strong housing market in 2020, discussing the combined effect of falling interest rates and transition to remote work on overall housing demand, and the disproportionate impact of rising home prices on Alaskans already struggling with financial and/or housing insecurity. The article references data from the Alaska Multiple Listing Service, which reported the highest average single family home sales and home prices, in a decade, while data from the Alaska Housing Finance Corporation and McKinley Research Group found the number and value of home loans grew statewide from 2019 to 2020. Anecdotes from home buyers and real estate brokers described competitive bidding wars that in some instances resulted in bids “tens of thousands of dollars more than the asking price.” Those interviewed attributed the market conditions to a combination of economic factors, including low interest rates and an existing housing shortage, and the emotional and social conditions brought about by the pandemic, reflecting buyers’ “recommit[ment] to Alaska” and their overall confidence in personal economic resilience. However, the article also highlights the disparate impacts of the pandemic on many lower-income homeowners and renters, who also faced disproportionate employment impacts that exacerbated housing insecurity among vulnerable populations.

McKinstry, Erin. “Portable, Sitka-Built ‘mini homes’ Could Help with Southeast Alaska’s Housing Crunch.” Alaska Public Media, April 20, 2021. https://alaskapublic.org/2021/04/19/portable-sitka-built-mini-homes-could-help-with-southeast-alaskas-housing-crunch/.

This article discusses the promise of modular home construction in addressing availability, affordability, and acceptability of housing in remote Alaskan villages like Yakutat, where chronic challenges of overcrowding, substandard housing, and astronomical construction costs became even more dire due to the pandemic. A $900,000 grant from the CARES Act funded an effort by the Sitka-based company Sitka Construction Solutions to provide four “mini homes” to elders of the Yakutat Tlingit Tribe. The funds were specifically designated for energy-efficient homes to address pandemic-related housing shortages and overcrowding, which were already disproportionately high among Tribal households in Yakutat according to a 2019 survey. Derek James, co-owner of Sitka Construction Solutions, described the structures as “mini homes,” built to the same standards as conventional homes with additional measures to maximize energy efficiency and to help mitigate high utility costs and harsh climatic conditions. The modular construction approach avoids high costs associated with transporting materials and skilled tradespeople, such as electricians and plumbers, to rural communities, but faces several barriers to expansion, including land availability, zoning, building regulations, and financing, with most banks unwilling to issue a construction loan until homes have been placed on the foundation. We have also cited this article in section 2.1.1 Alaska because it overlaps with multiple themes in this review.