Why are there so few new homes in Nome?

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There is relatively little new construction in Nome, Alaska, for several interconnected reasons:

1. High Costs of Materials and Labor

  • Transportation Costs: Building materials must be shipped to Nome, either by barge during the ice-free summer months or by air, both of which are expensive.
  • Specialized Labor: Skilled labor, such as carpenters and electricians, is limited locally. Hiring workers from outside Nome or training local labor adds to costs.

2. Short Construction Season

  • The construction season is restricted to the summer months when the ground is thawed and the weather is conducive. Winter conditions, with snow, ice, and subzero temperatures, make building difficult and expensive.
  • Projects often experience delays due to unpredictable weather or supply chain disruptions during the brief window of opportunity.

3. Land and Environmental Challenges

  • Permafrost and Soil Conditions: Construction on permafrost or unstable ground requires expensive foundation solutions like pilings or insulated pads to prevent thawing and shifting.
  • Erosion and Flood Risks: Coastal erosion and the risk of flooding make some areas unsuitable for new development without costly mitigation efforts.

4. Regulatory and Planning Hurdles

  • Permitting: Obtaining permits for new construction, especially in sensitive areas, can be a lengthy and costly process. Most of the undeveloped areas around Nome are classified as Wetlands, requiring Army Corps of Engineers permitting.
  • Zoning and Infrastructure: Limited space with existing utility access (water, sewer, and electricity) often restricts where development can occur. Further zoning issues as the City of Nome adapts to the planned port project creates another layer of risk.
  • Title issues: Many properties have been passed down or inherited and have questionable title, making lending and selling a challenge.

5. Limited Demand and Economic Feasibility

  • Nome’s population is relatively small, with a transient population.
  • High construction costs often make new builds unaffordable for most residents, especially compared to buying or renovating existing properties.
  • Rental income is high, resulting in higher ratio of renters to owners.

6. Focus on Renovation Over New Builds

  • Many homes and buildings in Nome are older but still functional. Renovating existing structures is often more cost-effective than building new ones.
  • Local programs may prioritize retrofitting homes for energy efficiency or structural stability rather than funding new construction. Bering Straits Housing Authority has been a leader in housing solutions for tribal members.

7. Lack of Financing Options

  • Access to construction loans or mortgages can be limited in remote areas, with higher interest rates or stricter conditions. Currently the only bank in Nome with a lending branch is Northrim Bank, which has loan officers for commercial loans.
  • The high risk of investing in such a remote area makes it harder to secure private or institutional funding for large-scale projects.

8. Subsistence Lifestyle and Cultural Factors

  • Nome’s residents often focus on subsistence activities and may prioritize spending on practical needs like equipment for hunting, fishing, and heating rather than new construction.
  • A strong sense of community and tradition means that many families remain in older homes, preserving cultural ties and heritage.

9. Challenges for Builders and Developers

  • Contractors face logistical hurdles, from shipping equipment and supplies to managing tight timelines due to the short building season.
  • Developers may be hesitant to invest due to uncertainty about returns and the area’s vulnerability to climate change.

These factors combine to create significant barriers to new construction, encouraging reliance on existing structures and adaptations to the local environment.