Alaska Housing Market Crunch

     Good luck trying to find a  place to rent in Anchorage which has high rents and low vacancy rates.  The last survey by the Alaska Housing Finance Corporation put a 3.3% apartment vacancy rate  and  just 2% vacancy for  single family homes. It doesn’t help that Alaska  in general has more renters than the lower 48 as a result of a more fluid, younger and transient population.  Plus tightening  mortgage credit standards required for homeownership has put additional pressure on the rental market with young adults returning home to nest in spare bedrooms and rec rooms.  Also, as we all know, there has been  a significant decline in Anchorage new home starts over the past five years. For example, so far this year Anchorage has had only 80 new single family starts, a 20% decline from 2013.  For a population of over 300,000, it is almost absurd to be counting our single family starts in double digits.

     The average rental rate in Anchorage is now $1,154 which is about $50 more than last year due to increases in property taxes and utility costs that landlords pass on to tenants. Also, all those $10 increases per $100,000 property valuations for various bond packages get passed on to tenants as well as homeowners.  Plus, most tenants end up paying for their own electric while the landlord provides water/sewer/garbage pick-up and snow removal. Over the passed decade Alaskan rents have steadily risen, according to the Department of Labor’s most recent publication from a low of $750 to what we have today and the future does not look any better for renters due to the rising cost of vertical construction.

     Home ownership is not necessarily the only answer to affordable housing but more housing starts, including multi-family and duplex, would definitely ease the crunch without people having to move to the Mat-Su.  It is interesting to note that the Mat-Su has a higher percentage of home ownership than Anchorage. According to the last U.S. census, 76% of Mat-Su residents owned their own home compared to 59.9% in Anchorage.   Between 2002 and 2012, the Mat-Su Borough had 46.7% of the state’s new housing starts compared to Anchorage’s 22.7%.  Even the Mat-Valley’s rental rates are lower with an average rent of $940 per month.  An abundance of land and less regulation for its development in the Mat-Su makes the ‘Valley’ a viable housing option for either renters or homeowners.  These startling statistics should make Anchorage rethink its long-term goals for economic growth and development. If we can’t provide adequate housing for our population, we will eventually lose the economic engines that drive our local economy as well.