The average rent for a two-bedroom apartment in Alaska rose 7% in the last year, the largest increase since 2011. Recent years have seen about a 2% increase.
That’s according to new state data from a survey of landlords in 11 of Alaska’s biggest communities. State economist Rob Kreiger co-authored the report, and said while it’s difficult to point to a single driver behind the rent hike, a number of landlord costs, like property taxes and utilities, have gone up with historic inflation during the previous two years.
Kreiger said vacancy rates went up slightly over the year, but are still historically low, meaning there are fewer available houses and apartments to choose from.
“And anytime you have such tight market conditions where it’s hard to find a rental, that kind of gives landlords more pricing power,” Kreiger said. “So you’d normally expect to see with a tight vacancy rate, rents tend to go up.”
Kreiger said very few new housing units are being built in the state and that’s part of the reason housing is so limited. He said it was difficult to build during the pandemic years when construction costs rose sharply. Even as those prices have leveled off, Alaska’s pervasive worker shortage is still holding things up.
Kregier said the labor shortage is also likely pushing up costs at larger apartment complexes, where hard-to-find maintenance and administrative staff now come with higher wages.
In its report, the state recognized the influence of a growing number of short-term rentals, but Kreiger said they have very little data to work with.
“What percentage of the overall housing, of rental stock is comprised of short-term rentals? We don’t know,” Kreiger said. “And if there are documented cases of where, short-term rentals, where you are having conversion from people changing from long-term to short-term, and how much is actually being pulled off of the rental market as a result of that? Those are questions we don’t have the answers to.”
He said he expects it will become an increasingly important topic that local governments will likely have to take the lead on.
The increases in median rent varied by region, with Ketchikan seeing a 16% increase from March 2022 to March 2023, and all other increases in the single digits. Bethel was surveyed for the first time this year, and had the highest median rent of $1,600 per month, without utilities. The other 10 communities had utility costs factored in.
Kreiger said he’s hoping to survey more rural areas like Nome and Dillingham, but suspects their averages would be similar to Bethel’s.
Kreiger said the high heating costs in Fairbanks explain why, with utilities factored in, it ranked third behind Anchorage.
Kreiger didn’t want to speculate on future rent prices, but he said housing prices have remained high since March, when the survey was conducted.
Michael Fanelli reported on economics and hosted the statewide morning news at Alaska Public Media.
