Survey: Rental prices up, vacancy rates down in Alaska

ANCHORAGE, Alaska (AP) — Rental rates across Alaska have risen during the pandemic, and it’s more difficult to find an apartment, a new study indicates.

The Alaska Department of Labor and Workforce Development survey shows a median adjusted rent for all unit types in Alaska at $1,179 a month in 2021, a 2% increase from spring 2020, Alaska Public Media reported Monday.

Sitka had the highest rental rate at $1,323, the survey shows, while Wrangell and Petersburg were lowest at $950. In Anchorage, the state’s largest city, the rent was $1,172, or a 2.8% increase over 2020.

The largest increase came in Ketchikan, where the average rent rose nearly 10% to $1,230 this year. However, the survey notes that electricity and water rates had just been approved at the time of the survey, and that anticipated increase might have been a factor.

It isn’t a surprise that rents rose while vacancy rates, or the number of empty rental units, fell, said state economist Rob Krieger. The two rates tend to be connected.

“When you see a rise in rental prices, you generally see a fall in vacancy rates,” he said. “As the market tightens, prices come up. And that would work in the other direction: In a market where prices are coming down, you’d generally see more vacant units available.”

Vacancy rates dropped almost everywhere across the state. In Alaska overall, they fell to 5.9% this year from 9.2% in 2020. In Anchorage, they dropped to 4.3% this year from 5.7% in 2020. But the biggest driver for a low vacancy rate was in the Fairbanks North Star Borough, where nearly 1,700 new personnel and their families came to Eielson Air Force Base since spring 2020. The borough’s vacancy rate fell to 9.5% from 19% in 2020.

Krieger said that during the pandemic, fewer people moved to a new rental, and there were fewer people shifting from renting to buying their first home.

“People are staying in place,” he said. “They may have been dislocated from their employment and it’s just a matter of just not making major changes at this point. Or for safety reasons, or other things, nobody’s really moving that much.”

Rising home purchase prices and low interest rates are also making it difficult for first-time buyers in a competitive housing market, “especially when you consider that an average mortgage payment is now significantly higher than the average rent,” Krieger said.

Now that the federal eviction moratorium has been lifted, Krieger said it’s difficult to say how many people could be evicted. He said it may make more sense for landlords to work with tenants than evict them.

“I don’t think it would do anybody any good to just have a massive number of evictions — especially landlords, because without the ability to refill them, they’re no better off in terms of collecting revenue and rent,” he said.

The Alaska Housing Finance Corp. began accepting new applications Monday for rent relief, providing up to three months assistance to eligible applicants.