New Report Lays Out Factors Driving Alaska’s Tight Rental Market

Physician assistant Desiree Hardman said she had been scouring South Anchorage for months looking for a two-bedroom apartment that fit her budget. It arrives empty.

Prices have jumped sharply since 2020, and it’s hard to find a decent place for less than $1,500 a month with utilities and pet fees, she said.

Then there is the competition. Several dozen people may be vying for the same place, and property managers charge an application fee, sometimes $50, just to view an apartment, she said.

“It’s quite discouraging,” said Hardman, who lives in North Birchwood, where housing is more affordable. “It was a bit like there was a spike in grocery prices at the start of the pandemic. But now it’s like a price hike for people who need a place to live.

Hardman, who commutes more than 50 miles a day to work in South Anchorage, is not alone.

A report Published this month by the Alaska Department of Labor and Workforce Development said Alaska’s housing market has tightened sharply, helping to drive up rents .

The report covers Data issued by the agency in July. The agency cites several causes for the tight market, including extremely limited construction activity and a surge in short-term vacation rentals.

[Rental prices for homes and apartments rise in Alaska, led by a sharp spike in Anchorage]

The report says rental vacancy rates in Alaska this year have plunged to their lowest level in a decade, hitting 4.3%, meaning few rental units are open. Rates hovered around 9% in 2020.

“Mat-Su and Anchorage had the tightest markets at 2.9 and 3.2 percent vacancy, respectively,” the report said.

The lack of available rental units has a big impact on average monthly rents, the report says.

Rents have risen 8.2% statewide this year, to a median of $1,276 for a two-bedroom apartment, with the cost of utilities included.

Average rents rose more than usual in the state’s largest markets, including Fairbanks and the borough of Matanuska-Susitna, the report said. Leading the way, Anchorage saw the biggest increase at 14.2%, pushing average prices to $1,339. It’s the biggest increase in Anchorage in at least two decades, but if it followed years of falling rents before the pandemic, the report said.

The report, based on surveys conducted in March, says rents are still relatively affordable, thanks to rising monthly wages.

According to the report, factors during the pandemic caused the housing market to tighten.

Homeownership costs have soared, keeping many tenants in their leases, the report says. And there have been fewer evictions, thanks to federal assistance.

“Although Alaska does not have publicly available eviction data, more than 26,000 renters — about three in 10 — received a share of the $262 million in rent assistance distributed during the pandemic to help tenants. tenants to repay rent and utilities and offset future payments,” the report said.

[Alaska house prices jumped last year to a record $389,000]

Another key cause is the lack of new construction activity, the report says.

Permits for multi-family dwellings have been falling for several years, and in 2021 they hit the lowest level in at least two decades. Well under 200 new units were licensed last year, the report said. About three times as many units were authorized in 2016.

Factors also include a significant increase in the number of short-term rental listings available to tourists on platforms like Airbnb. Listings jumped to about 7,000 statewide this spring, the report said, citing AirDNA, a company that analyzes the short-term rental market. That’s up from about 5,000 last year.

Anchorage leads the short-term rental market with more than 2,300 listings, followed by the Kenai Peninsula with more than 2,100, according to the report.

Jonathan King, an economic consultant who owns Halcyon Consulting in Anchorage, spent time looking at in the details of the short-term rental market.

He said the growth of the short-term rental market can have significant consequences in Anchorage and other Alaskan communities.

“We lack housing as it is,” he said. “It doesn’t take much of an increase in the number of short-term housing rentals to affect the long-term housing rental market.”

A big issue is the risk of homelessness for people at the bottom of the market ladder, he said.

“That can lead to higher rents, making it harder for people to find housing and people being squeezed out of the market,” he said.

It may already be happening, he said.

Hardman said she saw the long-term rental market start to tighten in 2020.

Anchorage property managers often wouldn’t show apartments in person, for fear of contracting COVID-19.

She said she saw Anchorage prices jump from 2021, thanks in part to the short-term rental market. The owners of these rentals offered leases to traveling nurses coming to Alaska to help fight the pandemic.

Now, Hardman sees short-term rental landlords advertising their space to Alaskans, but only until next summer. It’s something that doesn’t interest him.

“Nobody wants to move that much,” she said. “It keeps me where I am.”

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