Rental prices in Anchorage soared over the past year, increasing by 14.2% in line with a national trend, according to a report released this month by the Alaska Department of Labor and Workforce.
Several other Alaska communities also saw increases in rent, though at a slower pace than the state’s largest city.
The median price for an Anchorage rental, usually a 2-bedroom apartment, rose a whopping $167 a month from the year before as of March, according to the data, based on annual survey.
That pushed the typical Anchorage rental price, which includes the cost of utilities, to $1,339 a month.
The increase in Anchorage boosted the state’s overall median rent. That jumped by $100, to $1,279 a month, an 8.5% increase.
In the previous year, rental rates increased by a much smaller amount: 2.8% in Anchorage, and 2% in Alaska.
Economists with the state of Alaska and an official with the Alaska Housing Finance Corp. say this year’s jump is likely driven by several factors, including rising costs for landlords. Limited housing of any sort in many Alaska communities, and growing demand for rentals, are also part of the picture, they said.
Rob Kreiger, an economist with the Alaska Department of Labor and Workforce Development, said he did not yet know if the increases are a record.
“I think historically it is a pretty big jump, but we are still looking into what’s driving that,” he said.
With inflation high, landlords are likely spending more on supplies and labor to maintain apartments and single-family homes for rent, he said.
A landlord’s property taxes in Anchorage also may have gone up, following home valuations higher in recent years. That could also add to costs, he said.
The rising rental rates could make it harder for families struggling to make ends meet.
“The more tight your budget is, the more affected you will be,” said Sara Teel, also an Alaska Department of Labor economist.
Rising home ownership costs could also be a factor, preventing some families from leaving the rental market, she said.
“You have more people competing for a set number of rentals, at least that’s part of it,” Teel said. “But I’m sure there’s more going on.”
Rental increases that occurred in other Alaska communities grew moderately compared to Anchorage.
For example, rent in Sitka was the highest in the state at $1,349, up $26 from a year ago. It was $1,305 in Fairbanks, up $59; it was $1,260 in Juneau, up $3; and it was $1,092 in the Mat-Su Borough, up $41.
Daniel Delfino, director of planning and program development at Alaska Housing Finance Corporation, said another factor could be an increase in vacation rentals in Anchorage and in some other Alaska communities, reducing the housing stock for long-term rentals.
The state agency, focused on providing affordable housing, is studying the vacation rental market in Alaska, he said. It also paid for the March survey on rental prices in Alaska.
Kreiger said he doesn’t know if median rental costs have continued rising since March. But he said costs for single-family homes have jumped with higher interest rates, which will likely keep more families in the rental category.
The demand for workers has been strong and many employers are boosting wages, so it’s possible that some of the higher rent costs are being offset by better pay, he said.
But that also needs a closer look, he said.
Kreiger said the department plans to release a fuller report in September.