Rent up, vacancy down: How the pandemic impacted Alaska’s rental market

A sign reads "Fox Terrance Apartments: No vacancy" outside of a green-colored building.
A “no vacancy” sign at an apartment complex in the Midtown Anchorage area on Saturday, Sept. 11, 2021. (Alaska Public Media)

The cost to rent a home or apartment has gone up in Alaska during the pandemic, according to state economists. A survey published this month by the Alaska Department of Labor and Workforce Development shows a 2% bump in rents since spring 2020. 

According to the survey, the median adjusted rent for all unit types in Alaska was $1,179 a month in 2021. Comparing Alaska communities: Sitka came in with the highest rent bill at $1,323, while Wrangell and Petersburg were lowest at $950. In Anchorage, the median rent was $1,172 and in the Matanuska-Susitna Borough it was $1,051. 

The biggest increase was in Ketchikan, where the median rent went up more than 10% between 2020 and 2021. In Anchorage, rent rose 2.8%.

At the same time, statewide vacancy rates — the percentages of available rental units — were down. 

That makes sense, according to state economist Rob Krieger. Rental prices and vacancy rates tend to be connected, he said.

“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.”

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Vacancy rates dropped almost everywhere in Alaska a year into the pandemic, according to state data, ranging from 2.5% in the Mat-Su in 2021 to 13.1% on Kodiak. In Anchorage, the vacancy rate declined from 5.7% in 2020 to 4.3% in 2021.

The fall in vacancy rates statewide is happening for a number of reasons, some of which are related to the pandemic, said Krieger. The biggest driver, he said, was an influx of military personnel and their families to Eielson Air Force Base near Fairbanks, brought on by the new batch of F-35 fighter jets stationed at the base.

At the same time, the pandemic rental market isn’t experiencing the usual level of churn of people moving into and out of apartments, said Krieger. 

“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 prices are also at play. Low interest rates are making it more difficult for first-time buyers to break into the competitive housing market, said Krieger. 

“Especially when you consider that an average mortgage payment is now significantly higher than the average rent,” Krieger said.

More people are choosing to continue renting for now, he said.

A looming question on the horizon is what will happen now that the federal eviction moratorium has been lifted. Krieger said it’s hard to say how many people could be facing eviction, or even whether Alaska will see a large wave of newly-evicted renters. 

“In order for evictions to happen on such a large scale, you have to assume that there’s a bunch of people waiting to occupy those vacant units. And I just don’t think that’s the case,” he said. 

In cases where renters are struggling to find work and holding out for rental assistance, he said, it makes more sense for landlords to work with tenants to keep them in their units.

“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.

Alaska Housing Finance Corporation recently announced a new round of rental assistance, up to three months rent for eligible Alaskans. Applications open Monday. 

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