Soaring rents, mortgages and home prices: What new data shows about Anchorage’s

Last year in Anchorage, housing reached its least affordable level in the last 21 years — worse even than during the Great Recession more than a decade ago, according to new data from the Alaska Department of Labor and Workforce Development.

State economists reported a similar statewide trend in May. In 2023, housing in Alaska was at the least affordable level since 2006.

The cost of home ownership in Alaska has more than doubled since 2018, according to data provided by Alaska Housing Finance Corp. The average mortgage payment — principal loan amount plus interest, but excluding property taxes, insurance and other costs — rose by 52% between 2018 and 2024.

Rents have soared in that same time period.

“The rental market has gone up by about 24% in terms of the pricing escalation across the state,” said Daniel Delfino, an economist and director of planning at Alaska Housing Finance Corp.

City officials have called the situation in Anchorage a housing crisis. They’ve pointed to a tangle of factors: the spike in housing costs, a low rental vacancy rate, a rising number of short-term vacation rentals, a decline in housing development, increasing building costs and a labor shortage, among others.

The new data sheds further light on the difficulties of renting or buying a home in Anchorage today.

It’s become a central issue in recent city policymaking and discourse. Mayor Suzanne LaFrance, sworn in on Monday, says housing is a top priority for her administration.

The Assembly has aimed to spur more housing development with a series of changes made to city code over the last two years. Late last month, the Assembly voted to essentially eliminate single-family zoning in the Anchorage Bowl, by allowing duplexes to be built in areas that were previously zoned only for houses.

To Assembly Vice Chair Meg Zaletel, one of the sponsors of last week’s measure, a housing crisis means that people across the economic spectrum “can’t achieve appropriate housing, attainable housing that’s suitable to their needs,” she said.

“That’s renters who are stuck at the top of the rental market who can’t move into home ownership. That’s people needing to double or triple up in order to afford rent. That means there just aren’t enough housing units for the market to respond to the various circumstances and needs,” she said.

More expensive, fewer homes for sale

The median rent in Anchorage increased by 7.8% since last year, rising from $1,275 to $1,375 in 2024, according to AHFC’s data. That doesn’t include the cost of utilities.

AHFC’s rental data comes from a yearly survey in March done by the state Department of Labor. It “runs the full gamut” of rental housing, from studios to four bedrooms and larger, and excludes rentals that have income restrictions, like those for affordable housing programs, Delfino said.

This year’s increase comes after Anchorage rents rose 14.2% in 2022 and jumped another 5% in 2023, according to state data.

The U.S. Department of Housing and Urban Development defines being “housing cost burdened” as spending more than 30% of a person or household’s monthly income on rent or mortgage payments and utilities.

Among economists, there isn’t a broadly used definition of a “housing crisis,” nor is there a defined level of ideal affordability, said Rob Kreiger, an economist with the Alaska Department of Labor and Workforce Development who authored the May report.

That’s because what may be affordable varies by the circumstances and income of an individual, he said.

But with Anchorage housing at its “least affordable level” in two decades, “I think right now, what we’re seeing is, it’s really prohibitive for first-time buyers to afford a home, and it’s really expensive to rent as well,” Kreiger said.

Statewide, “it’s more expensive, and there are fewer homes on the market,” Delfino said, adding that the reported number of homes sold and mortgage loans recorded has dropped “pretty significantly over the past couple of years.”

According to the National Association of Homebuilders’ chief economist, more than 86% of residents can’t afford the cost of a newly constructed home in Anchorage.

State economists measure home purchase affordability with the Alaska Affordability Index, a calculation that uses the average mortgage payment and average monthly wages to determine how much income it takes to afford a home.

An average index of 1 would mean that average monthly wages are just enough for one person to afford the average monthly mortgage payment for an average priced home.

The state and Anchorage saw the lowest indexes — the most affordable housing — in 2020 and 2021. Mortgage interest rates dropped significantly during that time as the federal government took actions to stabilize the economy during the pandemic, Kreiger said.

But by 2023, Anchorage’s affordability index jumped to 1.8. That means to afford the average Anchorage home, it takes about two people working full time at the average wage.

The Anchorage-specific data only dates back to 2002, and housing last year was at its least-affordable level in that timespan.

In 2023, Alaska’s overall affordability index was 1.66, the highest since 2006. That dataset dates back to 1992.

‘Alaska has a problem with keeping young people’

What the state data doesn’t show or quantify is how the rapid increases in housing costs are affecting…