Alaska Rental Vacancies Hit Five-Year High

According to the annual Alaska Rental Market Survey, vacancy rates crept up in 2017 to 5.08% in Anchorage which is almost identical to the national average. Fairbanks, Kenai Peninsula Borough and Wrangell-Petersburg all have vacancy rates double Anchorage’s and have for the past several years. Valdez-Cordova and the Juneau Borough have the lowest vacancy rates with 4.55% and 5.68% respectively. According to one local property owner, Bethel has a vacancy factor of zero. Overall the state vacancy rate stands at 7.33%, the highest it’s been in the past five years—the low being 5.8% in 2016. The 2017 survey, conducted by the Department of Labor, surveyed 16,550 units out of the approximately 92,000 housing units in the state. It’s a reliable survey of the rental market with one exception and that is it does not differentiate the vacancy and rental income between units built since 2000 when building codes and energy ratings began being upgraded and the majority of those built during the early 1980’s housing boom.

New multi-family units, whether subsidized or market, are few and far between, given the historic low of multi-family permits the past five years. In Anchorage, the handful of new multi-family units being built with five-star energy ratings and thus, lower utility costs, are renting for $1,500 to $1,600 per month, almost 30% more than the adjusted median rent of $1,200 per unit as reported in the survey. Increased utility costs add to the cost of housing either for the tenant or the property owner.  In Anchorage, you can expect the reported eight per cent increase in natural gas rates to be absorbed by the property owner. Heat is paid by 73% of the property owners surveyed. The exception is the Fairbanks-North Star Borough where only 2.8% of units have natural gas. In Anchorage, water and refuse are paid by 49% of owners and sewer by 94%. This is typical of three and four story multi-family structures whereas duplex condos and single family rental units are usually separately metered, at least for heat, and electric and paid for by the tenant. On a statewide basis, only 20% of landlords pay for lights. Depending on the type of structure, snow removal is included by 80% of all surveyed units.  The 20% exception most likely due to single family or duplex units.

Similar to the report in the May issue of Alaska Trends, Alaska is showing a stability and resiliency in the rental market as well as the for sale housing market despite the stalemate of the Alaska Legislature over the state’s budget woes.