It’s getting harder for Alaskans to afford a place to live, whether that means buying a house or renting.
When adjusted for inflation, monthly mortgage rate payments around the state are the highest they’ve been in over three decades according to September’s Economic Trends Magazine. And the increase has been dramatic.
In 2024, the principal and interest payment on a typical 30-year fixed rate mortgage was roughly $2,300 per month, 75% higher than in 2021 according to the study.
Gunnar Schultz, an economist with the state and co-authored the report, said that much of an increase is unusual in a relatively short timeframe.
“We had a full decade of relatively low mortgage rates during the 2010s, and we had even lower rates during Covid. But I think that combination of low rates, prices went up with limited inventory, followed by steep rate increases is what led to that big jump,” Schultz said.
That price surge doesn’t include other expenses like utilities or property taxes. The report said a 20% down payment on a single-family home in the state increased by $25,000 since 2019.
That combination of soaring mortgage rates plus inflated down payments has widened the gap between renting and homeownership in recent years. In Anchorage, the report said it costs $860 more per month to buy than to rent.
Average monthly mortgage payments are calculated using a 30-year fixed-rate loan with a 20% down payment. The report is published each September by the Alaska Department of Labor and Workforce Development, and surveys thousands of landlords and property managers around the state.
The study shows one third of Alaskans rent, though Schultz said they don’t know how that number compares to prior years. But he said there are general trends when it gets more expensive to buy a home.
“When the cost of home buying rises, specifically talking about mortgage costs, more people will rent, just because those things are substitutes,” he said. “Some people that would have bought a house if mortgage costs were at more typical levels, will not buy a house because [of] they're where they are.”
It’s getting more expensive for renters, too. Throughout the state, rental prices jumped 4.7% this year – almost twice as high as the nearly 15-year average of 2.7%. That continues a trend of higher-than-normal rent increases that has been common since 2021, spurred in part by a tight housing market.
The low vacancy rate gives more power to landlords to raise rents, the report says, because renters don’t have many options. A two-bedroom apartment is the most expensive in Bethel at over $2,075 and the lowest in the Kenai Peninsula Borough at $1,203 each month.
The Matanuska-Susitna Borough saw one of the highest increases in rent prices compared to the year prior. The area has a unique situation that could be contributing to the hike, Schultz said.
“They have something that lots of other places don't, and that is, they've had consistent population growth. They also have had the most building of areas around the state,” he said.
Wrangell and Petersburg had the biggest rent hike at 14%, reaching $1,235 a month, while Fairbanks saw an 8.7% increase to $1,676.
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