Learn more about the housing market in Alaska

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying or selling, it will impact many aspects of your life.  

Alaska Housing Market Overview 

Alaska has always had a unique housing market. From rich landscapes and resources to wildlife and fishing grounds, Alaska’s unique geography attracts both tourists and feeds the cultural connections of local communities. 

However, Alaska also faces many challenges, some unique to the state and others more reflective of general U.S. trends. The state is littered with abandoned towns, many deserted from the effects of climate change, flooding, economic struggles, or natural disasters. Alaska also struggled greatly during and after the Great Recession. While the rest of the country was recovering, Alaska’s economy continued to economic setbacks with high unemployment. Alaska was also hit hard by the COVID-19 pandemic, during which homes depreciated greatly.  

Fortunately, Alaska’s economy has been recovering since 2019. Income and wages are growing, unemployment is at a historic low, and new jobs in mining, logging, and construction have caused 2.8% year-over-year job growth in March 2024. Alaska is a major supplier of minerals and fuel sources like oil and gas, opening job growth and increasing wages. Job growth is unhindered by the state’s net migration, which has been negative for over a decade. 

Focusing specifically on real estate, Alaska’s housing market still lags behind the rest of the country—although it is beginning to look more and more like the national market. Prices for Alaska homes are higher (although more affordable than some other states due to its prolonged recession), demand is high, and supply remains low, following the U.S.-wide trend of housing scarcity. Housing in Alaska is at its least affordable since 2006, according to a recent report from the Department of Labor and Workforce Development. The market is active, with homes still selling, but a limited inventory continues to make housing affordability low for many would-be homeowners in Alaska. 

The main factors contributing to unaffordability—interest rates, inflation, prices, and wages—are unlikely to change drastically soon, according to the same report. If we do see movement back towards affordability, a drop in interest rates is likely to be the cause. 

Alaska Market Trends 

To understand the Alaska real estate market, it’s important to keep up with trends. Let’s look at some key ones in Alaska: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

The median sale price in Alaska was $367,700 in April 2024, according to Redfin’s monthly housing market data from April 2023. This represents growth of about 2.3% year-over-year. The average price of a home in Anchorage is slightly higher, at $449,000. 

Number of Homes Sold in April 2024 

Only 469 homes sold in Alaska last month, making the state one of the lowest in the country for sales. This metric is down about 3.5% from last year. 

Keep in mind, however, that nationally speaking, sales usually peak during the spring and summer months and slow in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market 

Days on market (DOM) is a measure of the average length of time a home remains listed on the market before being put under contract. A lower DOM signals a highly competitive seller’s market with more pressure on buyers to make higher offers and remove contingencies. A higher DOM signals a buyer’s market as sales are slower and sellers have less leverage. 

The current median days on market (DOM) in Alaska is 14 days. This means homes for sale in Alaska sell in two weeks on average. 

Housing Supply Statistics 

As in many states, Alaska’s housing unaffordability is due, in part, to lack of inventory. Alaska had about 2.12 new residential construction permits per 1,000 people in 2021, according to data from Statista. This new home construction rate is relatively low compared to other states and likely explained by the lack of substantial migration to Alaska from the contiguous 48 states.  

Property Tax Rate 

The average property tax rate in Alaska is 1.04%, according to Rocket Mortgage. The average annual property tax bill in Alaska is about $3,500, higher than the national average of $2,459. This places Alaska’s average property tax rate as the 21st highest in the U.S. However, keep in mind that property taxes vary widely depending on the specific county of Alaska and the value of the home. 

Foreclosure Rate in Q1 of 2024 

In the first quarter of 2024, 1 in every 3,024 homes experienced a foreclosure filing, (according to recent data from ATTOM). Compared to other states, Alaska’s foreclosure rate is lower, ranking at the 39th highest. 

Hottest Local Markets in Alaska 

Alaska has several attractive cities and metro areas. Top markets for this season include Anchorage, Fairbanks, Juneau, Wasilla, Sitka, and Ketchikan.  

Here are a few more details of three of these Alaskan markets: 

1. Anchorage

Although Anchorage has seen depreciation in the past, recent years have seen movement towards recovery for this market. With a robust oil industry fueling job growth and new construction, the median listing home price in Anchorage is now almost $450K, trending up 5.6% year-over-year compared to April of last year. Popular neighborhoods in Anchorage include Mountain View, Northeast Anchorage, and Independence Park. 

2. Wasilla

Wasilla is one of the fastest-growing areas in Alaska, located only 40 miles north of Anchorage in the Mat-Su Valley. Tourists and homeowners alike are attracted to this city for its beauty and housing potential. The median listing home price in Wasilla is almost $440K in April 2024. Some of the best neighborhoods in Wasilla according to Realtor.com include Downtown Anchorage, Russian Jack Park, and University Area. 

3. Juneau

As the state capital and popular tourist destination, Juneau saw more than 1.64 million cruise ship passengers last year alone. Its economy is based on a balance of resource extraction and tourism, with vibrant nightlife, outdoor activities, and other attractions to fuel short-term rentals and keep property prices high. In April of 2024, the median listing price in Juneau was $495K, up 21.4% year-over-year. Popular neighborhoods in Juneau include Mendenhall Valley, Downtown Juneau, and West Juneau. 

Economic Factors Impacting the Alaska Housing Market 

A holistic view of Alaska’s housing market requires a basic understanding of the main economic drivers affecting the market. Let’s look at a few critical ones below: 

Mortgage Rates 

Mortgage rates are a common cause of concern for would-be homeowners across the U.S. in 2024. According to Zillow, Alaska’s current average for 30-year fixed-rate mortgages is 6.34%, which is 33 basis points lower than the U.S. average of 6.67%. 

The good news for sellers and existing homeowners is that between 2019 and 2022, the value of a home in Alaska jumped 30% on average (Department of Labor and Workforce Development). However, more recent home buyers feel stuck because they don’t want to give up current lower mortgage rates and anticipate difficulty upgrading to a more valuable home. Prospective buyers in Alaska should monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates are tied to inflation, another massive contributing factor to the affordability of housing and the state of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Alaska. This means fewer people can truly afford to limit housing costs to less than 30% of their monthly income. 

Population Changes and Demographics 

Population trends, jobs, and intraregional migration all affect the housing market. Alaska has experienced negative net migration since 2013, meaning that more people are moving out of Alaska than are moving to the state. Negative migration naturally affects jobs, population density, and housing inventory. Although the rate of population loss has decreased in recent years, it is worth monitoring for its future effects on the housing market. 

Alaska Housing Market Forecast 

According to the U.S. Department of Labor and Workforce Development, the main factors contributing to unaffordability in Alaska are unlikely to change drastically in the near future. In order to see substantial cooling, interest rates would need to lower, inflation would need to cool, prices would need to drop, and wages would need to increase. The Department’s 2023 report claims, “History shows that a price drop large enough to affect affordability is not likely.” However, they add that if we do see movement back to affordability in Alaska, it will likely be due to a drop in interest rates. 

If only one factor changed to push Alaska’s market back to average affordability, below are the changes that would be needed: 

• Interest rates: 4.6% drop needed 

• Home prices: 17% drop needed 

• Wages: 20% increase needed

In general, most analysts monitoring Alaska’s market agree that appreciation will continue to rise, as will prices, until inventory increases—as is the case for most of the country. Additionally, continued improvement of economic conditions in Alaska and recovery from COVID-19 may stimulate the housing market in the state. 

Likelihood of Alaska Housing Market Crash  

A housing market crash in Alaska is unlikely. Low inventory in the state keeps demand high and makes it unlikely that the market will crash. Many experts are optimistic about Alaska’s market as the state’s economy continues to recover. 

Forecast for The U.S. Housing Market 

Now that we’ve looked at Alaska’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Lower income households continue to struggle in the current housing market. This trend appears likely to continue into the foreseeable future. Without enhanced supply or helpful subsidies, the outlook is that many Americans will still wrestle with housing affordability in the years to come.  

Alaska Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

This short summary leads directly into Alaska’s current rental market. 

Alaska’s current rental market is influenced by all of these trends. Unaffordability extends from high home prices to high rental rates, including in major Alaska rental markets like Juneau and Wasilla. Below are just a few of the current trends for Alaska’s rental market based on data pulled from Zillow: 

Alaska Rental Market Key Trends 

• Median rent: $1,800 

• Month-over-month rent change: $0 

• Year-over-year rent change: +$125 

• Available rentals: 461 

Conclusion 

From beautiful coastlines and lakes to grand boreal forests and glaciers, Alaska certainly has much to offer its residents. The state’s housing market is on that list of opportunities. A recovering economy and increasing appreciation may inspire the housing market in the state. Analysts as well as everyday homeowners and investors will continue to monitor affordability trends in Alaska and the broader U.S.