For first-time buyers in Alaska, the path to homeownership between 2018 and 2023 was anything but predictable. At first, low interest rates gave many a shot at settling down—even in remote or rugged corners of the state. But as prices climbed and rates followed, the dream grew harder to reach. From cabins near Fairbanks to starter homes in Anchorage, new buyers faced shifting ground. What emerged was a story of resilience, timing, and the pull of home—even in a state where “home” might be miles from the nearest road.
Overall Homebuying Trends (2018–2023)
From 2018 to 2021, Alaska’s housing market was heating up. In 2018, about 5,445 homes (single-family houses) were sold statewide at an average price around $333,000. By 2020, historically low mortgage interest rates fueled a surge in demand. Annual home sales jumped to roughly 5,760 in 2020 (and a similar number in 2021).
With many buyers competing, home prices climbed – by 2021 the average Alaska house cost about $389,000, up from the low-$300Ks a few years earlier. The boom was supercharged by mortgage rates in the 3%–4% range, which made monthly payments more manageable. Alaska’s housing affordability index hit a record low of 1.11 in 2020, meaning a single average income could almost cover the mortgage on a median-priced home.
However, the tide turned sharply in 2022. As the economy reopened and inflation picked up, lenders raised interest rates at a historic pace. By mid-2022, the average 30-year mortgage rate in Alaska had climbed above 5%, and in 2023 it averaged around 6.3% – the highest since 2006. These higher rates dealt an immediate blow to affordability.
The Market Decline of 2022-2023
Even though prices didn’t fall much, far fewer buyers could qualify for loans at the higher rates. Homebuying activity plunged: statewide single-family sales fell to 4,459 in 2022, and then bottomed out at just 3,005 in 2023. By 2023, Alaska’s average home price had reached about $436,000, roughly a 30% increase from 2018.
The net effect was that affordability worsened dramatically after 2021. Alaska’s affordability index, which had been around 1.1 in 2020 (very affordable), jumped to 1.66 by 2023 – meaning one full average income plus two-thirds of another were required to afford the average home. According to state data, the average mortgage payment in Alaska rose by 52% between 2018 and 2024.
In simple terms, a family that might have managed a mortgage in 2018 could be priced out by 2023 unless their income rose significantly to keep up. These numbers underscore a tale of two periods: 2018–2021 was a time of opportunity for many first-time buyers due to low rates, while 2022–2023 saw many of those would-be buyers pushed to the sidelines by high costs.
What Types of Homes Are First-Time Buyers Purchasing?
Even under tight budgets, most first-time buyers in Alaska tend to seek traditional single-family homes. From 2018 through 2023, about 85–90% of owner-occupied purchases statewide were detached single-family houses. This proportion remained very stable each year.
There are practical reasons: Alaska’s housing stock is mostly single-family to begin with, especially outside Anchorage, and these homes offer the space and storage that many Alaskans prefer. During the COVID-19 pandemic, the desire for space only grew – with remote work and schooling, people valued having a yard or an extra room for an office.
Condominiums and Townhomes
Condominiums and townhomes made up a smaller but important share of purchases for new homeowners. Condos are especially significant in Anchorage, which accounted for about 80% of Alaska’s condo sales by 2018. A typical condo in Anchorage sold for around $220,000 in 2018, much cheaper than the average house, making condos an attractive entry point for buyers with limited budgets.
Many first-time buyers (and downsizing seniors) chose condos or townhouses for their lower price and maintenance. By 2023, the condo market had slowed considerably – only 569 condo units sold statewide that year – but condo prices had actually jumped to an average of $289,000. That’s a 33% increase in condo prices since 2018. The price rise suggests that any relatively affordable properties, like condos, were in high demand even as higher rates made buyers cautious.
Multi-Family Homes
Multi-family homes (duplexes, triplexes, etc., where the owner might live in one unit and rent the others) were a niche pursued by a few savvy first-timers. From 2018 to 2021, roughly 100–160 owner-occupied multi-family purchases were made each year statewide. Some first-time buyers used this strategy to help cover their mortgage by having tenant income.
But by 2022–2023, buying a multi-unit property became much less feasible for the average buyer. Only 63 such owner-occupant multi-family purchases happened in 2022, and a mere 29 in 2023. High prices and rates made these deals tough to afford, and lenders often have stricter rules for multi-unit mortgages as well.
Upsizing, Downsizing, and Second Homes in the Mix
Not all buyers in the market were first-timers – many existing homeowners were active too, and their decisions impacted overall supply and demand that first-time buyers faced. During the late 2010s up through 2021, “move-up” buyers were common.
With low interest rates and rising home equity, a lot of Alaskans who already owned a starter home were able to upsize to a bigger or newer house. Real estate agents noted that from 2018–2021, many families sold their first home (often at a profit) and could afford a larger home since mortgage rates were only about 3–4%.
However, by 2022, the spike in mortgage rates largely froze these move-up plans. Even if someone sold their house at a great price, the next home’s mortgage at 6-7% interest could be prohibitively expensive. Many homeowners decided to stay put rather than trade their low-rate mortgage for a high-rate one. This meant fewer existing homes were listed for sale, adding to the inventory crunch that frustrated first-time buyers.
The Downsizing Trend
At the same time, a smaller but steady group of owners were downsizing. Downsizers are often empty-nesters or retirees moving to a smaller, more manageable home (or a condo). In 2018–2019, Alaska’s sluggish economy made selling a larger home harder, so downsizing moves were relatively few.
But during the hot market of 2020–2021, downsizers found it easy to sell their big houses (thanks to high demand) and many moved into condos, townhomes, or smaller single-story houses in the same community. This freed up some larger homes for sale. By 2022, downsizing continued at a modest pace, but even these moves became trickier as high prices meant some smaller condos weren’t that cheap anymore.
Vacation Homes and Second Properties
One noteworthy trend during the pandemic boom was a surge in second homes and vacation properties. With travel limited and remote work more feasible, some Alaskans (and even buyers from out of state) looked for recreational cabins or getaway homes within Alaska.
Popular areas for these vacation homes included the Kenai Peninsula (known for fishing and scenery), remote parts of the Mat-Su Borough, and parts of Southeast Alaska. Real estate agents reported increased interest in properties like lakefront cabins, hunting cabins, or homes in small towns that could serve as a quiet retreat.
However, this trend reversed sharply in 2022. When mortgage rates climbed above ~5%, buying a second home became far less affordable, and lenders also tightened rules for second-home loans. By late 2022, many discretionary buyers dropped out. Alaska’s “cabin country” cooled off, taking pressure off those markets. For first-time buyers, this was a bit of good news – fewer second-home buyers meant a bit less competition.
By the end of 2023, the housing market in Alaska had shifted to a much slower gear. Most non-essential moves were on hold. Homes were still being bought and sold, but increasingly those transactions were driven by life necessities rather than by opportunistic upgrading or investing. This cooldown meant that first-time buyers faced less frantic competition by 2023 than in 2021 – but they still had to contend with high prices and interest rates.
Who Are Alaska’s First-Time Homebuyers?
First-time homebuyers are a diverse group, but they tend to share some characteristics. Many are in their 20s or 30s, often couples (married or unmarried) or individuals who have steady jobs and are tired of renting. Nationally, people have been buying their first homes later in life as houses become less affordable – in 2022 the typical U.S. first-time buyer was 36 years old, up from age 33 just a year earlier. Alaska likely mirrors some of these national trends, though the specific age might be a bit lower due to the state’s slightly younger population and military presence.
In terms of income, first-time buyers in Alaska are generally middle-income households. The median household income in Alaska is around the high $80,000s, and many new homebuyers earn in that ballpark or a bit less. According to the Alaska Housing Finance Corporation (AHFC), about 90% of the home loans it backs are to first-time buyers, and their median incomes are typically in the $60,000 to $80,000 range.
With those incomes, buyers can qualify for modestly priced homes. Indeed, AHFC notes that first-timers using its programs tend to purchase houses priced around $200,000 to $300,000. These might be small starter homes, older houses in need of a little TLC, or condos/townhomes.
The household size of first-time buyers is often small – many are young couples, some with a baby or young child, and some are single individuals buying a home on their own. Nationwide data show that about 61% of recent homebuyers were married couples, 17% single females, 9% single males, and 10% unmarried couples. First-time buyers have an even higher share of unmarried couples in the mix (nearly 1 in 5 nationally).
One distinctive subset of first-time buyers in Alaska are those using VA loans, such as young military families stationed in Alaska. Military and veteran buyers can be first-time owners too, and they benefit from VA loan programs that require no down payment. Areas around Anchorage and Fairbanks (which have Air Force and Army bases) see many of these buyers.
Housing Affordability, Mortgages, and Assistance Programs
For first-time buyers, affordability is the name of the game. Two major factors determine if a home is affordable: the price of the home and the mortgage interest rate. From 2018 to 2021, Alaska benefited from historically low interest rates, which offset the rising prices to some extent. Many first-time buyers were able to get 30-year loans at around 3–4% interest.
This meant lower monthly payments – for example, a $300,000 loan at 3% has a much smaller payment than the same loan at 6%. Low rates allowed buyers to “stretch” their budgets a bit more. In 2019 and 2020, the statewide affordability index hovered around 1.11 to 1.20, meaning the average worker’s income was just about enough (or a little more than enough) to afford the average house.
By contrast, when rates spiked in 2022, affordability worsened everywhere in Alaska. In 2023 the index hit 1.66 statewide, and in high-cost areas like Anchorage and Juneau it was even higher. This indicates that buying a home had become out of reach for many single-income households – it often took two incomes or a higher-than-average income to make it work.
The Mortgage Rate Rollercoaster
Mortgage rates rose very quickly in this period. At the start of 2018, rates were around 4.5%, but they fell to the low-to-mid 3% range by 2020. The Federal Reserve’s actions during the pandemic helped push rates to record lows, which is one reason 2020 and 2021 saw such a frenzy of buying – money was cheap to borrow.
But as the Fed later hiked rates to combat inflation, mortgage rates jumped. By late 2022, Alaska’s average 30-year fixed rate was about 6% and continued to fluctuate around the 6–7% range in 2023. For a first-time buyer, this increase was like a gut punch. Higher interest drives up the monthly payment and also reduces the loan amount a buyer can qualify for. One analysis noted that a household that might have qualified for a $400,000 loan at 3% could only qualify for roughly a $300,000 loan at 6%, given the same income. This sharply limited what first-time buyers could afford by 2023.
Financing and Assistance Programs
Given these challenges, financing and assistance programs became more crucial than ever for new buyers. Many first-timers rely on government-backed loans like FHA loans or VA loans. An FHA loan allows as low as 3.5% down payment and is more forgiving on credit scores, which helped a lot of Alaskans buy their first home.
Throughout 2018–2021, buyers could pair the low market interest rates with FHA loans to keep monthly costs very low. By 2023, even FHA loans came with higher rates (since overall rates were up), but they still at least enabled buyers to put little money down. The Department of Veterans Affairs (VA) loans similarly helped many military members and veterans buy homes with zero down; Alaska has a sizeable military population, so VA loans are a key part of the first-time buyer toolkit.
Alaska’s own housing agency, the Alaska Housing Finance Corporation (AHFC), offers special programs for first-time buyers as well. AHFC often provides interest rate reductions for certain qualified borrowers, down payment assistance programs, and other support to make buying easier. For example, AHFC’s First-Time Homebuyer Program can offer lower interest rates if you take a homebuyer education class or if you buy in certain areas.
By 2022–2023, affordability had deteriorated so much that even these programs had limits. AHFC could help with a down payment or shave a bit off the interest rate, but when 30-year rates are 6.5% or higher, the benefit of those programs is partially overshadowed by the high base rates. That said, without such programs many first-time buyers would have had no chance at all.
Regional Differences Across Alaska
Alaska is a huge state with diverse communities, and housing trends can vary a lot by region. The first-time buyer experience in Anchorage (the state’s largest city) is quite different from that in a small rural town.
Anchorage
This city is Alaska’s urban and economic hub, home to about 40% of the state’s population. It usually makes up 40–45% of statewide home sales by value in a given year. Anchorage has the most developed housing market with a mix of single-family homes, condos, and townhouses. It also has some of the highest home prices.
In 2018, the average single-family home price in the Municipality of Anchorage was around $392,000, already high for a first-time buyer relying on an average income. By 2023, that average price ballooned to roughly $491,000. This steep increase put a strain on Anchorage buyers.
Many first-timers in Anchorage had to get creative: some bought condos instead of houses, others looked for older homes that were more affordable, and quite a few started looking outside the city in search of cheaper options. Indeed, a trend emerged where Anchorage workers would purchase homes in the adjacent Mat-Su Valley (commuting from towns like Wasilla or Palmer) to find something within their budget. By 2022–2023, local officials in Anchorage were even calling the situation a housing crisis due to the lack of affordable homes in the city. Housing in Anchorage in 2023 was the least affordable it had been in over two decades.
Mat-Su (Matanuska-Susitna Borough)
This area north of Anchorage, including towns like Wasilla and Palmer, was the fastest-growing housing market in Alaska during 2018–2023. Mat-Su has more open land and historically lower home prices, which made it a magnet for families (including many first-time buyers) looking for affordability.
In 2018, the average Mat-Su home price was about $293,000, significantly less than in Anchorage. By 2023, Mat-Su’s average price rose to roughly $430,000. That’s a big increase (nearly 47%), yet Mat-Su was still generally cheaper than Anchorage for similar homes.
Mat-Su also had newer subdivisions popping up and a reputation for being more family-friendly in terms of housing costs. For someone working in Anchorage, the trade-off was a longer commute for a more affordable or bigger home. In terms of affordability index, Mat-Su was one of the more “affordable” spots in an increasingly unaffordable state – around 1.33 in 2022, compared to Anchorage’s 1.48 that year.
Fairbanks (Interior Alaska)
Fairbanks, the state’s second-largest metro area, had a relatively stable and moderate housing market. It’s an “interior enclave” that remained more accessible price-wise than Anchorage or Juneau. In 2018, the average Fairbanks-area home price was about $272,000 – quite a bit lower than Anchorage. By 2023, Fairbanks’ average price was around $341,000.
While that’s a big jump in five years, Fairbanks homes were still generally within reach for many local first-time buyers, especially with the help of the region’s slightly lower cost of living and the presence of military housing options. The affordability index for the Fairbanks North Star Borough was about 1.24 in 2022, better (lower) than any other major region in Alaska.
Rural Alaska
Outside the road system and major towns, Alaska’s housing is very different. In many remote villages (often predominantly Alaska Native communities), homebuying as discussed in a traditional market sense is less common – housing might be provided by tribal or regional housing authorities, or homes are built and passed down in families.
That said, some regional hubs like Bethel, Nome, Kotzebue, Utqiaġvik do have active home sales and first-time buyers. These areas tend to have extremely high construction costs (everything has to be barged or flown in) and often lower median incomes, making affordability extremely tough. For example, Bethel (a hub in Western Alaska) saw only 15 homes sold in all of 2023. The average sale price in Bethel was about $440,000, which is astonishingly high given the median local incomes.
In 2022, Bethel’s affordability index hit 2.21, the highest (worst) in the state. That implies you’d need more than two average Bethel incomes to afford the average house there. First-time buyers in such rural areas often rely on special programs like USDA Rural Development loans or HUD’s section 184 Indian Home Loan program.
Comparing 2018–2023 to the Prior Decade (2008–2017)
To put these recent years in context, it helps to compare them with the previous decade. The period 2008–2017 included the tail of the 2000s housing boom, the nationwide housing crash and Great Recession, and a slow recovery. Alaska’s experience during that time was more stable than many other states. Even when the U.S. housing bubble burst in 2008, Alaska did not crash as hard as places like Nevada or Florida.
Home sales volumes in 2008–2017 were relatively consistent each year (with some ups and downs during the recession). A peak in sales came around 2013, when nearly 7,993 homes sold statewide. That was a banner year for Alaska real estate, fueled by low interest rates (~3.5% around 2012-2013) and a decent economy.
In contrast, 2018–2023 was far more tumultuous. The swings in sales and the speed of price increases were unprecedented in such a short time. We saw sales go from ~5,100 in 2019 (during the local recession) up to ~5,760 in 2020–21, then down to ~3,000 by 2023. Such rollercoaster volatility did not happen in the prior decade. Likewise, prices jumped about 30% in just five years (2018–2023), which is almost as much as they had risen in the entire ten years before.
A major difference was the interest rate environment. 2008–2017 was largely an era of falling or low interest rates. After 2008, U.S. mortgage rates dropped below 5% and stayed quite low for years – by 2012–2013 they hit around 3.5%, an all-time low at that point. By stark contrast, 2018–2023 saw an interest rate spike that had no precedent in the prior decade. Rates went from roughly 4.5% in 2018 up to ~7% at peak in 2023 – that swing is huge, and it happened fast.
Conclusion
From 2018 to 2023, first-time homebuyers in Alaska saw their prospects swing from one extreme to another. The period started with a buyer’s advantage – falling interest rates and reasonable prices – and ended in a landscape where high costs made buying a home a steep climb.
The COVID-19 pandemic brought an unexpected housing frenzy: record-low mortgage rates and lifestyle shifts led to many people upsizing, some grabbing second homes, and overall competition for homes reaching a fever pitch, which drove prices to new heights. Paradoxically, those ultra-low rates kept monthly payments manageable for a time, sustaining the boom. But by 2022 and 2023, the situation flipped. Soaring interest rates (combined with years of price increases) pushed housing affordability to its worst level in nearly 20 years, effectively slamming the brakes on home purchases by all but the most well-off buyers.
Throughout these fluctuations, Alaskans still primarily bought single-family homes (when they could), with condos as a secondary choice in urban areas. Regional shifts occurred: Anchorage and Juneau became increasingly cost-prohibitive, the Mat-Su Valley solidified its status as the go-to affordable area for Southcentral Alaska, Fairbanks provided a somewhat more accessible market in the Interior, and places like Kenai saw a balance of local demand and outside interest.
For first-time buyers in Alaska, persistence and resourcefulness will be key: tapping into AHFC programs, considering a broader range of locations and home types, and being ready to act when a good opportunity comes. The resilience and determination of these buyers are evident. The past five years have been a rollercoaster for Alaska’s housing market, but they underscore one thing clearly – homeownership is deeply valued by Alaskan families, and many are willing to weather the ups and downs of the market for a chance to own their home in the Great Land.
References
- Housing market shifts in 2022 – Alaska Economic Trends (May 2023), Alaska Department of Labor and Workforce Development
- Alaska Housing Information – Alaska Department of Labor and Workforce Development
- Soaring rents, mortgages and home prices: What new data shows about Anchorage’s housing crunch – Anchorage Daily News (July 6, 2024)
- Alaska Housing Market: 2025 Home Prices & Trends – Zillow Research
