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Alaska’s housing market underwent significant shifts from 2018 through 2023, especially for “budget-conscious” households earning under $250,000 per year. This income group constitutes the vast majority of Alaska’s homebuyers (the state’s median household income is around $89,000).

In this period, moderate-income buyers navigated a wild ride of economic changes – from a mild local recession in the late 2010s, to a pandemic-era real estate boom, and finally to a sharp cooldown by 2022–2023 as interest rates spiked.

Overall Homebuying Trends (2018–2023)

From 2018 to 2023, the volume of home purchases in Alaska rose and fell dramatically, while prices marched upward. In 2018, Alaska recorded about 5,445 single-family home sales statewide at an average sales price of roughly $333,000.

By 2020–2021, historically low interest rates fueled a surge in demand: annual home sales topped 5,750 in 2020 and 5,757 in 2021. Statewide home prices also accelerated, with the average single-family price rising from the low-$300Ks in 2018–2019 to about $389,000 by 2021.

The Alaska Affordability Index – measuring how many average wage-earners are needed to afford a median mortgage – hit a record low of 1.11 in 2020 (essentially, one typical income could nearly cover a house).

However, the tide turned sharply in 2022 and 2023. As the economy reopened and inflation surged, mortgage interest rates climbed at a historic pace, surpassing 6.3% in 2023 – the highest since 2006. Higher borrowing costs dealt an immediate blow to affordability. The result: homebuying activity plunged. Statewide single-family sales fell to 4,459 in 2022 and then bottomed out at just 3,005 in 2023.

According to the Alaska Department of Labor and Alaska Housing Finance Corp (AHFC), the typical mortgage payment in Alaska soared 52% from 2018 to 2024 due to rising rates and prices. In other words, a family that might have managed a mortgage in 2018 could be priced out by 2023 unless their income kept pace.

Overall trends can be characterized in two phases: a rising tide from 2018 to 2021, followed by an ebb from 2022 to 2023. The initial period saw many moderate-income Alaskans successfully buying homes amid favorable financing conditions. The latter period saw many of those would-be buyers sidelined by worsening affordability.

Types of Properties Purchased by Moderate-Income Buyers

Even under financial constraints, most Alaskan homebuyers under $250K income have continued to gravitate toward single-family houses. From 2018 through 2023, approximately 85–90% of owner-occupied purchases were single-family homes, a proportion that remained quite stable.

There are practical reasons for this emphasis on single-family properties. Alaska’s housing stock is predominantly single-family to begin with, especially outside Anchorage. These homes often provide the space, privacy, and storage that Alaskans value.

During the pandemic, the desire for more space likely reinforced this trend, as remote work and stay-at-home life encouraged people to seek larger homes. Indeed, the average size and price of homes bought has risen: new single-family constructions sold in 2023 averaged over $612,000, whereas existing homes averaged $414,700.

Condominiums and townhomes make up a smaller but significant share of purchases for budget-conscious buyers, particularly for first-timers and downsizers in urban areas. Condos are most prevalent in Anchorage – by 2018, over 80% of Alaska’s condo sales were in the Anchorage municipality.

A typical condo in Anchorage sold for around $220,000 in 2018, substantially cheaper than the average single-family home. This price gap made condos an attractive entry point for buyers with limited budgets or those seeking lower maintenance.

By 2023, the condo market also slowed (only 569 sales statewide), but interestingly condo prices rose to an average of $289,000. This 33% price jump since 2018 indicates high demand relative to supply for any affordable properties.

Multi-family units (duplexes, triplexes, fourplexes) represent a niche that some savvy buyers in this income group have pursued, although the overall numbers are very small. These properties are often bought as both a home and an investment – for instance, an owner-occupant might live in one unit and rent out the others to help cover the mortgage.

From 2018 to 2021, around 100–160 multi-family residential purchases were made each year statewide, a drop in the bucket compared to single-family sales. However, by 2022–2023, multi-family sales by owner-occupants plummeted (only 63 such sales in 2022 and 29 in 2023) as higher rates and prices made these deals less feasible for average folks.

Upsizing, Downsizing, and Second Homes

Households earning under $250K in Alaska span a wide range of life stages, from first-time buyers in their 20s/30s to longtime owners approaching retirement. Their homebuying behavior between 2018 and 2023 reveals different trends.

Upsizing (trading up to larger homes) was a common theme through the late 2010s into 2021. With interest rates low and equity rising, a number of existing homeowners took the opportunity to sell and buy a bigger home. Anecdotally, real estate professionals in Alaska noted that from 2018–2021, move-up buyers were active – many could afford higher-priced homes because their existing home had appreciated and rates for the new mortgage were favorable (3–4% range).

However, by 2022, upsizing became much more difficult: the jump in mortgage rates meant that even if you sold your current home at a high price, the next home’s payment could be prohibitively expensive. This likely froze a lot of move-up plans.

Downsizing (moving to a smaller, more manageable home) has been a smaller but steady part of the market. Downsizers often sold larger homes and moved into condominiums, townhomes, or smaller houses – often staying in the same community. The 2018–2019 period, with a softer economy, saw fewer of these moves because selling was harder; but by 2020–2021, with hot demand, downsizers found it easy to find buyers for their homes.

Second homes and vacation properties emerged as a notable trend during the pandemic housing frenzy. Areas like the Kenai Peninsula, remote parts of the Mat-Su, and Southeast Alaska experienced increased interest from both in-state and out-of-state buyers looking for recreational cabins, fishing lodges, or just a quiet getaway.

However, this trend reversed sharply by 2022. Mortgage rate locks for second homes fell once interest rates rose and lending rules tightened. In Alaska, local realtors noted that many discretionary buyers dropped out once 30-year rates went above ~5%. The result is that the “cabin country” markets in Alaska cooled.

First-time buyers (distinct from upsizers/downsizers) are a key part of the under-$250K demographic. According to the Alaska Housing Finance Corporation, about 90% of AHFC-supported home purchases are by first-timers. Their median income is well below $100K (often $60–80K), and they typically buy modest homes with prices around $200K–$300K.

The low-rate era was a boon for these buyers, allowing some to buy sooner or afford slightly better homes with manageable payments. But by 2022–2023, first-timers faced perhaps the biggest challenges of anyone: high prices, high rates, and competition from cash or well-off buyers.

By the end of 2023, most non-essential moves were on hold. Upsizers were staying put unless absolutely necessary, downsizers were cautious, and second-home dreamers largely stepped back. The market became driven more by life necessities rather than elective lifestyle upgrades.

Regional Patterns Across Alaska’s Housing Markets

houses in the Municipality of Anchorage — Shutterstock

Alaska’s real estate trends can differ markedly by region, given the state’s vast size and diverse local economies.

The Municipality of Anchorage is Alaska’s largest urban center and housing market, typically representing about 40–45% of statewide home sales by value. For moderate-income buyers, Anchorage presents a mixed picture.

In 2018, the average sales price of a single-family home in Anchorage was around $392,000, already above what many middle-class families can comfortably afford. By 2023, that average price had ballooned to roughly $491,000. This affordability crunch meant that some Anchorage residents looked outside the city for homes, while others squeezed into condos or older homes within city limits.

The Mat-Su Borough (which includes Wasilla, Palmer, and surrounding areas) was the fastest-growing housing market in the state during this period. Mat-Su has comparatively abundant land and historically lower home prices, making it a magnet for families and first-time buyers looking for affordability.

In 2018, the average Mat-Su home price was about $293,000 – significantly less than Anchorage. By 2023, Mat-Su’s average price rose to roughly $430,000, but this was still lower than Anchorage’s average. Mat-Su was one of the more “affordable” spots in an unaffordable state, with an affordability index around 1.33 in 2022 (versus 1.48 in Anchorage).

The Fairbanks North Star Borough, including the city of Fairbanks and North Pole, is Alaska’s second-largest population center. Housing in Fairbanks has historically been cheaper than Anchorage – and that held true in recent years. In 2018 the average single-family home in Fairbanks sold for around $272,000, and even by 2023 it was about $341,000, well below statewide average.

One interesting pattern: a lot of Fairbanks buyers are military personnel using VA financing, which often allows zero down payment. These VA-backed buyers were well-positioned when rates were low, but as rates rose, their zero-down loans became more costly on monthly payments.

Juneau, the state capital, presents a unique housing market. It is geographically isolated and has limited land for development, which has driven housing costs high relative to incomes. In 2018, the average single-family home price in Juneau was about $410,000, second only to Anchorage. By 2022, Juneau’s average topped $513,000.

These prices challenge even $150K-income households unless they have significant down payments. Homebuying in Juneau for the under-$250K crowd often means modest older homes, condos, or even manufactured homes, simply because of the cost.

The Kenai Peninsula Borough, including communities like Kenai, Soldotna, Homer, and Seward, is another important region, blending year-round residents with vacation-home owners. For local households under $250K income, Kenai offered some of the more affordable single-family homes in Alaska – about $278,500 average price in 2018, and around $395,000 in 2023.

The Kenai Peninsula also has a reputation as a retirement and recreation haven; thus, some properties are bought by Anchorage or out-of-state folks as second homes. During 2020–2021, the Peninsula saw a surge of interest: coastal and scenic properties were snapped up.

In summary, Anchorage and Juneau posed the biggest affordability challenges, Mat-Su and Kenai attracted those seeking more bang for their buck, Fairbanks remained relatively stable and moderately priced, and the balance of the state played a minor role in sales.

Shifts Compared to 2008–2017

The 2008–2017 period saw more consistent sales activity overall. Even at the low point of the housing bust, Alaska didn’t crash as hard as some Lower-48 markets. A peak came around 2013 when nearly 7,993 homes sold as low interest rates spurred activity.

Contrast that with 2018–2023: sales first dipped in the late 2010s due to Alaska’s mini-recession, then spiked back to ~5,760 in 2020–21, and then sharply collapsed to ~3,000 by 2023. Such volatility was not seen in the prior decade.

From 2008 to 2017, Alaska’s home prices rose modestly overall. One analysis noted that Alaska had one of the smallest 10-year home price increases in the nation (about +37% from 2009 to 2019). In contrast, 2018–2023 saw a sharper upswing in prices, especially during 2020–2022. In just five years, the statewide average single-family price jumped from ~$333K to ~$436K – roughly a 30% rise, which is nearly as much as the prior decade’s entire growth.

A major difference is the interest rate backdrop. The 2008–2017 era was largely one of declining or low interest rates. After 2008, rates dropped under 5%, reaching record lows around 3.5% by 2012–2013, which made mortgage payments more affordable and helped buyers stretch their budgets.

In contrast, 2018 started with rates around 4.5%, dipped to mid-3% by 2020, then skyrocketed to ~7% by 2023. This kind of spike never occurred in the earlier decade. It introduced a new obstacle for buyers: financing costs became a see-saw. A household under $250K income in 2015 might have comfortably locked in a 4% loan; that same household in 2023 faces rates of 6–7%, adding hundreds of dollars to monthly payments.

From 2008–2017, Alaska added more housing stock and had more new construction relative to demand. By contrast, new construction hit a near-record low in 2022 despite strong demand. Builders faced higher costs and labor shortages, and slowed production.

Overall, compared to 2008–2017, the 2018–2023 period was more tumultuous and challenging for Alaska’s middle-income homebuyers. The earlier decade benefited from generally improving affordability (thanks to falling rates and steady prices), whereas the latter has been defined by eroding affordability (fast-rising prices and rates).

Impact of Interest Rates, Financing, and Affordability

During 2018–2021, interest rates hovered near historic lows, boosting affordability despite rising home prices. A 30-year fixed mortgage rate that stayed around 3–4% meant that buyers could borrow more money for the same monthly payment compared to eras of higher rates.

This environment was especially beneficial for under-$250K income households: lower interest costs kept the Alaska affordability index around 1.11 to 1.20 during 2019–2020 (very affordable historically).

By contrast, the interest rate shock of 2022–2023 severely hurt affordability for this group. The average mortgage rate in Alaska climbed above 5% in mid-2022 and crossed 6% later that year. In 2023 it averaged around 6.3%, with peaks near 7%.

To illustrate the effect: Alaska’s affordability index jumped to 1.66 in 2023, meaning it took one full average income plus two-thirds of another just to afford the average home. That’s the worst level since 2006 and a dramatic swing from the 1.11 of 2020.

Financing options played a critical role in mitigating (or exacerbating) these challenges. For under-$250K income buyers, government-backed mortgages are very important in Alaska. AHFC offers interest rate reductions for certain borrowers, down payment assistance, and other support. Similarly, FHA loans allow as low as 3.5% down and more flexible credit scores, which many first-time Alaskans rely on.

In 2020–2021, these programs enabled a lot of purchases: buyers could combine low market rates with FHA/VA terms, making monthly payments very low. By 2023, however, even with an FHA loan, the interest rate you’d get was around 6.5–7%, so the benefit was more about the low down payment requirement.

Another aspect of financing is credit and debt-to-income (DTI) criteria. When rates rise, the DTI on a given loan amount rises too. So, many buyers who could qualify for a $400K loan at 3% interest could only qualify for maybe $300K at 6% interest, given the same income.

In summary, high interest rates have been the single biggest obstacle to homebuying for Alaska’s middle-income families in recent years. They turned what was a very affordable situation in 2020 into an unaffordable one by 2023.

Conclusion

From 2018 to 2023, Alaska’s homebuying landscape for households earning under $250,000 underwent dramatic swings. In the late 2010s, buyers benefited from low rates and stable prices, allowing many to achieve homeownership or move up to better homes.

The pandemic period brought a frenzy of buying – people upsizing, some acquiring second cabins, and properties of all types getting snapped up – which drove prices to new heights. Yet paradoxically, ultra-low interest rates kept monthly costs manageable and sustained the surge.

By 2022 and 2023, however, the environment flipped: soaring interest rates and years of price growth pushed housing affordability to its worst in nearly two decades, slamming the brakes on home purchases by all but the most well-off.

Throughout these years, the fundamentals of what people buy remained consistent – mostly single-family homes, with condos as a secondary choice – but the ability of people to buy ebbed and flowed with economic forces.

Regional shifts emerged as well: Anchorage and Juneau grew more cost-prohibitive, Mat-Su solidified its status as the affordable alternative for Southcentral Alaska, Fairbanks stayed a relatively accessible interior enclave, and Kenai balanced local affordability with vacation-home pressures.

As of early 2024, there are signs that mortgage rates might stabilize or ease slightly, and wage growth is ongoing. While a return to the ultra-affordable conditions of 2020 is unlikely soon, even a small improvement in interest rates could revive some buying activity among this income group.

The resilience and desire of Alaskans to own a piece of the Last Frontier remain strong. The past five years have been a rollercoaster, but they underscore that homeownership – whether a suburban house, a downtown condo, or a cabin by the lake – is deeply valued by Alaska’s families.