Alaska’s response to the national housing shortage has been different than other states. In many areas across the country, new housing is going up rapidly to meet demand.
But not in Alaska.
In a recent presentation to the Sitka Chamber of Commerce (11-29-23), Nolan Klouda explained that Alaska ranks 45th out of all states in per capita new housing construction, building about two new units per thousand people on average. Within the state, the Mat-Su was at the top of the list for new construction, and not far behind – surprisingly – is Southeast.
“Sitka actually builds a lot more housing per capita than anywhere else in the state besides the Mat-Su,, which is just something that’s really interesting,” said Klouda. “This is all adjusted for population: Sitka is building about four units for every 1,000 people. I found it interesting that Southeast communities are on the top there. Also Haines, Ketchikan, and Skagway, which are above the statewide average, too.”
Klouda is the director of the University of Alaska Center for Economic Development in Anchorage. He traveled to Sitka to participate in the chamber’s fall speaker series on housing.
Most of the new housing construction in Sitka is the result of an expansion by the Southeast Alaska Regional Health Consortium. Overall, Klouda said that projects like employer-built housing and new subsidized housing for seniors will improve housing markets – but not necessarily the bottom line for buyers.
“Whatever the cause, though, I think that’s really good news overall,” he said. “I still want to see much more housing. Nonetheless, Sitka is doing better than most of our communities in Alaska on this measure, even though affordability might still be a big problem.”
Klouda attributed the affordability problem to a lack of land in the state, high construction costs, and out-of-date zoning laws, most of which were written when Alaska was a different kind of state.
“A lot of times zoning is about protecting existing neighborhoods from change, more than it is about health or safety or anything like that,” Klouda said.
He also was unwilling to place full blame on the growth of short-term rentals for Alaska’s high housing costs. Based on anecdotal data, he estimated that 3-percent of Sitka’s housing stock was tied up in short-term rentals. Klouda felt that the short-term rental market was adapting to changes in the visitor industry, faster than other types of accommodation.
“So the challenge is not that short term rentals are inherently evil,” Klouda said. “I think it makes a lot of sense that you would want to have that kind of income supplement. I think the challenge with it is each year you’re going to see more and more housing tied up as short term rentals, as visitor numbers increase. Statewide, we don’t necessarily build a lot of hotels anymore. And so more and more of your housing stock gets tied up as short term rentals. And we have low rates of building (new housing), so more and more housing stock becomes essentially a hotel.”
Klouda said he feared the short-term rental trend growing out of hand, however, and he favored imposing caps to keep them in check.
Nolan Klouda spoke at the Sitka Chamber’s Fall Housing Series on November 29.
