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Fairbanks rental homes costliest in state

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Posted: Wednesday, August 14, 2013 12:00 am | Updated: 7:35 pm, Wed Aug 14, 2013.

FAIRBANKS — Renters are paying more for a single-family home in the Fairbanks North Star Borough than in any other region in Alaska, according to data collected by the state.

The survey, compiled annually by Alaska Housing Finance Corp., put Fairbanks in the most expensive spot among 10 population centers surveyed in 2013.

A three-bedroom single-family house — the most common type of home on the rental market — costs a renter an average of $2,131 per month in the Fairbanks North Star Borough. That’s $111 more per month than the No. 2 region surveyed, the Kodiak Island Borough.

The Fairbanks area also topped the state in the cost of a four-bedroom rental home, at $2,566 per month.

Much of the blame for the expensive rental rates points to a familiar culprit in the Interior — high energy costs. The survey includes heating costs in its monthly figures, and Fairbanks’ cold climate and reliance on expensive heating oil combined to add a big premium to local rentals.

“It’s always about the energy costs,” said Pam Cook, who oversees properties for MB Management.

According to the survey, 88 percent of Fairbanks rentals use heating oil to keep the units warm. Other communities that rely primarily on heating oil, such as Kodiak and Valdez, are in more temperate parts of the state. Several regions have access to less expensive energy sources such as natural gas or hydro-generated electricity.

According to the AHFC survey, 90 percent of local units include heat with the monthly rent, although local property managers said that practice is less common among single-family home rentals.

“If an owner is going to pay for the heat, they’re going to include it with the rental costs and rent is going to be higher,” said Phyllis Enoch, a property manager for Northern Homes.

Last year the Fairbanks area was No. 4 in the single-family home category, behind Kodiak, Valdez and Juneau, said Karinne Wiebold, an economist with the Alaska Department of Labor. But Fairbanks was previously the most expensive area in the state in the category as recently as 2011.

Wiebold said she didn’t know whether those shifts mirror changes in energy costs in Fairbanks.

But the rental data in the Fairbanks area isn’t consistently bad for tenants. The median rent for all unit types in the borough is slightly below the state average — $1,104 per month. Kodiak tops that category, which also includes utilities, at $1,365 per month.

There are also quite a few rental units on the market in the Fairbanks North Star Borough. The local vacancy rate is 9.2 percent, among the highest in the state. Anchorage, by comparison, has the lowest rate in Alaska, with 3.3 percent of its units vacant.

The price disparity between various types of rentals in Fairbanks isn’t simple to explain, agreed property managers Enoch and Cook.

Enoch said many of the single-family rentals are owned by military families who couldn’t sell them in a tepid market. Those rental rates may be disproportionately high because they’re being used to pay off mortgages, she said.

Cook said the addition of new housing on Fort Wainwright has softened the market for smaller apartment units in Fairbanks, which could be affecting the rent that can be charged at comparable units.

Contact staff writer Jeff Richardson at 459-7518. Follow him on Twitter:


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