Blog

Real Estate Investment in Alaska (AK)

• Posted by Opeyemi Quadri in US Property Market
• No Comments
• Share

By population, Alaska is one of the top five smallest states in the U.S., but if you’re looking for a unique and potentially lucrative property investment opportunity, The Last Frontier State will give you Return on Investment (ROI).

For instance, rent in Alaska grew by 10.7% in 2022, compared to the national rent that grew at an average of 4.6%. This should be a signal for real estate investors who are looking for a U.S. state that will give them value for their investment.

From its booming tourism industry to its rich oil and gas reserves, there are plenty of reasons to consider real estate investing in Alaska just like others are considering Alabama for property investing.

Quick facts about Alaska

• Gross State Product: $49.6 Billion
• State capital: Juneau
• Number of counties: 29
• Most populated city: Anchorage
• Land area: 571,951 sq mi (1,481,346 km2)
• Population: 733,583 (2022 estimates. Source: U.S Census Bureau)

What is unique about Alaska?

There are many unique things about the Last Frontier State known for its rugged, wilderness character.

Some of the things that make Alaska unique include:

Its size:

Alaska is the largest state in the U.S. by land area covering 571,951 sq mi (1,481,346 km2). This vast expanse of land is home to a wide variety of landscapes, from mountains and glaciers to forests and tundra.

Its location:

Alaska is located in the northwest corner of North America, separated from the rest of the U.S. by Canada. This remote location gives it a sense of isolation and helps to preserve its natural beauty.

Its wildlife:

Alaska is home to a wide variety of animals, including bears, moose, caribou, wolves, and bald eagles. It is also home to many species of fish, including salmon, halibut, and cod.

Its climate:

Alaska has a subarctic climate, with long, cold winters and short, cool summers. In some parts of the state, the sun doesn’t rise for several months during the winter, while in other parts, it never sets during the summer.

Its culture:

Alaska has a diverse cultural history, with Native Alaskan communities, Russian immigrants, and U.S. settlers all contributing to the state’s rich cultural heritage. This diversity is reflected in the state’s art, music, and food.

Why should I invest in Alaska property?

There are several reasons why investing in Alaska property could be a good idea:

Strong economic growth:

Alaska has a strong and diverse economy, with sectors such as tourism, oil and gas, and natural resource extraction driving economic growth. This economic growth can help support the value of real estate in the state.

High demand for vacation rentals:

Alaska is a popular destination for travelers, and there is a high demand for vacation rentals, particularly in areas with a lot of natural beauty or outdoor recreational opportunities.

Investing in a vacation rental property could be a good way to tap into this demand. For instance, the thousands of tourists to Alaska in 2021 is a pointer that the state is a lucrative state for vacational rentals.

Stats from the Department of Labor shows that Alaska’s eight national parks such as Glacier Bay, Denali, Lake Clark, Kobuk Valley, Katmai, and Gates of the Arctic experienced more visits in 2021.

Potential for appreciation:

Considering the number of visits the state welcome every year, real estate values in Alaska have historically appreciated at a strong rate, and there is potential for this trend to continue in the future. This means that investing in Alaska property could lead to strong returns over time.

Diverse investment opportunities:

There are a wide variety of investment opportunities in Alaska, from single-family homes to large commercial properties.

This means that investors can find a property that aligns with their investment goals and risk tolerance.

What kind of property is in high demand in Alaska?

There are several types of property that are in high demand in Alaska:

Vacation rentals:

Alaska is a popular vacation destination, and there is a high demand for vacation rentals, particularly in areas with a lot of natural beauty or outdoor recreational opportunities. These properties could be single-family homes, cabins, or even apartments.

Single-family homes:

Single-family homes are a popular choice for both residents and investors in Alaska. These properties tend to be in high demand in areas with good schools, amenities, and access to outdoor recreation.

Commercial properties:

There are a variety of commercial properties in high demand in Alaska, including office buildings, retail spaces, and industrial properties. These properties can be a good choice for investors looking to tap into the state’s strong economy.

Multi-family properties:

Multi-family properties, such as apartment buildings and duplexes, can be a good investment in Alaska, particularly in areas with strong rental demand.

What is the cost of rent in Alaska?

The cost of rent in Alaska varies depending on a variety of factors, including the location, size of the property, and overall demand for rentals in the area.

In general, however, rents in Alaska tend to be higher than the national average due to the state’s high cost of living.

According to data from Zillow, the median rent in Alaska in December 2021 was $1,865 per month for a one-bedroom apartment and $2,395 per month for a two-bedroom apartment. These figures are higher than the national median rents of $1,469 and $1,665, respectively.

Rent prices in Alaska can vary significantly depending on the location. In the largest city, Anchorage, the median rent for a one-bedroom apartment was $1,499 in December 2021, while in Juneau, the state capital, the median rent was $1,907. In smaller, more rural areas of the state, rents may be lower.

Specifically, Alaska largest city by population Anchorage has consistently witnessed property appreciation, growing by 17% in a year-over-year comparison, according to ApartmentList.com

What are the best cities for real estate investment in Alaska?

The best cities for real estate investment in Alaska will depend on your investment goals and risk tolerance, as well as the current state of the market.

Here are a few cities in Alaska that may be worth considering for real estate investment:

Anchorage:

Anchorage is the largest city in Alaska, with a population of 292,545. It has a diverse economy and a relatively high demand for rental properties, making it a good choice for investors looking for cash flow.

Fairbanks:

Fairbanks is the second-largest city in Alaska and has a strong economy driven by the oil and gas industry.

It has a high demand for both rental properties and owner-occupied homes, making it a good choice for investors looking for appreciation.

Juneau:

Juneau is the state capital and has a strong economy driven by the state government, tourism, and the fishing industry.

It has a high demand for rental properties, particularly in the downtown area, and a relatively low vacancy rate, making it a good choice for investors looking for cash flow.

Wasilla:

Wasilla is a city located in the Matanuska-Susitna Valley and has a strong economy driven by the oil and gas industry and tourism.

It has a high demand for both rental properties and owner-occupied homes, making it a good choice for investors looking for appreciation.

How can I start a real estate business in Alaska?

Starting a real estate business in Alaska is a process that involves several steps. Here’s what you’ll need to do:

Get a real estate license:

In order to work as a real estate agent in Alaska, you’ll need to obtain a real estate license.

This typically requires completing a certain number of hours of education and passing a licensing exam. You can find more information on the licensing requirements in Alaska on the Alaska Real Estate Commission website.

Find a broker:

In order to work as a real estate agent, you’ll need to be affiliated with a brokerage. You can find a brokerage to work with by researching local firms and reaching out to them to discuss potential opportunities.

Build your business:

Once you have your license and have joined a brokerage, it’s time to start building your business.

This may involve marketing yourself to potential clients, networking with other real estate professionals, and staying up-to-date on market trends and changes.

Learn about local laws and regulations:

It’s important to understand the local laws and regulations that apply to real estate in Alaska, including zoning laws, fair housing laws, and other rules that may affect your business. You can find more information on these laws on the Alaska Real Estate Commission website

Summary:

Real estate investment in Alaska is a unique and potentially lucrative and the state could be a good choice for investors looking for a high-demand, high-growth market.

The type of property that is in high demand in Alaska will depend on the location and the specific needs of the market just like it for anyone who wants to explore Arizona and Florida property market.

It’s important for investors to do their research and consider the demand for different types of property in the area they are interested in.