Rent vs buy in Alaska
Of its one city of 50,000+, renting wins in 1, at today's numbers over 7 years.
Renting or buying in Alaska's cities
| City | Verdict | 7-year result | Break-even (up to 30 yrs) | Typical home | Rent /mo |
|---|
Sources: the Zillow Home Value and Observed Rent indexes, plus verdicts from our rent vs buy method with 20% down over 7 years.
What Alaska's law says
- Transfer tax when you buyNational Association of REALTORS, State and Local Issues: Real Estate Transfer Tax
- None. Alaska has no statewide real estate transfer tax.
- Homestead exemption for ownersKetchikan Gateway Borough Assessor, Senior Exemption (AS 29.45.030(e))
- No general homestead exemption; owners 65 and older get up to $150,000 of value exempt (AS 29.45.030).
- Security deposit limit for rentersAlaska Department of Law, Landlord and Tenant Act handbook (AS 34.03.070)
- 2 months' rent unless rent tops $2,000 a month; refund within 14 days, or 30 if deducting.
Our Alaska verdict
We have one city in Alaska to judge, and the call is clear. In Anchorage, the typical home costs $422,584 while monthly rent is $1,845. Renting ends up $65k ahead over 7 years. At today's numbers, buying never breaks even in 30 years.
What makes the gap so wide? Tax explains part of it. Here, property tax comes to 1.10% of value, higher than the 0.94% rate in the US. In much of the country prices have grown faster; here they've risen about 4% a year since 1995. With slow growth, the house pays you back less.
A few rules work the other way:
- Buying costs a bit less at closing, since there's no statewide transfer tax.
- A general homestead tax break isn't available. Owners aged 65 and up may receive the $150,000 exemption.
- As a deposit, renters pay no more than 2 months' rent, unless rent tops $2,000.
Our take: in Anchorage, rent, and do it with a clear conscience. Make the down payment work for you, and if you put down roots, buy later.