‘Landlord’s market’

On Tuesday morning last week, Tyson Cox leaned over the railing of an apartment building in Soldotna, calling down to the bottom level.

“Are you here for the 11 o’clock showing?” he asked Hailey Scott, who had her 4-year-old daughter, Ryssa Curtiss, in tow.

She said yes.

Cox owns the multiunit building — one of several properties belonging to him on the central Kenai Peninsula — and spent the day showing off a newly vacant apartment.

Scott was there to learn more about a furnished one-bedroom apartment going for $845 per month, not including electricity, which Cox said can run for an additional $50 to $75 per month.

“I’m trying to get out of my apartment,” Scott said. “My apartment … takes Alaska Housing (vouchers) and everything so I could just stay there, but I need a new start.”

Scott was one of about five people to attend showings Tuesday, but Cox estimates that he’s received at least 20 applications from people looking to rent the unit.

Cox told Scott that his policy is to have a maximum of two people per bedroom, with parents and children in different rooms. He was hosting showings at one of his other buildings for a two-bedroom unit, which he said she should consider.

As a steady stream of potential tenants flowed through the unit throughout the day, Cox fielded questions about parking availability and laundry facilities. The kind of unit being shown was one Cox said has been popular throughout the COVID-19 pandemic — one-bedrooms are ideal for people looking to live by themselves.

Cox, who also represents Soldotna on the Kenai Peninsula Borough Assembly, and his wife began their rental business in 2006. Over the last 15 years, the price of two-bedroom units in the area have jumped by 27%. The price jumped over the last year by 10.5%. Cox said he hasn’t had trouble finding tenants willing to pay the higher rates, but only “because there’s nothing available.”

“It is a landlord’s market,” Cox said. “Being a landlord’s market, tenants need to look at this like they look at a job. … You need to convince me that you’re the right person to rent to.”

About 7.3% of rental units in the Kenai Peninsula Borough were vacant during the first week of March 2021, when units were surveyed by the Alaska Department of Labor and Workforce Development. That’s compared to 2020, when 10.6% of the borough’s rental units were vacant.

An area’s vacancy rate can be tied to how difficult it is to find a rental unit there, according to the department’s August 2020 issue of Alaska Economic Trends magazine.

That article, written by Rob Kreiger, found Alaska’s statewide vacancy rate to be around 9.2% — a decade high. It dropped to 5.9% in 2021.

Even so, both surveys found that the Kenai Peninsula Borough had among the most affordable rental costs in the state of Alaska, along with Wrangell/Petersburg, both years. The department uses a rental affordability index to gauge how many average wage earners it would take to afford an area’s typical rent. A value of 1.0, Kreiger wrote, means one person’s paycheck is enough.

Second-lowest only to Anchorage, the Kenai Peninsula’s rental affordability index was 0.81 in 2020. The survey total’s rate was 0.82, while Sitka had the highest rate at 1.05.

Where Cox said he’s seeing real demand is for what he called “family-oriented” units, such as those that have two or three bedrooms. He said he partially attributes the uptick to the limited availability of homes on the market on the Kenai Peninsula. The limited housing supply, he says, has a trickle-down effect on the type of people who come to him seeking housing.

It can also affect prices. “Demand for apartment and single-family homes continues to outpace supply, which ultimately drives competition and hurts housing affordability,” National Apartment Association President and CEO Bob Pinnegar was quoted as saying last December in Forbes.

Marti Pepper is an associate broker with Redoubt Keller Williams Realty Alaska Group who has been selling real estate on the Kenai Peninsula since 1998. She said new listings are selling faster than ever, some within a few hours of going live.

“I’ve been busier in 2020 and 2021 … than I’ve ever been,” Pepper said. “By a lot.”

Pepper said Friday that the volume of properties she sold increased by 40% in 2020, which she said is significant, especially considering that there isn’t a ton of new home building on the peninsula. That’s mostly because there are more builders in places like Anchorage, which also has more subdivisions, she said.

Average sales price for homes on the central peninsula — which she said includes Kenai, Soldotna, Sterling, Kasilof and Funny River — in 2021 was $308,816. That’s compared to $269,294 in 2020 and $254,824 in 2019. The number of homes sold on the central peninsula has also jumped, from 224 in 2019, to 278 in 2020, to 508 in 2021.

As the cost of homes goes up and rental supply becomes limited, housing challenges grow for peninsula residents.

According to the Alaska Department of Labor and Workforce Development, peninsula renters paid, on average, around $930 for rent, or about $1,100 including utilities. The borough’s median rent payment was exactly $900, or just over $1,000 with utilities. How much someone spends monthly, however, doesn’t always just depend on how much rent costs.

Analysis by the National Low Income Housing Coalition, a group that advocates for affordable housing, found that, in 2021, the fair market rent for a two-bedroom apartment in Alaska was $1,235.

For someone to afford that level of rent and utilities without paying more than 30% of their income, their household must earn $4,115 monthly, or about $50,000 annually. That equates to about $23.74 per hour, though Alaska’s minimum wage is $10.34 per hour.

At $10.34 per hour, the group found, someone has to work 71 hours per week to afford a modest one-bedroom rental home at fair market rent. It also estimates that of the roughly 250,000 households in Alaska, about 90,000 are renters.

“I think this really puts into perspective the housing shortage that we have here on the peninsula, as well as the discrepancy in funds available to get what little housing is available,” said Jodi Stuart during a Feb. 23 meeting of the Soldotna City Council.

Stuart is media chairperson for Project Homeless Connect, an annual one-day homelessness outreach event through which data about the peninsula’s homeless population are collected.

She also explained that the seasonality of some peninsula housing exacerbates what is already a tight market for people trying to find homes. So too do short-term rentals, such as Airbnb and Vrbo.

“For the individuals that are using seasonal housing, it’s a frustration, because they would love to be able to find something that is not seasonal,” Stuart said. “Homer is really bad, Seward is awful. Here locally, we have people that are buying full homes to make a profit using Vrbo in order to rent it out during the summer.”

A quick search for “Soldotna” on the popular vacation rental site Airbnb returns nearly 200 accommodations — 167 of which are for an entire place, such as a house or cabin.

Adam Garry also turned out for Cox’s Tuesday showing. The place where he’s currently staying is going to be turned into a first-time Airbnb this summer, and his landlord needs him out soon. He’ll have the opportunity to move back into the apartment in September.

Beyond his current apartment search, Garry has also lived seasonally in Seward, where he said he was provided housing in the form of a two-person bunkhouse for which he paid $180 a month.

“People either just want to rent for the summertime or they just want to rent for the wintertime, or whatever reasons they have,” Garry said. “Rent goes up, you know, like, at certain times of the year.”

Still, there are ways landlords can proactively make their units more accessible to more people.

Cox participates in the Alaska Housing Finance Corporation’s Housing Choice Voucher Program, which he said is similar to the U.S. Department of Housing and Urban Development’s Section 8 housing program.

According to AHFC, the voucher program is meant to assist eligible low-income Alaskans in renting privately owned units. After being screened and accepted into the program by the corporation, applicants search for housing. If a landlord agrees to accept the applicant’s vouchers, participants pay about 30% of their adjusted gross income to the landlord for rent. The rest is paid by AHFC.

Not all landlords participate in the program, however. Though AHFC estimates around 2,000 rental property owners participate statewide, Cox pointed out that some landlords charge rent that is too high to be eligible for the program. Others may be turned off by bad experiences they’ve heard of others having with tenants, he said.

“I think across the nation, Section 8 tenants have gotten a bad name,” Cox said. “I always recommend to any landlord: Consider it. I say consider it because all they’re doing at (AHFC) is determining whether they need financial help. It is still my job to vet the person and determine whether they would be a good tenant in our building.”

Moving forward, Cox said he’d like to see the state and AHFC work more closely together to help set interest rates and emphasized that the solution isn’t always just for a government to construct a new building. Instead, Cox said he’d be interested in exploring what tax incentives could be given to help encourage nongovernmental investments in more housing.

Specifically, he said he’d like to see more buildings with between two and four three-bedroom units.

“With those kinds of buildings, you could have a more permanent three-bedroom living situation,” Cox said.

To prospective renters on the central peninsula, Cox said to remember that you’re probably not going to get the first apartment that you apply for and to submit applications as early as possible. A lack of evictions, organized information and a complete picture of your situation are also important, he said.

“You need to convince me that you’re the right person to rent to,” Cox said. “ … You want to put your best foot forward.”

Reach reporter Ashlyn O’Hara at ashlyn.ohara@peninsulaclarion.com.