Overcoming Homeownership Challenges in Rural America: Lessons from Alaska


With its stunning landscape and rich culture, Alaska is known as the “The Last Frontier.” But the real “frontier” begins outside populated areas like Anchorage, Fairbanks, and Juneau where decent, safe, and energy-efficient housing becomes scarce.

The challenges are significant. High transportation costs due to the vast distances between villages, lack of roads, harsh temperatures, and a shortage of remote construction workers all contribute to high construction costs. According to Alaska’s Department of Transportation, about 82 percent of Alaska’s communities are not connected by roads. And according to the Alaska Housing Finance Corporation’s statewide assessment, Alaska’s overcrowding rate is twice the national average, with the greatest severity in rural areas, and nearly 20,000 Alaska homes would receive a one-star energy rating, indicating a need for replacement or deep retrofit.

Another challenge is the old, poorly designed existing housing stock. These homes are expensive to heat and have poor ventilation, resulting in widespread mold and residents with respiratory illnesses. And many homes in Alaska’s rural areas are not designed for harsh winter weather.

To answer this call for housing, the Federal Reserve Bank of San Francisco partnered with other Alaska-focused agencies to convene a forum to assess rural Alaska’s existing housing stock and discuss current and prospective initiatives to build more housing. From this forum comes the Alaska Rural Homeownership Resource Guide that captures what we learned about both the challenges facing and the solutions that show promise for rural Alaska. The guide discusses the stark need for decent housing stock in rural Alaska against the backdrop of many challenges. It was presented at a recent affordable housing meeting as a living document due to the need for more suggestions on how we can improve housing stock in rural Alaska.

Assuming there will never be sufficient grant funding to meet the growing housing needs, efforts are underway to reduce housing construction costs and increase energy efficiency, while identifying ways lenders can make safe and sound mortgages on the properties. One example highlighted in the guide comes from the Cold Climate Housing Research Center (CCHRC) and its construction innovations that provide significant energy savings to homeowners. Learnings include shipping trusses in one piece to save building time, which is crucial in areas with very narrow construction seasons, and substituting metal studs for wooden studs to lower freight expenses without sacrificing durability.

Still, getting a mortgage in rural Alaska can be tough. Given the relatively small population in remote parts of Alaska, appraisers have difficulty finding comparable properties. A village’s cash and subsistence economies can also make it difficult to qualify borrowers. These economic realities have caused housing construction costs to exceed market values, making it difficult for lenders to make loans on the properties without any subsidies. Government direct and guaranteed lending products with low or no down payment requirements are available to mitigate risks to lenders and provide an alternative to borrowers.

Innovative building techniques and creative financing are part of the solution to increasing housing stock and closing the funding gap in rural Alaska. Housing practitioners in other rural parts of the country could take note of Alaska’s innovations and help make homeownership available in areas previously thought to be impractical.

For more on what we learned by analyzing rural housing challenges and opportunities in Alaska, read the Alaska Rural Homeownership Resource Guide.

The views expressed here do not necessarily reflect the views of the management of the Federal Reserve Bank of San Francisco or of the Board of Governors of the Federal Reserve System.

About the Author
Craig Nolte is a regional manager for community development at the Federal Reserve Bank of San Francisco.  He leads community and economic development initiatives primarily in Washington, Idaho, Alaska, Hawaii, Guam, and the Pacific Islands.  His areas of expertise include economic revitalization, small businesses, affordable housing, health and community development, rural issues, and Native Communities. Learn more about Craig Nolte