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Kodiak sees decrease in cost of living

It’s high. But it’s not that bad.

It depends on which metric you look at. But generally, Kodiak’s cost of living has been steadily decreasing over the past five years.

According to statistics released this month by the Alaska Department of Labor and Workforce Development, the state has the sixth highest cost of living in 2020, behind Hawaii, New York, California, Oregon, and Massachusetts.

This ranking is based on various indexes collected by the Missouri Economic Research and Information Center, which scored Alaska at 128.4, meaning that Alaska’s cost of living is 28% higher than the national average. Their indexes, though, are based on information about Alaska’s major metropolitan areas: Anchorage, Fairbanks, and Juneau.

The US Department of Defense produces its own cost-of-living index called the Outside Continental United States Overseas for all of its overseas locations including Alaska and Hawaii. The state believes the military cost of living index is a more dependable measure because it takes more geographic regions into account and update their data more frequently.

According to the military, the average cost-of-living index in Alaska in May 2020 was about 138, or 38% higher than the US average cost of living.

Where does Kodiak fall on that list? Surprisingly, near the lowest end, at 128, its lowest since at least 2015.

That’s because the military’s cost of living index doesn’t take housing into account, since the military deals with housing through a separate allowance program.

As of March 2020, the average house price in Kodiak is about $325,000, which is more expensive than our Kenai Peninsula neighbors to the north, but cheaper than the state average of $345,000 and Anchorage’s average of $400,000.

Typically, places with higher home prices tend to have higher rents, but that’s not the case in Kodiak, which has the second highest median rent in the state, behind Sitka, but has below-average house prices. Kodiak’s median rent in 2020 is $1264, a significant drop from 2019’s average of $1366, and $1424 in 2018.

That’s right: Kodiak’s average rent has decreased by nearly $200/month since its peak in 2016.

Looking at affordability metrics can help us understand the difference. Housing affordability is defined as the number of paychecks needed to afford a house. For instance, statewide, the average Alaskan uses 1.2 paychecks to afford their home. In Kodiak, that number is nearly 1 ½ paychecks, one of the highest in the state, but has decreased slightly over the past few years.

Another important metric is the average cost of heating fuel and gasoline. Compared to the rest of the state, the city of Kodiak is one of the cheapest places in Alaska: 6th cheapest for gasoline, 10th cheapest for heating fuel.

You can read more about cost of living data in this month’s Alaska Economic Trends, published by the Alaska Department of Labor.