Alaska is not a cheap state. The cost of living in Alaska is 27% above the national average. Thankfully, the average income in Alaska is just above $74,000 and houses are not particularly expensive. However, this does not make Alaska cheap because the high salaries do not compensate for the high cost of living.
Now, this is when you take into account the whole state of Alaska. It is also interesting to only focus on Anchorage. Indeed, 40% of the Alaskan population lives in Anchorage.
This means that if you are living in Alaska (or want to move to Alaska), you are probably either living or working in Anchorage.
In Anchorage, the cost of living is a bit lower: the city is on the coast, so it’s easier to transport goods. Also, there is more infrastructure in Anchorage, meaning that you will easily find supermarkets in the area.
Your Walmart in Anchorage won’t be more expensive than your Walmart in California: you can find a gallon of milk for $4 in Alaska.
It’s also interesting to note that the average income in Anchorage is even higher than in other places in Alaska. The average income in Anchorage is around $81,000. Compared to the national average of $62,000, this is quite high.
Why is Alaska so expensive?
Alaska is remote, which increases the cost of transportation of the goods, and making Alaska an expensive state. The cost of living in Alaska is 27% above the national average. However, it used to be 41% higher in the past, meaning that as time goes on, Alaska is getting more affordable.
Here is a list of the restaurant and grocery prices in Anchorage so you can see how expensive Alaska is.
Restaurant prices in Alaska
Meal, Inexpensive Restaurant
Meal for 2 People, Mid-range Restaurant, Three-course
McMeal at McDonald’s (or Equivalent Combo Meal)
Domestic Beer (0.5 liter draught)
Imported Beer (0.33 liter bottle)
Coke/Pepsi (0.33 liter bottle)
Water (0.33 liter bottle)
Grocery prices in Alaska
Milk (regular), (1 liter)
Loaf of Fresh White Bread (500g)
Rice (white), (1kg)
Eggs (regular) (12)
Local Cheese (1kg)
Chicken Fillets (1kg)
Beef Round (1kg) (or Equivalent Back Leg Red Meat)
Lettuce (1 head)
Water (1.5 liter bottle)
Bottle of Wine (Mid-Range)
Domestic Beer (0.5 liter bottle)
Imported Beer (0.33 liter bottle)
Cigarettes 20 Pack (Marlboro)
Credits to numbeo.com for this table showing the restaurant and grocery prices in Anchorage, Alaska
Why are houses so cheap in Alaska?
Compared to big cities in the other states of the United States, houses in Alaska are very cheap thanks to the vast amount of buildable land. The average cost for a house in Alaska is $372,000 and the average rent for a 1 bedroom apartment is $900.
It is interesting to note that the cost of housing in Alaska is consistent. Home prices don’t vary much with time. You can find a 2 bedroom apartment for around $1,100.
In the future, the cost of housing in Alaska could increase because the number of new houses built over the years is lowering. There are not a lot of new houses built in Anchorage.
The new houses are mostly built in the Mat-Su valley (Matanuska-Susitna Valley). This could be a place to find great deals in the future as this place is not very far from Anchorage.
To visit the inside of the Alaskan land, it’s even better because the valley is located North of Anchorage. So if you want to visit Denali National Park, for example, it will be easier if you are in the Mat-Su valley.
Cheapest places in Alaska
The cheapest places to live in Alaska are the towns closest to Anchorage which are connected to the road system. Indeed, almost all the goods transit through Anchorage, meaning that their price will increase the further you are from Anchorage.
Places like Wasilla or Palmer are cheap because they are both connected to the road system and close to Anchorage.
When you look for the cheapest places to buy houses in Alaska, you can easily find great deals in the small villages of Alaska. However, this is not a good idea! Indeed, small villages are usually not connected to the road system.
So yes, you will pay less for a house in King Cove, for example. But the overall cost of living will explode because of the transportation, energy, and grocery expenses. Please watch the following video about the cheapest places to live in Alaska to understand exactly what I mean here.
How cheap is Anchorage, Alaska?
Anchorage is a cheap city in Alaska because you can find groceries in supermarkets at relatively low prices and because the salaries are high (the average income in Anchorage is $81,000). Compared to Juneau, the second biggest city in Alaska, the rent prices are 17% lower in Anchorage.
This is the advantage of living in the biggest city in Alaska: the cost of transport of goods is lower because most goods transit through Anchorage when they arrive in Alaska. Also, there is a lot of work in the city since it is the most active one in the state.
Is Anchorage, Alaska a good place to live?
If you want to live in Alaska, Anchorage is a good place to live. Now, as mentioned earlier, there are not a lot of houses built in Anchorage anymore, meaning that the price of houses may increase in the near future.
Thankfully, lots of houses are now built in the Mat-Su valley, which is more affordable. Cities like Wasilla or Palmer could be great places to buy houses at the moment.
This would able you to live in the Mat-Su valley and work in Anchorage, as it’s only a 45 minutes car transit between the two. You could also benefit from the low costs of Anchorage supermarkets to buy goods and from the low cost of housing in the cities outside Anchorage.
Is Anchorage, Alaska cheap?
The best way to see if Anchorage is worth it is to compare it with other cities. If you compare Anchorage with Kansas City, Missouri (which is a very cheap city by the way), you will probably be surprised by how expensive it is to live in Alaska.
Indeed, consumer prices in Anchorage, AK are 36.81% higher than in Kansas City, MO (without rent). Rent prices in Anchorage, AK are 14.67% higher than in Kansas City, MO. Restaurant prices in Anchorage, AK are 8.98% higher than in Kansas City, MO. Groceries prices in Anchorage, AK are 56.84% higher than in Kansas City, MO.
Overall, this makes the local purchasing power in Anchorage, AK is 13.76% lower than in Kansas City, MO (all this data comes from the cost of living comparison tool of numbeo.com).
However, when you compare Anchorage with a bigger city like Los Angeles for example, you will find that the local purchasing power in Anchorage, AK is 8.59% higher than in Los Angeles, CA.
Now you have all the information to decide whether Alaska is made for you on the financial side. I hope this article was helpful and you found everything you wanted. If that’s not the case, please write a comment or send me an e-mail.