Sitka’s population dropped by 71 people between 2020 and 2021– a small fraction of that number was due to a ‘natural decrease’ meaning more people died than were born in 2021(Data provided by the McKinley Research Group)

Sitka’s community has lost population for the fifth year in a row. Consultants recently (4-21-22) delivered an annual overview of Sitka’s economic trends in 2021. Katie Berry is an economist with the McKinley Research Group (formerly the McDowell Group), a Alaska research and consulting firm. She said Sitka also saw a “natural decrease” in its population last year– with deaths outnumbering births, slightly.

“This is somewhat unusual. This is not something that we see a lot of economies experiencing every year,” said Berry. “Again, it was a very small net negative number.”

Berry said it’s unclear what’s causing the “natural decrease” but it could be, in part, because Sitka’s population is aging.

“So in 2012, Sitka’s median age was 39 years old,” Berry said. “By 2021, it was 41. That doesn’t sound like a really big change. But in these demographic numbers, that’s quite a shift up in the median age of a population.”

She said that the aging population will have an impact on a number of things, including Sitka’s labor force and the number of non-resident workers that are needed.

Every year the McKinley Group publishes a report for the Southeast Economic Development Association examining Sitka’s economic trends. During her presentation, Berry discussed changes in Sitka’s population, labor force and employment, and industries.

Berry also discussed housing trends in Sitka- and confirmed what many suspect- the market remains tight, affected by construction costs and the highest inflation increase since the 1980s. Berry said the number of homes that sold last year in Sitka was a bit lower than preceding years– only 32 homes sold last year, compared to an average of 40 for the previous four years. 

“But here’s where the real story is, and where the real story of how tight your housing market is…the number of days on market for a home that sold in Sitka, and that’s really gone down over the last five years,” Berry said. “Things are changing hands faster.”

On average, homes spent 91 days on the real estate market compared to 220 days in 2017. A question was raised from the public about how many homes sold were as primary residences verses second homes or investment properties. How many were bought for cash rather than financed? Berry replied she wished she could get her hands on those numbers but that information is considered proprietary.

“Data certainly exists on if these homes changing hands are primary residences in cash. If I could only get the banks to give me that data, what data I would have, I would love to see it,” Berry said. “It exists. It’s not made public. “

One thing that Berry said could help take some of the pressure off of Sitka’s housing market– an uptick in new construction. The community has seen a big jump in multifamily housing construction. In 2020 and 2021 multi-family housing overtook single family homes as the biggest chunk of new housing units added to Sitka– making for the biggest annual increase in new housing  units in the last decade. The jump in 2021 was due in large part to the construction of the 10 unit Sealing Cove apartment complex on Alice Loop.

Berry said it’s unclear whether that trend will continue in 2022, or what its impact could be. 

“It remains to be seen how this trajectory might change this year, again, as construction materials are harder to find, more expensive,” she said. “And it remains to be seen if adding these units is going to ease that pressure on the housing market at all.”

When it comes to Sitka’s job market, Berry said it seems to be on the rebound. While wage and salary employment remains about 6% below 2019 levels, Berry said through the first nine months of 2021, Sitka added 400 new jobs. And while the seafood industry was hit hard by COVID, preliminary data shows 2021 was a better year, and the community also saw a big increase in seafood processing employment. And then there’s tourism- the record-breaking 450,000 cruise passengers Sitka is expecting this summer comes with big economic implications and unknowns.

View Berry’s full presentation here. The full report will be published in mid-May.