Housing Costs: Salt Lake County Facing Tightest Rental Market in History

As house prices reach new heights and further Utahns are being discounted of owning a home, Utah’s most populous county is experiencing its tightest rental market in history.

That’s despite a record number of apartment unit building permits, for 6,672 units, being issued in Salt Lake County in 2021, according to a report published by the Kem C. Gardner Policy Institute at the University of Utah in March.

“Salt Lake County’s housing shortage and high home prices have led to the ‘tightest’ apartment market in county history,” with a vacancy rate that, for the first time, fell below 2% and rental rates increased by double digitswrote the report’s author, James Wood, a senior fellow at the institute’s Ivory-Boyer.

That small vacancy rate is driving demand for rental units to an all-time high, according to the Utah Apartment Association.

Even though developers have built a record number of rental units, a staggering 98% of Salt Lake County’s 148,500 rental units were occupied in 2021, with only a scant 3,000 vacancies, according to the report.

In 2022, that trend continues with no end in sight.

“People can’t find places to rent,” Paul Smith, executive director of the Utah Apartment Association, said in a statement Thursday. “In some cases, tenants call to leave and then ask their rental operators if they can extend their stay because they can’t find a new place to live.”

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A “rent now” sign for a new apartment building in the Sugar House neighborhood of Salt Lake City is displayed on Friday, April 1, 2022.

Mengshin Lin, Deseret News

High demand has put enormous pressure on the Salt Lake County rental market, and landlords have responded by raising rental rates.

Statewide, the median rent in Utah for a two-bedroom unit was $1,710 in February 2021, according to Rent.com’s rental report released last month. That represents an increase of more than 44% over a median rent of $1,185 in 2020.

In Utah’s capital, Salt Lake City, rental prices are even higher. The median rent for a two-bedroom unit there was $2,157 in February 2021, an increase of more than 43% year over year, according to rent.com.

Today’s market makes homeownership increasingly unattainable. Many renters have put their dreams of buying a home on hold due to rising prices, bidding wars and rising interest rates on mortgages.

“For many households, the only housing option is to rent,” Wood wrote in the Kem C. Gardner Institute report. “High house prices have locked them out of home ownership.”

Although rental rates have risen substantially since 2021, from $720 in 2010 to $1,310 in 2021, Wood noted that they have risen at a slower rate than home prices. Since 2010, the annual increase in rental rates has been 5.5% compared to a 7.9% annual increase for the median sales price of a condo or townhome, and an 8.5% increase % for single-family homes.

But simply finding a rental unit can be a challenge, Smith said.

“There are multiple applicants for each available unit,” he said. “Clearly, demand is outstripping supply.”

From the standpoint of landlords and rental operators, Smith noted there are challenges for them as well.

“Every time there is an opening, we are inundated with calls, texts and emails. It’s hard to answer all of them,” she said.

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Apartment buildings under construction at 500 South and 600 West in Salt Lake City are shown on Friday, April 1, 2022.

Mengshin Lin, Deseret News

Rising rental rates mean renters are increasingly burdened by housing costs.

About 41% of renters in Salt Lake County spend more than 30% of their income on housing and utilities, and nearly 19% of all renters spend more than 50% of their income.

That’s 27,500 households in Salt Lake County, Wood wrote, that are spending more than half of their income on housing costs and are severely burdened by housing costs.

Latest Utah Rental Rates Arrive Same Week Researchers at the Federal Reserve Bank of Dallas have warned that a housing bubble is brewing in the US. — but they say it’s not the same bubble as the one that preceded the 2008 market crash and global financial crisis triggered by a glut of subprime and mortgage lending.

Especially in high-demand states like Utah, where inventory lags far behind demand, housing experts say it’s hard to imagine a bubble bursting in the foreseeable future. But they also warned that the housing shortage in Utah is creating “severe imbalance” that is driving up prices and rapidly compounding the state’s housing affordability crisis.

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