Unaffordable Utah: Salt Lake County’s apartment market the tightest in history

Mar 9, 2022, 7:26 PM | Updated: Jun 19, 2022, 9:33 pm

SALT LAKE CITY – Renters in Salt Lake County are facing increased rental rates and low vacancy even as the county experiences an unprecedented apartment boom, according to a new report from the Kem C. Gardner Policy Institute at the University of Utah.

“Salt Lake County’s housing shortage and high home prices have led to the ‘tightest’ apartment market in the county’s history,” the report said. “In 2021, the vacancy rate dropped below 2%, and rental rates increased by double-digits.”

The county’s vacancy rate dropped to its lowest level in the 20-year history that records have been kept. Also, the rent increase of 10.1% from 2020 to 2021 is the second-highest increase on record.

“Builders and developers have responded to the imbalance of rental units and renters with a record number of developments under construction and proposed, with growth projected to stay strong in the coming years,” said a prepared statement from James Wood, the report’s author and Ivory-Boyer Senior Fellow at the institute.

The county’s apartment building boom picked up steam from 2011 to 2021 with 34,500 apartment units receiving building permits, triple the level from the preceding decade, the report said. And in 2021, apartment building permits hit a record high of nearly 6,700 units.

“For many households, the only housing option is renting,” Wood wrote in the research brief. “High housing prices have excluded them from homeownership.”

The report predicts that all the construction activity will result in more options and some relief for renters by increasing the county’s vacancy rate to 5.7% by 2024. However, the market will continue to favor landlords.

“Given the number of units under construction and proposed, the Salt Lake County rental inventory will increase by 18,167 units over the next three years,” the report said.

The report detailed how the flurry of apartment construction in Utah’s most populated county is concentrated in the capital city and downtown area.

“Downtown rents are about 30 to 40 percent higher than they are out in the suburban areas,” Wood said during the institute’s virtual Newsmaker Breakfast on Wednesday.

In 2021, the average rent was $1,301 in Salt Lake County, a significant increase from 2010 when the average rent was $720. The report said that rising rents are resulting in more renters being burdened by housing costs.

“In 2009, 20% of renter households in Salt Lake County (19,760 households) faced a housing cost burden (paying 30% or more of their income for housing and utilities),” the report said. “By 2018, the share had increased to 41%, nearly 60,000 renter households.”

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Unaffordable Utah: Salt Lake County’s apartment market the tightest in history