Also called Utah’s housing market cools down, the rental market continues to heat up. A new report from the Kem C. Gardner Policy Institute looks at the changes in the Wasatch Front housing market as more residents struggle to rent due to unachievable housing prices.
Dejan Escik, a senior research fellow who focuses on housing with Policy Institute Kem C. Gardner, said 76% of Utahns are currently assessed out of home ownership. As a result, more residents are looking for rental apartments.
“When we were talking about the housing shortage and there just wasn’t any housing to buy,” he said, “rents started to come under more and more pressure because the prices of people who can’t afford them are being pushed out of the housing market, so they are forced to hire them.”
There are just over 24,000 housing units currently under construction on the Wasatch Front. Salt Lake County is at the top. Of the approximately 14,000 units under construction in the county, 54% are in Salt Lake City.
Downtown Salt Lake City has nearly 6,000 units under construction, all of which will launch around the same time, Escik said. The majority of units being built in the Salt Lake City area will be one bedroom apartments.
“This will help stabilize downtown rents. Might even lower it because vacancy rates will increase because so many new products will come online,” Escik said.
But on the west side of Salt Lake City, it’s a different story. This part of the city has seen the largest increase in rents. Over the course of a year, rents rose 42% in some parts of West Valley City.
According to the report, Salt Lake County landlords have increased rents by an average of $321 over the past two years. On the Wasatch front, rents grew 10.5% annually between 2020 and 2022. The reason for the increase, Escik said, is that there is not enough rental stock to meet demand.
With rental prices becoming increasingly difficult to afford, it’s unclear whether prices will come down despite more inventory.
Even with 245,000 units under construction, more housing is needed to meet demand. Escik said around 31,000 units are needed to meet residents’ housing needs. However, this figure assumes little to no population growth.
And while housing construction might be on the rise now, that could change quickly if interest rates rise, Escik said. Housing is expensive to build, especially large complexes, and without a capital investment or a surefire way to turn a profit, there is less enthusiasm to build.
“I think that due to market conditions, there will unfortunately be fewer homes being built in the next two years,” he said.