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Housing Market: Why Rents Are High in Utah, West

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As housing prices in Utah and across the West continue to climb at staggering rates and more potential buyers are shut out of the market, rents are far from stagnant.

Rent prices aren’t rising at the same rate as house prices, but they’ve been on a steep upward trajectory, especially in the high-growth western states.

Compared to other major metropolitan areas across the country, the western states stand out with the largest increases in rent prices over the past two years, after the COVID-19 pandemic upended the U.S. housing market.

Led only by metros in Nevada and Idaho, Salt Lake City, Utah, ranks No. 3 in the nation among major metros that saw the largest price increases from 2019 to 2022, according to a new report from the real estate site Stessa.

Here’s how the top 10 major metropolitan areas broke out, according to analysis by Stessa, which used data from the U.S. Department of Housing and Urban Development and the Census Bureau to determine which areas saw the most rent price increases. most important:

The major American metros where rents have risen the most

No. 1: Sacramento-Roseville-Folsom, Calif. — Rent jumped 25.3%, up $369, from a median rental price of $1,461 in 2019 to $1,830 in 2022.

#2: Las Vegas-Henderson-Paradise, Nevada — Rent jumped 24.8%, up $295, from a median rental price of $1,190 in 2019 to $1,485 in 2022.

No. 3: Salt Lake City, Utah — Rent jumped 24.6%, up $291, from a median rental price of $1,184 in 2019 to $1,475 in 2022.

No. 4: Phoenix-Mesa-Chandler, Arizona — Rent jumped 22.3%, up $283, from a median rental price of $1,270 in 2019 to $1,553 in 2022.

No. 5: Jacksonville, Florida — Rent jumped 22%, up $255, from a median rental price of $1,159 in 2019 to $1,414 in 2022.

No. 6: Riverside-San Bernardino-Ontario, California — Rent jumped 21.6%, up $327, from a median rental price of $1,515 in 2019 to $1,842 in 2022.

#7: Orlando-Kissimmee-Stanford, Florida — Rent jumped 20.3%, up $281, from a median rental price of $1,382 in 2019 to $1,663 in 2022.

No. 8: Tampa-St. Petersburg-Clearwater, Florida — Rent jumped 20%, up $252, from a median rental price of $1,259 in 2019 to $1,511 in 2022.

No. 9: Portland-Vancouver-Hillsboro, Oregon-Washington — Rent jumped 19.4%, up $314, from a median rental price of $1,618 in 2019 to $1,932 in 2022.

No. 10: Fresno, Calif. — Rent jumped 19.3%, up $216, from a median rental price of $1,121 in 2019 to $1,337 in 2022.

Should You Rent Instead of Buy in Utah?

While rents are indeed rising in Beehive State, they haven’t risen as quickly as house prices in the past two years, notes Paul Smith, executive director of the Utah Apartment Association.

Home prices have risen 50% in two years, Smith said, while rental rates have only increased by half, or about 12% to 15% per year.

“Yes, rents have gone up, but that’s only natural since house prices have gone up twice as fast,” Smith said. Therefore, he argues that it is more affordable these days to rent than to buy.

Generally, buying a home is a better long-term investment. These days, as prices continue to climb, be aware that depending on your region, you will likely need to stay in your home longer – perhaps five years instead of three years from pre-pandemic – in order to get a return on your investment, according to a recent Wall Street Journal analysis.

In today’s market, however, buyers are wondering if they should wait for a potential price drop. Keep in mind that local housing experts aren’t predicting a “bubble” bursting or falling prices, noting that Utah’s housing supply was already driving Utah’s rapid population growth. the state even before the pandemic prompted many Americans to reevaluate their lives and look west for bigger homes at smaller prices.

As mortgage rates continue to rise, Utah’s severe housing shortage persists. Local experts have warned that the rates could help cool demand, but in fast-growing regions like Utah they can only slow price rises — not stop them — while pricing in even more potential buyers. .

Is greed the reason prices are rising?

As renters grow increasingly frustrated with house prices and rents, Smith said landlords hear — and often bear the brunt — of those frustrations. But he said it’s not greed that’s driving prices up.

“We barely pass on our expenses. We don’t make a lot of money,” Smith said of the tenants.

With inflation and labor shortages, Smith said owners are struggling to keep up with expenses. Rents, he said, are rising “just slightly more than the 11.2% increase in the producer price index”, while only 9% of rents are returned to landlords or investors. . The rest, 91%, goes to expenses.

“It’s not a very profitable business,” Smith said. “So when our expenses increase as dramatically as they have been, we either make less money or we have to find a way to pass on those expenses.”

Meanwhile, supply continues to fall hopelessly behind demand and landlords are inundated with potential tenants.

“Cities are still not approving enough housing. We just aren’t building enough housing of any kind,” he said. “There is simply more demand than we have supply. … And the consequence is an increase in housing prices.”

While tenants are frustrated, Smith said landlords are also going through tough times, while being “understaffed and overworked”.

“When people are frustrated by the increase in their rents, who do they blame? The owners,” Smith said. “So the owners have, you know, frustrated customers and they get a lot of bullshit. And they’re just trying to do their job to provide housing for people.

Despite the “perception” that it’s a good time to be a landlord, Smith said “it’s really a pretty tough time.” Labor shortages are making it increasingly difficult to hire employees, especially in maintenance and construction, and so property managers are working “more hours than ever”.

Meanwhile, prices for paint, appliances and building materials continue to rise.

“So it’s also a very difficult time for suppliers,” he said. “From angry customers yelling at us, from labor shortages to steep cost increases, the rental market is tough for operators too.”