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SALT LAKE CITY — Finding an apartment to rent in the Salt Lake Valley is not as easy as it once was. Recent data show that residential rental properties are near capacity with vacancy rates at their lowest levels in three years.
Data compiled by the Salt Lake office of Apartment Realty Advisors indicated that the 2011 mid-year overall vacancy rate for apartment properties with at least 20 units was 5.3 percent with an average rental rate of $769 per unit.
The 2011 mid-year overall vacancy rate for apartment properties with at least 20 units is 5.3 percent with an average rental rate of $769 per unit.
Statistically, a 5 percent vacancy rate is considered full capacity. The mid-year vacancy rate was the lowest since the 5.2 percent rate of 2008. The rate had jumped to 8.6 percent in 2009 before declining to 6.2 percent last year.
"It's a tighter market than it once was," said Jed Millburn, managing principal with ARA. "It went from being a renter's market to now shifting over to a landlord's market."
He said the market began to move as the housing crisis pushed many former homeowners into apartments, increasing demand significantly.
"There are a lot more people looking for apartments because they can’t get a home loan or (decided) they don't want to buy a home because they consider it to be a risky investment," he said.
Finding a studio, one or two bedroom unit has become particularly challenging, according to ARA, with vacancy rates and rents ranging from 3.4 percent for $497 class B studios to 5.6 percent for $1,020 class A two bedroom/two bath units.
Millburn noted that the only segment that was above average in vacancy rates was the larger three bedroom units. He attributed that anomaly to the unseen affects of the "shadow" rental market that resulted from the housing bubble.
There are a lot more people looking for apartments because they can't get a home loan or (decided) they don't want to buy a home because they consider it to be a risky investment.
–Jed Millburn, ARA
"You've got more rentals in that shadow market that compete with the three bedroom units," he said. "(For example) foreclosed homes (and) townhomes that are being rented by investors."
The "shadow" market is comprised of individually owned single-family detached homes or townhouses or condominiums that are being rented outside of traditional apartment communities, Millburn explained.
He commented that a lot of people got into mortgages that they could no longer truly afford or "get away from" and have resorted to leasing the property.
"In an effort to try to give themselves greater flexibility, they just want to rent the property," he said.
Meanwhile, the rest of the rental market has experienced an upward trend as more families and individuals seek out any and all available rental opportunities.
Millburn said the valley has previously seen occupancy rates in the 97 percent range, which could occur again in the current market, but that would depend on a number of economic factors including employment. He also said that the housing and rental markets should experience increased stability over the next year or two as the economy begins to gain traction.
"(The market) should stay balanced as long as all the drivers keep working together like they are," Millburn said.
Email:jlee@ksl.com
