SALT LAKE CITY — The average rental price in five major Utah counties has shot up a stunning 45% in just over a year and a half.
That's according to new report released Monday by the Utah-based property management software company Entrata. The report comes as the Beehive State, which has been the fastest-growing state in the country over the past 10 years, continues to grapple with a housing shortage that's fueling an affordable housing crisis and "insane" housing prices thanks in part to the COVID-19 pandemic, which threw the national housing market into upheaval.
"Similar to the larger real estate market in Utah, prices are increasing dramatically and putting a strain on folks looking for affordable housing," the report states.
Utah's rising rents continue thanks to the classic supply and demand phenomenon, said Chase Harrington, Entrata's president and chief operating officer. Utah, with its rapid growth, was already behind the demand for housing, and the COVID-19 pandemic only accelerated that demand as more Americans moved out of big cities and into more rural areas, especially in the West.
"We've had an influx of people coming to Utah," Harrington said. "The supply is low and the demand is high ... which ultimately is going to result in increased prices."
The report also includes data that highlights the impact the COVID-19 pandemic has had on renters and landlords, including month-to-month leasing becoming hugely more popular and dramatic increases in rent being paid later in the month.
The report, using data from more than 14,000 apartment units in Weber, Davis, Salt Lake, Utah and Washington counties, shows the county that saw the highest average rent increase is booming Utah County, which is among Utah's fastest-growing counties and home to Utah's tech corridor, Silicon Slopes.
Here's what the Entrata report found, looking at rent prices from just before the COVID-19 pandemic hit, January 2019, to July 2021. Utah County saw a dramatic 66% increase in average rent prices from pre-pandemic times. To the north, Davis County also saw a big jump, with a 59% increase. Washington County, home to southern Utah's rapidly growing city, St. George, saw a 43% jump. Utah's most populous county, Salt Lake County, saw a 23% increase.
Many factors could have influenced why Salt Lake County didn't see as dramatic of increases as its neighboring counties, Harrington said, but he speculated it could have been because as more people moved away from bigger cities after the COVID-19 shutdowns began, downtown areas lost their appeal compared to areas with more sprawl.
Utah County's growing rent prices are likely due to its "burgeoning" tech sector, Harrington said.
"We're seeing large companies and large businesses coming in and bringing jobs," Harrington said. From creating new jobs and increased opportunity to attracting people from outside the state to Utah for those jobs, Harrington said Silicon Slopes is "raising the market with that growth."
Why is month-to-month leasing so popular now?
The report also included some more telling figures that show the impact the pandemic and the federal eviction moratorium has had on leasing.
For example, from January 2019 to July 2021, the average number of month-to-month leases in those five major Utah counties have increased by a massive 330%, according to the report. Here's a breakdown by county: Utah County saw a mind-boggling increase of 633% to its number of month-to-month leases. Salt Lake County saw a 553% increase. Davis County saw a 266% increase. Both Washington and Weber counties saw a 100% increase.
Why are more renters and landlords opting for month-to-month leases?
"The pandemic spurred much of this growth, and Entrata is seeing more and more renters putting the flexibility of short-term leases above other perks and amenities," the report states.
Millennials, the generation that's increasingly becoming the dominant renter, Harrington said, may be a big driver for those increasing month-to-month leases. The younger renters want flexibility for the next chapter in their lives, he said. Plus, add in the uncertainty of the pandemic, and that's likely what's driven the trend, he said.
"The pandemic is what set this off," Harrington said. "They didn't know what was going to happen, and they didn't want to be in a long-term lease."
Harrington said the increase in month-to-month leases appears to have more to do with demand from renters rather than from landlords. Asked whether the federal eviction moratorium could have spurred more landlords to favor month-to-month leases rather than long-term contracts (since the moratorium didn't stop landlords from opting not to renew expired leases), Harrington said landlords generally favor more stable, long-term contracts.
"Really they're empowering the residents, allowing the residents to make that choice, and we're seeing people opt in to the month-to-month," he said. "Now, granted there's pricing strategies around that where, you know, your month-to-month may be more expensive."
Harrington said the popularity of the month-to-month lease is likely to remain as the world continues to grapple with the pandemic.
"Because what if it all shuts down again in a year and I want to be able to pick up and leave?" Harrington said. "Now, it's like, well who knows what could happen in the world ... so it kind of changes your whole view on things."
A 357% increase in rents being paid later
The report also showed indications of renters struggling to pay rent on time — or at least dropping rent lower on their budget's priority list.
The number of residents paying rent during the last week of the month saw a 357% increase from January 2019 to July 2021, according to the report.
"This highlights that many residents may need to pay rent later in the month to make rental payments, as well as property managers generously waiving late fees during the pandemic," the Entrata report states. "Similar to (the) month-to-month leases, this was spurred on by the pandemic and has continued into this summer."
To Harrington, the figure shows more renters are "having to try to figure out how to live paycheck to paycheck."
Now it's like, who knows what could happen in the world? It kind of changes your whole view on things.
–Chase Harrington, Entrata's president
That may change now that the federal eviction moratorium has ended.
"With the eviction moratorium, unfortunately, rent doesn't become the priority because I can't be penalized or evicted," Harrington said, so maybe that's why it "fell to the bottom" of renter's budget priorities. "So it will be interesting to watch this trend to see if it reverses back with the lifting of the eviction moratorium."
Interestingly, the amount of rent paid during the last week of the month has decreased by only 10% between 2020 and 2021, "showing the long-lasting effects of the COVID-19 (pandemic) on the rental market and economy," the report states.
Here's a breakdown by county of the percent increase in those who paid rent during the last week of the month: Salt Lake County saw the biggest jump, with a 546% increase. Utah County saw a 442% increase. Weber County saw a 310% increase. Washington County saw a 77% increase. Davis County saw a 21% increase.
Overall, the Entrata report showed the COVID-19 pandemic has spurred many of these "major changes" in Utah's housing market.
"We're still watching to see what the long-term effects are," Harrington said. As much as Utahns might hope they have made it through the pandemic and its effects on the economy, "I think we're realizing we're not."
The impact on Utah's rental market is likely to "continue to change, and we're continuing to watch," he said, "but I do think things will fundamentally shift due to it."