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SALT LAKE CITY — Utah has some of the most overvalued housing markets in the country. What about rent?
In the past year, rent in some U.S. cities shot up a staggering 35%, according to a recent report from Redfin, fueled in part by rising housing prices that forced potential homebuyers into the rental market, jacking up demand and leading to higher rates.
While Utah often leads the U.S. in growth and rising housing prices — Ogden, Provo and Salt Lake City recently made the top 10 list of the country's most overvalued markets — last year the Beehive State saw an increase in rent that was aligned with the national average.
Of the 10 metro areas in the U.S. that saw the highest year-over-year rise in rent, most are New York City-adjacent or in Florida, according to the Redfin report. They were:
- Austin, Texas, which saw a 40% year-over increase in rent
- Nassau County, New York, at 35%
- New York City, at 35%
- Newark, New Jersey at 35%
- New Brunswick, New Jersey at 35%
- Miami, at 34%
- West Palm Beach, Florida, at 34%
- Fort Lauderdale, Florida, at 34%
- Jacksonville, Florida, at 31%
- Portland, Oregon, at 29%
Across the country, rent increased by about 14% in 2021, according to Redfin. Most renters in the U.S. are paying $1,877 each month on average.
Housing prices in Utah are crazy — what about rent?
In Utah, most statewide figures point to a 10% to 15% increase in rent during 2021, with the Salt Lake City metro area seeing the largest bump. Consider this data from CoStar: The Salt Lake City metro area saw a 17.7% year-over-year increase in rent Provo saw a 16.2% increase St. George saw a 10.5% increase
Just because these increases are aligned with the national average doesn't mean the Beehive State isn't seeing an unprecedented surge in rent. According to Apartment List, that nationwide increase during 2021 was record-setting.
Experts say there are a few reasons for the spike — but a nationwide demand that exceeds the supply of rental units is a leading factor.
The demand in Utah is fueled by hot housing markets, which in turn force many prospective buyers to rent instead. Roughly 34% of Utahns are renting.
"It's never been that high," said Paul Smith, executive director of the Utah Apartment Association.
Smith said the rise in rent can also be attributed to a 2020 lull.
"Most places during that pandemic year didn't raise rent much at all. So it makes sense that the next year would be record-breaking," he said.
Nationwide, supply chain issues and lumber costs make keeping up with the rental demand difficult. Apartment complexes are also struggling to find workers amid the labor shortage.
Why rent in Utah didn't increase like other U.S. cities
Smith says one of the reasons Utah didn't see a spike in rent despite seeing a rise in housing prices is because of the type of rentals that are common in the state. Of the roughly 300,000 rental units in Utah, over 100,000 are single-family homes, Smith said. Another 50,000 are duplexes or triplexes.
That leaves about 150,000 rentals that are in buildings or complexes that have multiple units, which are typically run by professionals, rather than what Smith and others call "mom and pop landlords."
"They can bring up rent slower than the professionals, where it's their livelihood and they have investors and stockholders and they've got to push prices," he said.
Utah is also growing, adding to its rental inventory which helps meet the demand. Other communities, like those in Miami or New York City, lack the physical space.
"There's still more demand than there is supply. But we aren't standing still. We're adding inventory," Smith said.
Housing experts, including Smith, don't expect rent to drop anytime soon. One-year or six-month leases ensure that rates won't go down quickly. And inflation has rendered historical increases in rent — hovering around 3% to 7% annually — insufficient.
"Yes, rent increases are going to continue," Smith said. "They're not going to be as big as this year, but just to keep up with inflation now they have to be at least 7% or 8%. A 7% or 8% increase is now flat."