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That's despite a record number of apartment unit building permits — for 6,672 units — that were issued in Salt Lake County in 2021, according to a report released by the University of Utah's Kem C. Gardner Policy Institute in March.
"Salt Lake County's housing shortage and high home prices have led to the 'tightest' apartment market in the county's history," with a vacancy rate that, for the first time, dropped below 2% and rental rates jumping up by double-digits, wrote the report's author, James Wood, the institute's Ivory-Boyer senior fellow.
That slim vacancy rate is driving demand for rental units to an all-time high, according to the Utah Apartment Association.
Even though developers have built a record number of rental units, a staggering 98% of Salt Lake County's 148,500 rental units were occupied in 2021, with only a slim 3,000 vacant, according to the report.
In 2022, that trend continues with no end in sight.
"People cannot find places to rent," Paul Smith, executive director of the Utah Apartment Association, said in a statement issued Thursday. "In some cases, renters are giving notice to leave and then asking their rental operators if they can extend their stay because they can't find a new place to live."
High demand has put immense pressure on Salt Lake County's rental market, and landlords have responded by pushing rental rates skyward.
Statewide, the average rent in Utah for a two-bedroom unit was $1,710 in February 2021, according to Rent.com's rent report released last month. That's up over 44% from an average rent of $1,185 in 2020.
In Utah's capital, Salt Lake City, rental prices are even higher. The average rent for a two-bedroom unit there was $2,157 in February 2021, up over 43% year over year, according to Rent.com.
Today's market is making homeownership increasingly unreachable. Many renters have put their home buying dreams on pause due to increasing price hikes, bidding wars and rising mortgage interest rates.
"For many households, the only housing option is renting," Wood wrote in the Kem C. Gardner Institute's report. "High housing prices have excluded them from homeownership."
Although rental rates have increased substantially since 2021 — up from $720 in 2010 to $1,310 in 2021 — Wood noted they've increased at a slower rate than housing prices. Since 2010, the annual increase for rental rates has been 5.5% compared to a 7.9% yearly increase for the median sales price of a condo or a town house, and an 8.5% increase for single-family homes.
But just finding a rental unit can be challenging, Smith said.
"There are multiple applicants for every available unit," he said. "Clearly, demand is exceeding supply."
From the landlord and rental operators' side, Smith noted there are challenges for them, too.
"Any time there is a vacancy, we are inundated with calls, texts and emails. It's hard to respond to all of them," he said.
The increased rental rates mean renters are increasingly burdened by housing costs.
About 41% of renters in Salt Lake County are spending more than 30% of their income on housing and utilities, and nearly 19% of all renters spend more than 50% of their income.
That's 27,500 households in Salt Lake County, Wood wrote, that are spending more than half of their income on housing costs and are severely burdened by housing costs.
Utah's latest rental rates come the same week researchers from the Federal Reserve Bank of Dallas warned a U.S. housing bubble is brewing — but they say it's not the same bubble as the one that preceded the 2008 market crash and global financial crisis caused by an overstock of housing and subprime mortgage lending.
Especially in high-demand states like Utah where inventory lags dramatically behind demand, housing experts say it's hard to fathom a bubble popping in the foreseeable future. But they have also warned Utah's housing shortage is creating "severe imbalance" that's driving up prices and rapidly aggravating the state's housing affordability crisis.