If you are looking for a place to rent, Salt Lake is an expensive place. Rents went up 8.8% from 2006 to 2007, with a further 6 to 8% rise expected this year. This coupled with a vacancy rate of just 4.5% means tough times for those looking for a rental property.
But why is the rental market so strong, especially when much of the rest of the country are currently experiencing declining rental rates. Well the answer lies with the national real estate market. When the national real estate market experienced its downturn, prices fell and people started to struggle to pay their mortgage. When people found that they could not sell their home, they decided to try and rent it, resulting in a large number of rental properties, forcing down the rental rates.
In Utah, our real estate market downturn happened much later than in other areas of the country. Because of this, far fewer homeowners are currently in trouble, and far fewer properties are being put up for rent. Because of the national real estate market decline, local buyers, especially first time buyers, were either put off buying a home, or with the new lending requirements could not qualify for a mortgage. This led to an increase in the number of renters, which in turn lowered the vacancy rate, and forced up rents.
So where do we go from here? From what I can see we can go one of two ways. If the local housing market continues to decline then maybe more homes will become available for rent, resulting in an easing in the rental market. On the other hand if rents continue to rise, people will start to question paying such a high rent, which could force them back into the housing market.