Rental market is tight in Salt Lake area

A slowing Utah housing market is starting to affect Utah renters, according to a survey released Monday by real-estate services firm CB Richard Ellis.

The chain reaction works something like this: Rising home prices have led to a decrease in house sales, which has prompted would-be buyers to become renters, which has caused a record-low number of available rentals, which is leading to increased rents across the Salt Lake Valley.

"Affordability is squeezing people out of the single-family home market," said Seth Rossow, an apartment specialist with CB Richard Ellis' Salt Lake City office. "With that, there is a dramatic increase in rents, as you would expect. It's basic supply and demand."

According to the survey, the current apartment vacancy rate in Salt Lake County is at 1.66 percent, which Rossow called "ridiculously low."

"I've never seen a 1.66 percent vacancy rate in any market that I've ever researched," he said. "It's pretty much the lowest vacancy that I've ever heard of."

Rossow surveyed apartment communities ranging in size from 36 to 624 units over a two-day period at the end of July. Of 22,417 existing units in 21 Salt Lake County ZIP codes, only 373 apartments were vacant, according to the survey.

The lowest vacancy rate throughout the county — 0.39 percent — is in northeastern Salt Lake County, which includes the Avenues, the Liberty Park area and Sugar House.

"You've got to wonder, if you're a renter out there, how are you going to find a place to live in anything that has nice amenities?" Rossow asked.

Low vacancy rates aren't limited to large apartment communities. Of the 60 rental units owned by Campbell Properties throughout the Avenues, only two were vacant on Monday morning. And Paulette Campbell had applications, and a lot of interest, in those two apartments.

"It's incredibly good," Campbell said of the current market. "We've been able to raise the rents, not measurably, but 5 or 6 percent this year," she said.

With mortgage companies tightening lending standards in the wake of problems in the subprime mortgage market, CB Richard Ellis noted that fewer homebuyers will be able to qualify for loans. That, the survey notes, will lead to an increased numbers of renters.

Campbell agreed. "That's my theory: that the rental market will continue to be good and even get better because of the loan industry. I think we'll see more and more renters."

With only about 1,000 apartment units currently under construction or just finished in Salt Lake County, an increase in renters is going to be a big problem, Rossow said.

"When you compare that amount of new supply, it really doesn't match with the demand we're seeing," he said. "This is a problem that is going to continue to persist if we don't get more developments under way for multi-family and attached housing."

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E-mail: awelling@desnews.com