From Deseret News archives:
Good rental market may give S.L. boost
James Wood, director of the University of Utah's Bureau of Economic and Business Research, highlighted a four-hour Salt Lake City Council work session Tuesday on the city's economic future.
"We're in a real rough patch," Wood said of Utah's housing market. "This is by far the worst market I've seen in terms of its severity."
Since September, residential construction is down 50 percent from the same time in 2007, he said, and home values also are dropping.
Salt Lake City, however, finds itself in a unique position because nearly half of its housing is occupied by renters, Wood said. And in the changing housing market, the demand for rental housing is increasing, he said.
"If you look at the age structure of Utah's population, there are a lot of 20- to 30-year-olds," Wood said. "The difficulty of them getting housing ownership now is really going to increase the demand for rentals."
Wood estimates that 49.1 percent of Salt Lake City's 81,000 housing units are rental properties. Among the 10 most populous Utah cities, only Provo (53.5 percent) has a higher percentage of rental occupancy, he said.
"The rental market is important, and it's going to be increasingly important as a housing alternative," Wood said.
People also shouldn't fear rental housing, he said. Most cities that have studied the impact of rentals on surrounding properties have found it to be negligible.
The less-stigmatized condominium market likely will be in for some changes, too, Wood said.
"What you're going to see now, as a large number of condo projects get under way, they're not going to be able to be sold at $250 a square foot," he said. "They're going to end up being rentals. You're going to see quite a bit of that."
Despite the economic downturn, construction projects are continuing in Salt Lake City — including the $1.5 billion downtown residential, retail and office development of The Church of Jesus Christ of Latter-day Saints.
"You just need to stay on your surfboards and ride this one out," said Doug MacDonald, an economist and consultant for the Utah League of Cities and Towns.
E-mail: jpage@desnews.com
