Salt Lake City is the nation's most affordable housing market for homeowners and renters relative to household income, according to the findings of a personal housing costs study by Ernst & Young.
While it's good news at first glance, the study also indicates residents of Utah's capital city can expect higher rents and home prices within the next 24 months.Rents are expected to increase at least 10 percent within the next two years. Utahns won't be alone in rent increases, however. Rents are expected to climb throughout the country because of a marked decrease in apartment construction.
"In Salt Lake, what happened in your apartment sector was a 20 percent vacancy in 1985 and you now have a 5 percent vacancy. The demand factors outweigh your vacancy," said Michael Evans, national director of Ernst & Young's Real Estate Advisory Services.
Meanwhile, home prices will increase 5 to 10 percent, according to the study findings released at the Urban Land Institute and the National Association of Real Estate Editors Seminar in Seattle.
"You don't have a huge glut of homes compared to your job growth. There's a lot of supply and demand factors," Evans said in a telephone interview.
By comparison, six of the top 10 least affordable cities are in California. California is expected to experience increases in both rent and home prices during the next two years.
The study was designed to give businesses nationwide input in expansion and relocation decisions, builders and developers a better handle for planning and homeowners the opportunity to examine their options before buying a more expensive house or apartment.
Although predictions of increased housing costs are discouraging to Utah residents, the area will remain attractive to out-of-state businesses that are considering relocating. The Salt Lake market will remain far more affordable than California for years to come.
The low-cost markets will be well-positioned to compete for new business, because of affordable commercial leases and favorable tax and business environments.
Evans said most business relocations are motivated by three factors: office rents, payrolls and quality of life.
"The movement to Dallas by Exxon and JC Penney (to Plano, Texas) were motivated primarily by office rents. Also, a piece of that was their ability to pay their employees less because they don't have to pay as much for housing," he said.
As for quality of life, Evans said the trends of the last decade - moving to the West Coast - seem to be be reversing. "In terms of commuting, smaller cities are much more attractive than the larger cities. It's almost a reverse process of what we had in the '70s and early '80s," Evans said.
Further, the study said corporations are relocating to low-cost areas to gain access to trained labor pools.
Most affordable Least affordable
1.Salt Lake City Los Angeles
2.Denver San Diego
3.Houston San Francisco Bay area
4.Kansas City Orange County, Calif.
5.Atlanta Riverside-San Bernardino
7.Oklahoma City Sacramento
8.Dallas-Fort Worth Chicago
9.Jacksonville, Fla. Northern New Jersey
10.St. Louis Miami