Salt Lake City Real Estate Investors Continue to Benefit From Rising Rental Rates
Real estate investors in Salt Lake are doing better than most. First of all, appreciation remains in the double digits for Salt Lake and much of Northern Utah real estate. In fact, Salt Lake led the nation in appreciation during the second quarter.
Now a recent report shows rents are rapidly rising as less borrowers qualify to purchase homes and more people fearful of a real estate decline wait on the sidelines.
The Salt Lake Tribune reported:
Rental rates in Salt Lake County have risen by a hefty 6.7 percent over the past year - the highest rate in more than a decade - to an average rent of $697, a new report shows.
The higher rents stem from a dwindling supply of available units, according to the Greater Salt Lake Multi-Family Report, published by Apartment Realty Advisors-EquiMark.
Apartment vacancies in Salt Lake County have fallen from a high of 10.9 percent in 2002 to 4.1 percent - the lowest point since 1996, the report said.
This phenomenon is not unique to Salt Lake City as the report said the same results are happening across Northern Utah. Landlords are benefiting from this market shift. For years rents remained stagnant and finding renters was difficult to do. Now the roles are reversed.
While the market undoubtedly will create more headaches for renters, landlords are benefiting from the change in the market.
“There is no doubt, it’s a good time to be a landlord - finally,” said L. Paul Smith, executive director of the Utah Apartment Association.
In addition to the rental increases, landlords are benefiting from a larger pool of prospective tenants, Smith said.
“It’s a scary market for people with bad credit and people with criminal histories,” he said. “When the vacancy rate gets this low, landlords are much more choosy.”
This shortage of rental housing is creating opportunities for developers, but they are choosing to build high density condos and townhouses while demand for lower priced new housing still exists.
The vacuum for rental units will have to be filled by existing units for now until development swings back towards rentals. In the mean time Utah real estate investors with rental units are reaping profits.
