The average rental price in five major Utah counties has jumped 45% in just over a year and a half.
That’s according to a new report released Monday by Utah-based property management software company Entrata. The report comes as Beehive State, which has been the country’s fastest growing state for the past 10 years, continues to face a housing shortage that is fueling an affordable housing crisis and ‘insane’ house prices thanks in part to COVID. pandemic of -19, which upset the national housing market.
“Similar to Utah’s larger real estate market, prices are rising dramatically and straining people looking for affordable housing,” the report says.
Rent increases in Utah continue thanks to the classic phenomenon of supply and demand, said Chase Harrington, president and chief operating officer of Entrata. Utah, with its rapid growth, was already the driving force behind the demand for housing, and the COVID-19 pandemic has only accelerated that demand as more Americans move out of the big cities. cities to settle in more rural areas, especially in the West.
“We had an influx of people who came to Utah,” Harrington said. “The supply is low and the demand is high… which will ultimately lead to higher prices.”
The report also includes data that highlights the impact of the COVID-19 pandemic on tenants and landlords, including increasingly popular month-to-month rentals and dramatic increases in rents paid later in the month. .
The report, using data from more than 14,000 apartments in Weber, Davis, Salt Lake, Utah and Washington counties, shows that the county that saw the biggest increase in average rent is booming. Utah’s Tech Corridor, Silicon Slopes.
Here’s what the Entrata report found, looking at rent prices just before the start of the COVID-19 pandemic, from January 2019 to July 2021.
- Utah County has seen a dramatic 66% increase in average rental prices compared to pre-pandemic times.
- To the north, Davis County also saw a big jump, with an increase of 59%.
- Washington County, home to the rapidly growing southern Utah city of St. George, saw a 43% jump.
- Utah’s most populous county, Salt Lake County, saw a 23% increase.
There are many factors that could have influenced why Salt Lake County has not seen such dramatic increases as its neighboring counties, Harrington said, but he speculated that this could have been due to the fact that more and more people moved away from major cities after the start of COVID-19 closures, downtown areas lost their appeal compared to larger areas.
Utah County’s rising rent prices are likely due to its “booming” tech sector, Harrington said.
“We are seeing big business and big business coming in and creating jobs,” Harrington said. From creating new jobs and increased opportunities to attracting people from out of state to Utah for those jobs, Harrington said Silicon Slopes “uplifts the market with this growth.”
Why is monthly rental so popular now?
The report also included more revealing figures that show the impact of the pandemic and the federal moratorium on evictions on leasing.
For example, from January 2019 to July 2021, the average number of monthly leases in these top five Utah counties increased by 330%, according to the report. Here is a breakdown by county:
- Utah County has seen a staggering 633% increase in monthly leases.
- Salt Lake County saw a 553% increase.
- Davis County saw a 266% increase.
- Washington and Weber counties both saw a 100% increase.
Why are more and more tenants and landlords opting for monthly leases?
“The pandemic has fueled much of this growth, and Entrata is seeing more and more tenants placing the flexibility of short-term leases above other benefits and amenities,” the report says.
Millennials, the generation that is increasingly becoming the dominant tenant, Harrington said, could be a big driver for these month-to-month leases. Younger renters want flexibility for the next chapter in their lives, he said. Plus, add the uncertainty of the pandemic, and that’s probably what drove the trend, he said.
“The pandemic is what started this,” Harrington said. “They didn’t know what was going to happen and they didn’t want to be in a long term lease.”
Harrington said the increase in monthly leases appears to have more to do with demand from renters than from landlords. When asked if the federal moratorium on evictions might have prompted more landlords to favor month-to-month leases over long-term contracts (since the moratorium has not prevented landlords from choosing not to renew leases expired), Harrington said landlords generally prefer more stable, long-term contracts.
“Really, they empower residents, allow them to make that choice, and we see people going month-to-month,” he said. “Now, given that there are pricing strategies around this where, you know, your month might be more expensive.”
Harrington said the popularity of the month-to-month lease is expected to remain as the world continues to fight the pandemic.
“Because what if it all stops again in a year and I wanted to be able to pick up the phone and go?” Harrington said. “Now it’s like, ‘Well, who knows what might happen in the world’ … so that kind of changes your outlook.”
A 357% increase in rents paid later
The report also showed signs of tenants struggling to pay their rent on time – or at least lowering rent on their budget priority list.
The number of residents paying rent in the last week of the month increased by 357% from January 2019 to July 2021, according to the report.
“This highlights that many residents may need to pay rent later in the month to make rent payments, as well as property managers generously waiving late fees during the pandemic,” the Entrata report says.. “Similar to month-to-month leases, this was spurred on by the pandemic and continued into the summer.”
For Harrington, the figure shows that more tenants “have to try to figure out how to live from paycheck to paycheck.”
That could change now that the federal moratorium on evictions has ended.
“With the moratorium on evictions, unfortunately rent doesn’t become the priority because I can’t be penalized or evicted,” Harrington said, so maybe that’s why he “fell to the bottom” of the priorities budget tenants. “It will therefore be interesting to monitor this trend to see if it is reversed with the lifting of the moratorium on evictions.”
Interestingly, the amount of rent paid in the last week of the month only decreased by 10% between 2020 and 2021, “showing the lasting effects of COVID-19 (pandemic) on the rental market and the economy “, according to the report. States.
Here’s a breakdown by county of the percentage increase in those who paid rent in the last week of the month:
- Salt Lake County saw the biggest jump, with an increase of 546%.
- Utah County saw a 442% increase.
- Weber County saw a 310% increase.
- Washington County saw a 77% increase.
- Davis County saw a 21% increase.
Overall, the Entrata report showed that the COVID-19 pandemic has spurred many of these “major changes” in the Utah housing market.
“We’re still looking to see what the long term effects are,” Harrington said. As much as the Utahns could hope to have survived the pandemic and its effects on the economy, “I think we realize that’s not the case.”
The impact on the Utah rental market is likely to “continue to change, and we continue to monitor,” he said, “but I think things will fundamentally change because of this.”