Despite adding hundreds of new residential units, demand for housing in Salt Lake City is still outpacing supply. The tight rental market is making rent increasingly less affordable residents. According to recent rental reports by Apartment List and Yardi Matrix, rents in Utah’s capital city are rising faster than both the national average and state average despite rents in most of the country growing at the slowest pace in six years. Of the 100 largest cities, Salt Lake City had the second largest increase in rents between May 2017 and May 2018. Only Orlando Florida experienced higher rent increases than Salt Lake, with a year-over-year increase of 6.7 percent, followed by Knoxville, TN, which saw rents grow by 4.9 percent.
Rents in Salt Lake City increased 0.8 percent between April and May and 5.4 percent year-over-year. Salt Lake’s month-over-month growth is twice the national average of 0.4 percent and its year-over-year growth is over three times that of the national growth rate of 1.8 percent. Salt Lake’s rental rate also grew nearly 2 percent faster than the statewide average of 3.5 percent.
According to Apartment List, the median rent for a two-bedroom apartment in Salt Lake City is $1,060 is, below the national average of $1,170. But rents increases nationally are slowing down. The national year-over-year increase is down almost one percent from 2017 when it was 2.8 percent. In 2016 the year-over-year increase in May was 3.2 percent. But in July 2017, Salt Lake’s year-over-year was 4.3 percent.
Even though rental increases are slowing down nationally, year-over-year rents increased in 82 of the 100 largest cities. But signs show that for some of the hottest housing markets, rents are calming as supply catches up to demand. In Seattle, year-over-year rents decreased 0.8 percent. Cities like San Francisco, Denver and Austin Texas had increased in year-over-year rents but those increases were minimal with each city’s increase ranging between 0.2 to 1.5 percent.
Rents in Salt Lake could begin to stabilize like other tech hubs as the housing supply increases. In addition to the 3,600 units under construction and an additional 4,000 units in development, city officials are proactively looking to expand the housing stock by financing affordable housing developments and through a proposed Accessory Dwelling Unit ordinance that would allow small mother-in-law apartments, tiny homes and above-the-garage units in existing residential neighborhoods.