SALT LAKE CITY (ABC4) – Buyers looking to purchase a home in Utah know the real estate market has been rising steadily over the past few years.
But that continued surge in real estate costs has also affected renters in many cities across the nation.
In a study by Stessa, researchers took a closer look into the current U.S. rental market. The report sought to find the cities with the highest increase in average rent throughout the country.
The study looked at data from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. To find the cities with the highest rent increases, researchers calculated the percentage change in median rent from 2019 to 2022.
Salt Lake City saw the third-highest increase in rental rates, skyrocketing 24.8% with an average rate of $1,475, a sharp rise from $1,189 in 2019.
The Top 10 U.S. cities with the highest rent increases from 2019-2022 are:
The study found no segment of the rental market was excluded from rising rates — from studios and multi-bedroom apartments along with rental homes.
Data shows units of all sizes saw prices increase by over 10% for the average unit between 2019 and 2022.
The western U.S. states with the greatest rent increases are Nevada (26.0%), Idaho (24.1%), and Utah (22.2%). States in the southern and central regions saw increases as well, though they were generally lower.
“These states have experienced high population growth in recent years, bolstered in part by workers leaving higher-cost states like California and Washington in search of more affordable markets, but who have increased costs in their new locations in the process,” the study finds.
Experts say a multitude of factors contributed to the stark uptick. As the U.S. economy rebounds from the COVID-19 pandemic, homebuyers and renters are faced with obstacles such as inflation hitting a record 40-year high along with skyrocketing home prices and rising mortgage rates which have also hit a ten-year high in April.
“The spike in home values and now rising interest rates are putting homeownership further out of reach for many would-be buyers, keeping more people in the rental market,” researchers say.
For those actually buying homes, developers and builders are also facing supply chain issues and a tight labor market, compounding issues further.
“The last year has seen a dramatic spike in rental prices as a result of these factors, with a 17% year-over-year increase in rental costs from February 2021 to February 2022, according to data from Zillow,” the study finds.
Supply and demand is a major obstacle facing renters today, with the study reporting a shortage of around four million housing units.
“Zoning and density restrictions have made it more difficult to add housing stock in many locations, both for rentals and in the real estate market,” experts say. “With rising real estate prices, 70% of the growth of the rental market since 2009 has come from higher-income earners who might otherwise have bought a home.”
Exacerbating the issue further are high-income earners who are forced to stay in the rental market. Developers are more likely to cater to their needs with luxury apartments, further isolating available housing for middle or low-income earners.
When ABC4 spoke to Tonya Basset, head of Homie’s buy side agent team, about whether Utah’s real estate market is a “bubble,” Basset believes that may not be true for today’s market.
“I don’t think that’s going to happen here in Utah,” says Basset. “Things are so much different now than in 2008.” She mentioned that a similar crash will most likely be prevented by tighter loaning standards and a dramatic decrease in inventory for consecutive years in Utah.
Bassett predicts a market crash may happen gradually, as interest rates slowly rise on new home loans. When asked about a predicted timeline, Basset believes it “will probably take more than a couple of months,” and up to a few years for the market to slow down and equalize.
Whether you’re looking to rent or buy, Basset says Utahns will unfortunately be facing a “brutal market.”
To check out the full report on rental rates across cities of all sizes in the U.S., click here
