Amid continuing tight economic times, increasing numbers of Salt Lakers are renting instead of buying homes. In fact, the Salt Lake metro area essentially ties for the highest such increase among the nation’s 50 largest metro areas over the past couple years.
That’s according to a report issued Tuesday by the U.S. Census Bureau that compares rental markets in 2009 and 2011.
Highest median rents among nation’s 50 largest metro areas, 2011
1 » San Jose-Sunnyvale-Santa Clara, Calif.: $1,460 a month.
2 » Washington-Arlington-Alexandria, DC-VA-MD: $1,391.
3 » San Francisco-Oakland-Fremont, Calif.: $1,345.
4 » San Diego-Carlsbad-San Marcos, Calif.: $1,237.
5 » Los Angeles-Long Beach-Santa Ana, Calif.: $1,214.
29 » Salt Lake City: $859.
Source: U.S. Census Bureau, American Community Survey
"That has a lot to do with … foreclosures, short sales and people losing their homes," said James Wood, director of the Bureau of Economic and Business Research at the University of Utah.
"A lot of [foreclosed homes] have been purchased by investors and are being rented," he said. Many people who lost homes are now also forced to rent. And some homeowners chose to rent out their houses to raise money to save them from foreclosure, while themselves moving in with family, Wood said.
New estimates say the percentage of all households that are renting increased in the Salt Lake metro area from 30.59 percent in 2009 to 33.25 percent in 2011.
That 2.66 percentage point increase essentially put Salt Lake City in a statistical tie for the biggest such increase among the nation’s 50 largest metro areas, the Census Bureau said. It tied with six other metro areas centered in Atlanta, New Orleans, Phoenix, Orlando, Las Vegas and Providence, R.I.
The percentage of Salt Lakers who rent is still below the national average of 35.42 percent in 2011, which was up from 34.13 percent in 2009.
Besides a tough economy forcing more people to rent, Wood said some economists also believe "that preferences have really shifted, and what we are seeing is some sort of a long-term shift in preferences for rental over ownership."
The report also suggests that rent costs, when adjusted for inflation, actually dropped in the Salt Lake area over the past couple years — although Wood says several other local surveys show they actually increased. Also, the bureau says Salt Lake renters are paying a higher percentage of their income for rent — and two of every five are now considered "burdened" with too-high percentages.
The bureau said that after adjustments for inflation, rents in the Salt Lake metro area appear to have dropped from $874 a month in 2009 to $859 in 2011. Wood notes that margins of error in the bureau survey are big enough that its data could essentially suggest that rent rates stayed flat. But he said several other surveys locally show rents actually increased by perhaps 5 percent to 6 percent in that time frame.
The bureau figured that median rent nationally in 2011 was $871 a month — or $12 higher than its estimate for Salt Lake. It said the highest 2011 median rent among metro areas nationally was $1,460 a month in San Jose, Calif., and the lowest $502 a month in Wheeling, W.V.
The bureau estimated that the percentage of renters who are "burdened" by spending 35 percent or more of their incomes on rent increased in the Salt Lake metro area from 41.29 percent in 2009 to 43.61 percent in 2011. That was still a bit below the national average of 44.32 percent.
The bureau also estimated that rental vacancy rates were lower in Utah than for the nation, meaning finding a rental unit may be more difficult here. The vacancy rate in the Salt Lake metro area dropped from 8.08 percent in 2009 to 5.98 percent in 2011 — compared to a national vacancy rate in 2011 of 7.4 percent.
The report also noted that the Logan metro area had a vacancy rate in 2011 of just 0.8 percent — fourth lowest among all metro areas in the nation behind Bismark, N.D.; Williamsport, Pa.; and Ithaca, N.Y.
Wood said a vacancy rate under 1 percent "is an unhealthy low number. If vacancy rates were down below 1 percent, rental rates would really be ratcheting up."
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