SANDY, Utah (March 23, 2015) – Rental costs in Salt Lake County have increased 7 percent over a five-year period from 2009 to 2013, while the cost of a typical mortgage payment during the same period fell 5 percent, according to a Salt Lake Board of Realtors® analysis of American Community Survey data.
The median monthly housing costs for renter-occupied housing units in Salt Lake County reached $942 in 2013 (latest data available), up 7 percent from a median monthly rent of $883 in 2009. At the same time, the typical mortgage payment in Salt Lake County fell to a median $1,446 per month, down 5 percent from $1,515 in 2009.
“The drop in mortgage payments was a direct result of falling interest rates,” said Dave Robison, president of the Salt Lake Board of Realtors® and principal broker of South Jordan-based goBE Realty. “In 2009, the average mortgage interest rate was above 5 percent. By 2013, interest rates had fallen to below 4 percent.”
Robison added that the gap between housing costs and household income is widening as working families struggle to pay rising rents. The situation could worsen unless new home construction meaningfully rises. Nationally, in the past five years a typical rent rose 15 percent while the income of renters grew by only 11 percent, according to a report by the National Association of Realtors®.
Lawrence Yun, NAR chief economist, said those financially able to buy a home in recent years were insulated from rising housing costs since most take out 30-year fixed-rate mortgages with established monthly payments. Furthermore, a typical homeowners’ net worth climbs because of upticks in home values and declining mortgage balances. The result has been an unequal distribution of wealth as renters continue to feel the pinch of increasing housing costs every year.
“Meanwhile, current renters seeking relief and looking to buy are facing the same dilemma: home prices are rising much faster than their incomes,” Yun added. “With rents taking up a larger chunk of household incomes, it’s difficult for first-time buyers – especially in high-cost areas – to save for an adequate down payment.”
To improve the situation, more new housing starts are needed, especially homes affordable to first-time home buyers and working Utah families. In Utah, permits issued for new residential dwellings have fallen year-over-year in four of the last six years, according to the Bureau of Economic and Business Research at the University of Utah.
The top markets where renters have seen the highest increase in rents since 2009 are New York (50.7 percent), Seattle (32.38 percent), San Jose, Calif., (25.6 percent), Denver (24.14 percent) and St. Louis (22.26 percent).
The American Community Survey (ACS) is an ongoing survey by the U.S. Census Bureau that provides data every year – giving communities the current information they need to plan investments and services.
About the Salt Lake Board of REALTORS®
The Salt Lake Board of REALTORS® is the Wasatch Front’s voice of real estate and the No. 1 source for housing market information. Established in 1917, the Salt Lake Board of REALTORS® is a leader in protecting private property rights. As Utah’s largest real estate trade association, the Salt Lake Board of REALTORS® assists its members to better serve the public through continuing education, advocacy and a professional code of ethics.