Salt Lake County is in the midst of the strongest rental market of the 21st century. Renters are coming from a variety of backgrounds and are different ages. While some dropped out of the housing market, others never got into it.
As managing principal at EquiMark Multifamily, Jed Milburn analyzes the market to advise investors of their next move. He believes “the trend is definitely shying away from home ownership and toward rental housing.”
Dell Loy Hansen has been building, marketing and managing rental properties in the Salt Lake Valley for almost 30 years. The owner and CEO of the Wasatch Group saw the boom in rentals coming as banks locked potential buyers out of the housing market.
“They swung the pendulum from you could get anything to you could get nothing, forcing the number of home occupants down and the higher number of renters,” Hansen said.
The numbers tell the tale of a shifting American dream from home ownership to rentals. In 2008, a historic 76 percent of Utahns owned a home. By 2014 that figure had dropped to less than 71 percent. Meanwhile, vacancy rates in the fast growing rental market plunged from 7.2 percent in 2009 to 3 percent this summer.
The shift hit as Jake Huff started leasing units at Talavera at the Junction in Midvale.
“We leased up in less than six months, and our occupancy right now is holding strong at 96 percent, and we’ve got a real great culture of residents,” says Huff.
Some residents like the sense of community, while others enjoy their independence. Debora Hill and her husband sold their home in Idaho during the recession and moved into an apartment in Midvale to be closer to their kids and grandchildren.
“I think there is a sense of community, and we watch out for each other at the apartments,” Hill said.
Meanwhile, Aimee Synowicki moved home after graduating from college and starting a new job. This past year, she felt comfortable moving out of her childhood home and into her own rental.
“The idea that I want to live in a quiet, suburban neighborhood is less and less a draw for the younger generation," Milburn said. "They want to be where the action is.”
Synowicki agrees. “The best thing is that you don’t ever feel alone because there’s so many people around all the time,” Synowicki said.
Some older renters, like Debora Hill and her husband, Kerwin, would prefer the peace and quiet of a home, and they haven’t given up on the part of the American Dream that means owning your own home.
Synowicki also hopes to realize the American Dream in the future.
“I hope to own a home sometime in the future, but right now that’s just not a possibility.”
Analysts say one thing is certain: the Salt Lake County market for rentals will flatten out and even drop off. After a decade of adding just over a thousand new units to the market each year, developers added almost 2,500 over the past 18 months. Milburn has some advice for developers based on that forecast.
"I think developers need to be cautious going forward, make sure they underwrite a little bigger vacancy rate and make sure they know where the market is heading," Milburn said. "There is an end to the party.”
Developers think they’ve created a lifestyle that will be hard to give up even when the market for rentals starts to tumble. Rikki Knight manages the San Moritz in Midvale.
“You don’t have to worry about being stuck in a mortgage where if you want to move or times change, because life happens to all of us. You can give us a notice at the end of your lease and you can move on," Knight said.
Originally posted here.