Thursday, December 1 2022

Jennifer Fei, 48, has felt the pinch every year. But over the past two years in particular, the rental market’s stranglehold on his family budget has tightened.

She moved into a quaint two-bedroom duplex in Salt Lake City’s Sugar House neighborhood about seven years ago. At the time, her monthly rent was $1,300, which she said seemed like a pretty good deal.

“Over the years there have always been increases – $100 here, $50 there,” Fei told Deseret News. When she signed her lease for 2020 to 2021, it increased by $150.

Then, for 2022, it jumped $410, she said.

“Within two years, I saw a rent increase of $550,” she said. “So that’s pretty significant.”

Now Fei says her rent is just under $2,000 a month.

Meanwhile, his salary stagnates. As a sales rep, Fei said she earns around $60,000 a year. At the height of the COVID-19 pandemic, she said she earned less because the pandemic took a toll on her commission, which she earns by selling products to retailers and restaurants.

As a single mother of two teenagers who earns what she considers a “decent” income, it’s frustrating that the rent is so high for a modest two-bedroom house – especially since salaries have not kept pace with such a rapid price. growth.

Yet she feels trapped. Looking around in her same neighborhood, Fei saw prices soar. The typical two-bedroom apartment in her area “starts at $2,000 a month,” she said. “Most are between $2,500 and $3,000 a month, especially in all these new apartments.”

“Who pays for this? she asked.

Utah’s median individual income was $31,855 in 2020, according to the US Census Bureau. For households, it was $74,197.

Why are rental prices so high?

As housing prices in Utah and across the country hit record highs during the pandemic housing frenzy from mid-2020 to early 2022, this had an extraordinary impact on the rental market.

If renters — who faced steady annual rent hikes even before the pandemic crushed the accelerator — were having a hard time before, the pressure is only mounting now as the housing market continues to falter from mortgage rates over 6%.

Even before the Federal Reserve’s fight against inflation, rents have risen at faster rates over the past two years than they have over the past decade.

Between 2010 and 2020, asking rents increased by 2.6% per year. Fast forward between 2020 and 2022, and rents have increased by 10.5% per year during this two-year window.

That’s according to a new report released this week by the University of Utah’s Kem C. Gardner Policy Institute, authored by Dejan Eskic, a senior fellow at the institute and one of the country’s leading housing experts. Utah.

According to Eskic’s calculations, about 71% of Utah households were priced out of the Utah median home price in the spring of 2022, which crossed the $500,000 mark in February. This figure was even higher in Salt Lake and Utah counties.

As more and more potential buyers turn away from the market while house prices and mortgage rates are still at record lows since 2008, this is increasing pressure on the rental market.

“Narrowing the pathway to homeownership has increased demand for rental housing,” Eskic wrote. “Wasatch Front renter households have seen as much rental price growth in two years (between 2020 and 2022) as they have in the previous 10 years (between 2010 and 2020).”

As a result, tenants trapped between rising rental prices and out-of-reach home prices are stuck, vulnerable to annual rate hikes and potential instability if they get out of the price of their current homes.

How much is rent in Utah?

Of the four Wasatch Front counties, Salt Lake County saw the biggest change in absolute rent growth, according to the report.

  • In Salt Lake County, the average asking rent fell from $1,213 at the start of 2020 to $1,534 in the second quarter of 2022, according to the report. That’s a jump of $321 – an 11% increase each year, up more than 26.4% in two years.

“The two-year increase is greater than the $135 increase from 2000 to 2010 and the $213 increase from 2010 to 2020,” Eskic wrote.

  • Davis County comes next in terms of absolute rent growth, with the average rent increasing by $294, from $1,158 at the start of 2020 to $1,452 in 2022. This represents an annual increase of 10.6%.
  • Weber County ranked third in absolute rent growth, with average rent rising from $1,091 at the start of 2020 to $1,380 in 2020, an increase of $289 at an annual rate of 11%.
  • Utah County rents have increased from $1,213 in 2020 to $1,475 in 2022, an annual rate of 9.1%.

Trap

Fei wonders how long she will be able to keep her current home, seeing downsizing as perhaps her only option at this rate.

“Next year, if my landlord decides to raise the rent, I might have to move into a one-bedroom apartment. That’s the reality of my finances,” she said. “If I don’t make more money, I can’t afford to stay here.”

She’s thought about becoming a landlord, but as a single mother, her age and prices being what they are, she doesn’t see that as an option.

“I’m at a point now where I think I’m definitely out of the market,” Fei said. “I’m quite old, with teenagers, I don’t have enough savings…if I don’t have real estate at this point, at 48, I won’t. I mean, to be very honest.

She wondered how anyone could save for a down payment for a home these days, especially given how quickly rent prices have soared.

“I don’t know how you can save when rent is 40-50% of your monthly income,” she said. “If I was in a better financial situation, yes, I would look. But at this point, with interest rates and monthly payments, you’re looking at paying as much as rent these days. »

Fei also said his situation could be worse. She said that as she faces downsizing, other Utahans and their families may simply be taken off the price of rentals anywhere in the Salt Lake area. It’s not just the monthly rental fee, but also the deposits – first and last month’s rent – that break the bank.

Fei said that as she was driving down the street the other day, she noticed someone who had a dining table and chairs on a cart, with a pile of his stuff next to him.

“These homeless people aren’t because they have, you know, mental health issues or drug issues,” she said. “They’re homeless because they’re getting to a point where they can’t afford where they live anymore, and they have nowhere to go.”

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