Affordable housing shortage worsens with seller's market and rising rents

Thursday , May 11, 2017 - 12:00 AM2 comments

CATHY MCKITRICK, Standard-Examiner Staff

OGDEN — Rising apartment rents coupled with a real estate market where demand outpaces supply are causing an affordable housing crunch in northern Utah. 

The U.S. Census cited Utah as the fastest growing state in the nation when it hit an estimated 3.1 million residents last July. And according to Sonya Smithing, president of the Northern Wasatch Association of Realtors (NWAOR), the Wasatch Front is caught in a seller’s market that cuts both ways:

“It’s a good thing because our Realtors are busier than ever, but it’s also discouraging for our clients because the inventory of affordable housing is so low.”

Lee Ann Semrow-Jones, a Realtor with Ogden-based Lady Bug Realty, understands the predicament all too well — and said it’s particularly acute for first-time home buyers.

“Right now if you’re looking for a home in the first-time home buyer range — which could be anywhere from $150,000 to $300,000 — it’s very hard because there’s a shortage in that price range and when you go to look at a home, there are a lot of agents waiting to show it”

Semrow-Jones recently put in an offer for a client on a Layton home listed at $199,900 and found herself competing with 11 other offers.

“We went over their asking price (to $205,000) and still didn’t get it,” she said.

That kind of competition especially stresses buyers who have little or no financial flexibility to participate in a bidding war. 

In some cases, buyers who have extra cash will even pay more than a home’s appraised value to slide into first place.

In January, James Wood, a senior fellow at the Kem C. Gardner Policy Institute at the University of Utah, spoke to NWAOR members about Utah’s housing crunch: “For the first time in 40 years, the increase in households exceeds the increase in housing units.”

Between 2010 and 2015, Utah added 109,321 households but only 81,656 housing units, Wood said, leaving a 34.3 percent deficit in inventory.

That continued shortage naturally drove up home prices. The Utah Association of Realtors detailed those increases in its February 2017 report. Figures are based on year-to-date data comparing 2016 to 2017.

 

 

In a recent column, Smithing said the situation of high demand and low supply is not expected to ease up until Utah’s population growth slows. 

RELATED: Column: Tips and tricks for winning in a seller’s real estate market

According to a March 2017 Zillow Market Overview for the greater Ogden area, median home values in 20 Weber and Davis County cities ranged from $140,200 in Ogden to $315,200 in Farmington. The median home value for Davis County was $251,800 and $190,100 for Weber.

Zillow logged median rents in the greater Ogden area at about $1 per square foot. Among the 20 Davis and Weber County cities listed, Ogden rents were the lowest at $1,002, with Farmington’s the highest at $1,666.

Last month Wood presented renter data to the Utah Apartment Association: one in three Utah households rent instead of own. Of that group, 19 percent are senior citizens, 15 percent live in households of five or more, 25 percent live alone and 18 percent belong to an ethnic minority. 

The Association also profiled rental housing stock: 31 percent of rental units are in single-family homes, 37 percent are in apartment communities; 25 percent are in duplexes, triplexes, fourplexes, townhomes and condos; and 7 percent are basement apartments.

Gavin Gilbert, a Herriman resident closely involved with the apartment industry, confirmed that Utah’s rental rates are on the rise.

“We’re seeing an average increase of 7 percent per year, and vacancies are decreasing rapidly across the whole Wasatch Front,” Gilbert said, pointing to the large influx of individuals relocating in Utah from all over the country because of their jobs. Many moved from areas of the country where rents were considerably higher than in Utah — and are willing to pay more here.

Contact reporter Cathy McKitrick at 801-625-4214 or cmckitrick@standard.net. Follow her on Twitter at @catmck. 

Sign up for e-mail news updates.

×