This past month, the University of Utah’s Kem C. Gardner Policy Institute released its report on Utah’s housing situation. My colleagues Tony Semerad and Megan Banta summarized that report in their September article (and it’s also worth reviewing the full report), but the basic takeaway is this: Utah housing has never been more unaffordable than it is now.
I think people understand that primarily on the home ownership side of things. It’s easy to see how different home prices are when compared to even just two years ago; easy to understand how much high interest rates impact the average monthly mortgage payment. Buying a house is officially “severely unaffordable” now.
To wit, in Utah, fully 95% of houses sold are over $300K, therefore requiring a $100K household income in order to be considered affordable given current interest rates. 75% of houses sold are over $400K, meaning households should earn $130K to make the home a responsible purchase.
More such depressing statistics are in the Gardner report. Requiring a six-figure income to purchase a home simply locks out the possibility of home ownership for a majority of people — thus locking out the tax benefits, the retirement benefits and stability benefits that come with it.
So that’s all a big bummer. But I think it’s also worth examining just how unaffordable even just renting a home is — and by extension, just the basic experience of living here. To investigate this, I looked at the rental market in Salt Lake County, the wages in Salt Lake County, and compared the two. How much of a problem is this, really?
Getting the data
Rental data is a little bit hard to gather. Unlike with home sales, nearly all of which appear online through a Multiple Listing Service, different landlords and property management companies use different websites to promote their available rentals. Some properties don’t get on the internet at all. Some websites (Zillow and Apartments.com, I’m looking at you) can be a bit obfuscatory about how they show their data — listings will often be listed at “$1,400+” per month, with that plus sign being a big ol’ asterisk that could mean you’ll be paying more than that base cost.
In the end, I scraped data from the rental site Rentler, which has the benefit of showing just one price per listing. Rentler is most often used by smaller landlords and property managers, which I definitely wanted to capture. Rentler’s database of Salt Lake County listings is also larger than that of Zillow, Apartments.com, or KSL.com, though there’s significant overlap between the sites.
Wage data is easier to acquire, but perhaps more complicated to parse. The Census Bureau reports household income distributions on an annual basis thanks to their American Community Survey, but individual incomes are harder to find. Wages, though, are reported by the U.S. Bureau of Labor Statistics by metropolitan area. Salt Lake City’s defined metropolitan area includes all of Salt Lake County and Tooele County. Importantly, the Bureau of Labor Statistics also provides a distribution of salaries — reporting the 10th, 25th, 50th, 75th and 90th percentile income in each area.
Defining affordable
You might have heard of the 30% rule — the idea that 30% of a person’s gross income should go to housing costs. Spend more than that, and you’ll be what economists call “cost-burdened.” In other words, you likely won’t have enough money to spend for the other expenses of life. This 30% rule is actually the standard used for this article, too, so if you only care about that methodology, there it is.
But it’s worth addressing exactly why 30% is the ubiquitous standard applied. Harvard’s Joint Center for Housing Studies has a great 26-page overview report on this for the junkies, but here’s the short version:
In the late 1800s, there was an aphorism: one should devote “a week’s wages to a month’s rent.” That standard was based on studies of what typical families spent on rent then, and indeed, the 25% standard was added into federal housing assistant laws in the 1960s based on research from that time period, too. In the early 1980s, the federal government changed those laws from 25% to 30%.
One problem is that non-housing expenses have changed and expanded since the 1960s or 1980s. In particular, in that time period, defined employer-funded pension plans outnumbered employee-contribution plans like 401Ks. The self-made retirement plans, which more employers are either not matching or matching at lower rates, tend to take a significant chunk of worker income that previous workers didn’t have to consider. Furthermore, student loans have become vastly more common. Adjusted for inflation, the average student loan debt is now five or six times higher than it was in that era. In other words, 30% in housing costs was probably easier to pay then than it is now.
But the 30% standard ends up working pretty well to describe when rent costs become a burden. The Harvard study looked at another more in-depth approach to defining housing affordability -- examining whether renters’ residual income after housing costs was enough to live on in their selected area as defined by the Center for Women’s Welfare self-sufficiency standards. Researchers found that the easy-to-use 30% standard and the more complicated residual income approach resulted in pretty darn similar percentages of cost-burdened households.
In other words, 30% is still a good-enough rule of thumb, for our purposes anyway.
How affordable is Salt Lake County’s rental market?
OK, enough setup. Let’s look at the data.
Here are all rental properties on Rentler, sorted by price. The online version of the graph also allows you to select which properties you’re looking at: the number of bedrooms, and whether a rental is a stand-alone property, an in-law or basement situation, or a single room in a larger home.
We know from the wage data from the Bureau of Labor Statistics that the median individual income in Salt Lake County is about $47,000. I’ve highlighted in green the affordable rentals with that salary.
As you can see, it’s not many! The vast majority of rentals — 88.3% of them, in fact — in Salt Lake County are unaffordable to someone making the median income.
But remember, the median income means that 50% of Salt Lake County wage-earners make less than that. So for those making the 25th percentile wage, only 4.2% of rentals are affordable. For 10th percentile wage earners, only 1.1% are. Obviously, the math doesn’t really work out there — there are more people seeking housing than rentals they can afford — and the result is a housing shortage.
You can see a bunch of the other categories here:
I suppose the good news is that once you get into the above-median salaries in Salt Lake County, the rental market really starts to open up fast. Having two incomes really helps, too, but for those who must live alone, or as the only income generator, things are really rough out there.
For those at the bottom — and even middle — of the wage spectrum, it’s a frustrating state of affairs. These aren’t just teenagers making minimum wage at fast food places, as some might argue. The Bureau of Labor Statistics lets us examine some of the most common jobs earning these below-median salaries: preschool teachers, event planners, appraisers, loan officers, computer support specialists, technicians, researchers, house painters, welders, butchers, bakers, accounting clerks, administrative assistants, and so on. It’s a really wide scope of Utah’s labor base who face these issues.
I wanted to evaluate, too, where people seeking affordable rent might be able to live. The first rule of real estate is “location, location, location,” so to what extent can people sacrifice location in order to seek rent that works for them? So I looked at the rental data for every Salt Lake County zip code with at least 30 rentals, online users can select zip codes that interest them.
To be honest, the answers I was looking for weren’t found in this data. Going to West Valley City, or Rose Park, or even all the way out to Herriman doesn’t mean a significantly higher percentage of rentals that are affordable to the median-income renter. It’s not just about avoiding Sugar House or Downtown, prices are a problem throughout the valley.
It doesn’t get easier if you go farther south, either — it might get even less affordable. The Provo-Orem area averages a whopping 41.1% rent-to-income ratio, according to National Apartment Association data. That makes Provo-Orem the nation’s third least-affordable metropolitan area; it’s even higher than Salt Lake City’s 36% rent-to-income average.
In other words, this isn’t a Salt Lake City problem. This is a Utah problem.
It’s unfortunately likely to continue, though, unless hugely significant steps are taken. The Gardner report showed how the number of housing units built in Utah grew every year from 9,000 in 2010 to 40,000 in 2021 — meaning that we were making inroads on our housing shortage. However, new housing tanked in 2022 and 2023, so we’re no longer outpacing growing demand. That means the shortage will now increase.
Meanwhile, a majority of everyday Utahns are cost-burdened. For those who can’t afford to buy a home, there’s no solace in the rental market — many are suffering, unable to pay their bills, unable to save for retirement, unable to overcome a car breakdown or a medical episode.
I wish I had better news here. But the truth is that Utah’s housing situation is pretty darn bleak.
Andy Larsen is a data columnist for The Salt Lake Tribune. You can reach him at alarsen@sltrib.com
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