Here’s why rent in Utah County has surged ahead of Salt Lake County

Utah County has long been seen as a less costly refuge for people driven out of the Salt Lake Valley by the area’s high housing prices.

But that’s changed in recent years as rapid growth and well-paid newcomers have pushed the county’s rents even higher than those in its supposedly more expensive northern neighbor.

Salt Lake County renters pay an average of $1,182 per month, compared to $1,263 in Utah County, according to 2020 analyses from Cushman & Wakefield. And vacancy rates in Utah County are lower, meaning fewer units are available and it’s harder to find a place to live, data from the real estate services firm shows. Salt Lake County has a 3.9% vacancy rate, compared to 3.1% in Utah County.

Not only does the research show that “we have affordability issues here,” with rents higher than Salt Lake County, but also “we see that trend continuing. We don’t see that changing,” noted Kip Paul, vice chairman of investment sales for Cushman & Wakefield.

The real estate firm forecasts that rents will increase between 3% and 5% this year in Utah County — which was home to about 59,000 units in 2020, about a quarter of which were reserved for Brigham Young University students.

The issues that are driving the larger statewide housing crisis, including a shortage of homes and sluggish income growth, are likely also at play here.

But housing experts say factors behind rent increases in Utah County also include the booming growth of the tech corridor known as Silicon Slopes and Not in My Backyard (NIMBY) pushback against high-density development in the community.

These forces could soon come to a head for Springville resident Logan Millsap, who said he will be pushed out of his apartment at the end of July.

Millsap and his wife pay $800 a month for a duplex that he said is “not technically supposed to be a duplex” but “flies under the books.” Their low rent serves as a trade-off for month-to-month payments without a formal contract, meaning they could be displaced on short notice.

It didn’t come as a complete surprise, then, when the property owner informed them earlier this month that he intended to sell, in part in an effort to cash in on high property values — but that doesn’t mean it hasn’t been stressful.

“We’ve been looking at different rental options trying to see what we might find,” Millsap, 30, said in a recent interview with The Salt Lake Tribune. “There’s not a whole lot.”

The problems of prosperity

For several housing experts, it’s impossible to talk about the changes in Utah County’s rental market without mentioning Silicon Slopes, the collective of tech businesses that has brought the area economic prosperity on the one hand and growth-related challenges on the other.

The number of tech jobs in Utah has been expanding about three times as fast as the nationwide average, at a clip of about 5% a year from 2008 to 2018 — and much of that growth has hit Utah County. The total number of jobs in the Silicon Slopes corridor has shot up at an “astonishing” average rate of 8.9% per year, from 39,079 in 2010 to 84,045 in 2018, according to the Cushman & Wakefield report.

The Silicon Slopes job boom is a major reason that people are flocking to Utah County, which led the state in population growth from 2010 to 2019 with the addition of nearly 135,000 new residents.

Many of the employees who work for these tech businesses are making somewhere in the neighborhood of $120,000 or more a year, Paul said. And they’re much more willing to pay monthly rental costs that would require anyone making the county’s median income of $79,500 to stretch further financially.

Average monthly rents in the Silicon Slopes area stood at $1,319 in late 2020, about 4% higher than the countywide rate, Cushman & Wakefield reported.

“When we talk to on-site managers and a local resident comes in and asks, how much for a one bedroom? [They say], ‘$1,300? You’re crazy; I’d never pay that much,’” Paul said. “But people that are being imported here, that are migrating here, being transferred by their jobs, they go talk to the manager — ‘How much for a one bedroom? $1,300?’ — and they kind of have the attitude of ‘Really, that’s all?’ It’s a whole different mindset.”

As the influx of workers to Silicon Slopes has brought the community’s housing supply to the brink, some locals have been pushed farther south in search of an affordable place, said Robert Vernon, executive director of the Provo City Housing Authority.

“People were moving to Eagle Mountain and Saratoga [Springs] and south down to Payson and whatever,” he said. “Well, Payson and Eagle Mountain are just as expensive as anywhere else right now, so you’ve got to go even further out to really get something that’s affordable.”

Pressures from a booming tech industry also have spilled into communities to the north, at least in the eyes of Salt Lake City resident Westin Porter, who said he can’t help but feel a twinge of frustration when he sees another California license plate in his neighborhood.

“In my mind, it’s like I’m seeing a well-off white dude from Silicon Valley who’s making California wages, who is now able to take those into my community,” he said. “This is my home.”

Clint Betts, executive director of Silicon Slopes, a nonprofit that boosts Utah’s tech industry, said his community is aware that rising housing costs are often the downside of success. And the state’s industry should learn a lesson from Silicon Valley, he said, which has become so expensive that even tech workers have struggled to afford housing.

“How do we ensure that the Silicon Slopes don’t rise while the rest of Utah falls? Because that’s what happened in Silicon Valley,” he said. “That’s what happens in a lot of these startups and tech places where people get priced out, and we can’t allow that in Utah.”

To that end, Silicon Slopes wants to encourage tech companies and startups in rural areas, so these high-income jobs don’t overwhelm communities along the Wasatch Front, he said. Remote work could also be part of the solution, by helping to disperse tech employees across the state.

Sen. Curt Bramble, who represents parts of Utah County, said Utah’s economic development officials are looking at shifting away from recruiting out-of-state companies and focusing more on businesses already in the state. He believes that this change in emphasis is appropriate — but also argues that growth pains are preferable to economic malaise.

“If I had my choice of dealing with problems,” the Provo Republican said, “I’d much rather deal with problems that are a direct consequence of prosperity than deal with problems that are a direct consequence of economic challenge.”

Density as a ‘four-letter word’

As Utah County works to address its affordable housing crunch, residents can expect to see a continued boom of new apartment complexes going up, with 2,775 units in progress and 7,148 more proposed as of late 2020.

Still, Cushman & Wakefield’s analysis anticipated those units wouldn’t completely fill the gap between housing demand and supply, particularly as the county experiences continued population growth and in-migration. And attempts to fill the need for apartments could be difficult amid community pushback to high-density development.

Stan Lockhart, a lobbyist who recently served a short stint as CEO of the Utah Valley Chamber of Commerce, said a major problem in adapting to growth is that the communities overseeing development are generally resistant to it.

“City councils spend most of their time hearing from residents who don’t want growth,” said Lockhart, who’s now helping the chamber plan a fall summit on prosperity and growth. “And yet, it’s here. And the reason for high housing prices is multifaceted, but one of the big ones is that there’s more people here than there are homes available.”

A recent statewide poll commissioned by regional planners at Envision Utah shows that sentiment isn’t isolated to Utah County. Up to 32% of residents who responded agreed that they are “more comfortable with development in other nearby cities or towns but not in my own community.”

These community tensions erupted just a couple of months ago in Orem as residents mobilized against a proposed project to build a six-story town home and condo building on the corner of 1600 North and 400 West.

One of those residents, Kathryn Christensen, said the condo project isn’t appropriate for the site and that she’s concerned that poorly planned high-density housing will add traffic and crime to her neighborhood. But she rejects the NIMBY label, and said she and scores of other residents just want city leaders and the developers to compromise with them.

“I don’t think you’re going to talk to anybody that’s against housing,” said Christensen, who lives around the corner from her childhood home. “What we’re against is this huge monstrosity on the corner that makes the street more dangerous.”

Betts said tech leaders can play a role in combating NIMBY attitudes in their communities — being mindful that their flourishing industry does put pressure on the supply of housing. In the end, approving development in the face of public pushback will take some courage from politicians, he said.

But there’s no real alternative, he argues. “I don’t think we’re at a stage in our community where slow growth is even an option.”

And even if the state could tamp down the growth, that would be a tricky proposition, Lockhart contends.

“We’ve kind of got this critical mass, where there’s just this sense even outside of Utah that something really neat is happening here, and people are coming to figure out what that is,” he said. “And if we stop doing the things that get us to that place, then we end up with the possibility of having that engine slow down to the point that we can’t start it up again.”

Still, nearly as soon as people arrive in Utah County, they want to shut the door behind them, he said. And he believes it’s up to policymakers to convince these reluctant residents that failing to develop will mean their children and grandchildren likely won’t be able to afford to live nearby.

Millsap, the Utah County renter who may be pushed out of his apartment soon, is highly engaged in the Springville community, sits on several city boards and would like to stay in the city where he was raised. But he said he may have to move to Provo, which has a larger stock of apartments and where he anticipates spending about 15% more per month. The higher payments will likely defer his plans to return to school, he said.

Many in Utah County see density as a “four-letter word,” he said. What they don’t recognize, he said, is that the dearth of places to live is pushing people out of their communities.

“It’s always kind of a knock-out drag-down fight [to build high-density developments], at least in Springville,” Millsap said. “It’s frustrating that our land use regulations and cultural narratives about the places we live are preventing us from building the places where our children are going to live.”

Editor’s note • Clint Betts, a co-founder of Silicon Slopes, is on the board of the nonprofit Salt Lake Tribune. His term ends June 30, 2021.