A lot is happening in Utah and there is still more room to grow. Multifamily development is booming in Northern Utah, and for good reason. The region is experiencing strong population growth, job growth, and economic growth. As a result, there is a growing demand for housing, particularly multifamily housing.
Let’s dive into some of the stats for the Utah market:
Population Growth
Utah's population growth rate is 2.3%, which is higher than the national average of 2%. This growth is being driven by a number of factors, including a strong economy, a desirable quality of life, and a growing number of job opportunities. The state also experienced a jump in population with the mass exodus from California when the pandemic hit in 2020. The population is growing quickly and has been for the last several decades with no sign of slowing in sight.
Job Growth
Utah's job growth rate is also strong, at 9.9%. This is significantly higher than the national average of 2.7%. The growth is being driven by a number of industries, including technology, healthcare, and manufacturing.
Economic Growth
Utah's economy is growing at a healthy pace. The state's unemployment rate is 2.5%, which is lower than the national average of 3.8%. This low unemployment rate is a sign of a strong economy and a growing demand for labor.
Rent Stats
The average rent in Utah is $1,623, and rent growth is 9.4% year-over-year. This is higher than the national average rent growth of 5.2%. The high rent growth is a sign of the strong demand for housing in Utah. For example, the average rent in Los Angeles is $3,230, and the average rent in Denver is $2,390 which are two very strong multifamily markets that get a lot of buzz.
The rent-to-income ratio in Northern Utah is 25.3%, which is lower than other major metropolitan areas such as Los Angeles, Denver, Phoenix, and Portland. The national average of 31.9%. This means that renters in Utah are spending a lower percentage of their income on rent than renters in other parts of the country. This leads to less vacancy and an overall stronger rental market.
Multifamily Transactions
In 2022, there was $1.66 billion in multifamily transactions in Utah. This is a significant increase from the previous year. This is a significant amount of investment, and it shows that investors are bullish on the Northern Utah multifamily market. The growth in Utah has been increasing for many years now but it has just recently started to catch the eye of other out of state investors.
Mortgage Rates Rising
Mortgage rates are rising, which is making it more expensive to purchase a home. More people are being priced out of the Utah housing market which leads to an increase in renters. More renters in the market will further increase demand for multifamily housing across Utah as a whole.
Overall, Utah is a great place for multifamily development. The region is experiencing growth in all factors that have a positive effect on multifamily projects. Additionally, the rent-to-income ratio is lower than in other major metropolitan areas. With mortgage rates rising, it is likely that even more renters will enter the market. Many factors of the current environment in Utah indicate a high likelihood of success for multifamily projects in Utah in the coming years.
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