High apartment vacancy rates continued to plague Salt Lake County's rental market during the first six months of the year, rising to 9.5 percent.
That's up from 9.3 percent during the same period a year ago, according to a report by EquiMark Properties Inc., a Salt Lake brokerage and research firm. Last year, multifamily vacancies hit 10.9 percent, the highest rate since 1988.
However, industry experts believe the worst may be over.
"My sense is we're kind of bumping along the bottom right now," said Mark Millburn, president of EquiMark Properties.
While steadying or declining vacancies will be welcome news for the rental industry, decreasing rents and enhanced concessions are not. Since December, the average Salt Lake County rental rate fell $16 to $633 a month, a 3.8 percent decrease over the previous six months.
In neighboring Utah County — the state's second-most-populated county — rents also declined, down 2.2 percent to $646 from $657.
Rental rates are being pushed down by low mortgage interest rates. Nationally, the average 30-year-fixed mortgage rate last week stood at 5.40 percent, according to the weekly Freddie Mac mortgage market survey.
"Landlords are just making it more attractive for renters to remain renters," Millburn said. "In order to keep rental rates at or below the cost of a new house payment, they have had to lower their rents a bit."
Vacancy rates in Utah County continued to soar, rising to 10.8 percent in the first half of 2003, a sharp rise from last year's overall rate of 8.2 percent.
Two-thirds of all Salt Lake landlords reported offering concessions — which included everything from one month free rent and free appliances to cash discounts and free cable — in order to keep and attract new renters.
And although multifamily construction has slowed in recent years, 907 units are currently under construction in Salt Lake County. Another 1,586 units are in the works.
"The high-density, for-rent housing is really driven by jobs. Until we create jobs, we are going to stay in a very similar pattern," Millburn said. "One thing that could change that is if interest rates start to tick up and it makes home ownership less attractive. That will help the rental market."