Utah Market Analysis

[Aaron Ormiston]

Hi all,

I've been looking closely at the different broad Utah markets and am curious to see if I'm on-target with any of my assumptions. I'm trying to get a general overview of each major area in Utah so I can start narrowing my search for a good area for house flipping and eventually for multi-family rentals. 

The areas I'm most interested in investing are Ogden, South Utah County, the Provo-Orem area, and potentially Logan. Let me explain how I see each market so everyone can chime in/help correct me where I'm mistaken. 

Utah County Pros: Orem is essentially bought up from a raw-land perspective so it's unlikely to be a bubble. High demand, limited supply. Provo-Orem area has lots of college students so rental rates are supposed to be great. If you can stomach the competition it seems to be a safer bet despite high prices.  

Utah County Cons: Tons of competition. South of BYU is notoriously picked over. Good properties go fast and it definitely seems to be a seller's market right now. 

South Utah County Pros: Cheaper properties and less competition. I've heard that South Utah County has good rental rates as well despite being a bit more rural. I've heard that South Utah County is commuting to Utah County for work in a way that is similar to how Utah County commutes to Salt Lake City. This gives the area a more positive outlook because despite being a bit more rural, there are still plenty of jobs. The area seems under-rated and under-priced currently to me.

South Utah County Cons: There are the normal cons that come with more rural real estate (appreciation is less, rental rates aren't as strong, etc.), but the area is supposed to be improving.

Salt Lake County: I honestly don't know much about the market conditions in Salt Lake City. You've got pockets like Sugarhouse that are booming right now and other areas that are a little more risky and run-down. I'd be interested to learn more about this area from anyone who is investing there currently.

Davis/Weber County: Similar to South Utah County - less activity and cheaper prices. I've heard Ogden is actually a very good market right now. I understand south Ogden can see some more difficult tenants and higher crime rates, but I've heard it's a great place to invest. From what I understand, the cash-on-cash returns in lower-income markets is better if you're willing to put up with the unique tenant and repair challenges. 

I'm curious to see if you agree/disagree with my perspective. Again, I'm just trying to get a high-level perspective of what markets to consider in Utah and any direction is appreciated!

[Becca Summers]

@Aaron Ormiston I was going to clean my bathroom but you brought up my favorite subject Utah County so I'll clean later. I'll let others answer about Ogden and Davis County. 

Utah County Pros: I disagree Orem hasn't been fully bought up, Vineyard is considered Orem and is developing 1,700 acres there which I'm sure one day will break off into it own city. I'm sure your talking about old Orem which I agree there isn't much land left and if it's in the right neighborhood the price for lots is pretty good. I track rental rates in the county and the rates drop each city you move further south in the county you go as the job change from white collar to blue collar. 

Utah Count Cons: For sure south of BYU is very picked over, we are no doubt in a sellers market in Utah County the supply of single family homes is almost 2 months worth of inventory, meaning if nothing else was listed today it would take to months for everything to sell. A balanced market is 6 months worth of inventory and a buyers market is 6 months plus. For the last 3 years we have been closer to 3-4 months supply which is why this year has been so hot! The townhome/ condo market supply is closer to 1 months worth of supply so I'm sure you can understand why it's cut throat. A LOT of them are selling with days of being on the market or before it even hit.

South Utah County: Yes price point is less but so is rent rates. My parents have homes down south and it really surprises me how much less they rent for the same bedroom bathroom count I have in American Fork. Utilities in Springville tend to be higher and the age of most homes in Springville will warrant higher repair costs. Spanish Fork is becoming quite the booming city with a lot newer construction coming in. I could see rental rates going up there the bigger it gets. I moved to Payson when I was 11 and finished high school there and the mindset of people living there is defiantly rural, they don't like to drive to far for work and think people are crazy who drive an hour to work. It is changing for sure the more new construction going on getting more people from "out of town" moving in but the rent rates still don't reflect the change. I have found those willing to pay a premium want to be closer. 

Salt Lake County: Is actually pretty simple everything east of state street has better rental rates. Good access to the freeway is very important as a lot of them commute. Your right surgar house, 9th and 9th and 13th and 13th on the east side all have great little communities where they are willing to pay good money.

My personal preference is owning rentals close to home, that way I can drive by and check on them. I believe your looking into multi family which wouldn't matter as much about driving by if you have a property manager but it's still nice to do.