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Our vacancy rate now is about 5.2 and it’s still going down. Rental rates increased last year just over 4 percent, and we now have the highest average rental rate in history. It’s $791 a unit. And we still see rentals increasing some 2 to 3 percent this year and next year, with that being moderated and impacted by a lot of product that’s on the table.
This year there’s about 1,141 units that are under construction. Absorption will take care of that many units. But there’s also another 4,400 units that are in the pipeline and if they all came on all at once, it would have an impact on rental and vacancy rates. There are 500 units proposed in the Sugarhouse area alone, which is kind of a hot spot. When we sold Irving schoolhouse down there, it set the record for price per unit for a multifamily of $140,000.
Let’s touch on single family. Scott, could you talk about what you’re seeing at Daybreak—both in single family and multi-family?
KAUFMANN: We’re doing both. We delivered 315 units on the multifamily side last year, and a second project is in planning this year. With single family, we’re doing less than we did four or five years ago, but we’re still capturing about 13, 14 percent of all new home sales in the valley. It’s getting better.
But what we’re seeing is people aren’t just buying a price point or a design, they’re actually buying a place. Look at some of the TODs (transit-oriented developments) that are happening. We’ve got a couple TRAX stations in Daybreak. We’re planning and building around them.
One of the things that is a concern in our book is people are treating TODs as just adjacencies to transit versus an integrated opportunity. Some of the activities downtown are integrated opportunities. What we’re trying to do at Daybreak are the same. If you’re just looking at 12 acres near transit without all the connectivity and features that are appropriate, then we’re missing the mark long term.
We’ve got a pretty incredible infrastructure in Salt Lake, unparalleled by most city standards. And 20 years from now, if we look back, we’ll question whether we put the right densities, the right integrated features because we’re still car dominated in the way we’re planning.
For a lot of families, driving a car represents a quarter of their household budget between gas and the car payments. People are trying to find ways to shed this burden. As we see gas hit four bucks or higher, it’s going to put a greater strain on families. Last time we saw that, TRAX ridership went way up, bus ridership went way up. People were making different housing choices as a result of fuel prices. We can only expect that to continue. Also, we’ve got an obligation to start thinking about our airshed in the valley, and if we’re just pushing cars, we might be missing the mark.
So we need to find ways to make these places a little bit more robust. People don’t want to just get on the TRAX station or on the interchange. They actually would like to walk to a grocery store or take their kids to the park or have their kids ride a bike to school.
RICHARDS: We’ve been selling Goldman Sachs as they’ve been transferred. We do a lot of relocation work, and in commercial they still have to have a place to live and buy houses. But in the first two months of ‘12 versus ‘11, our sales in numbers have been up 30 percent. The listings have gone down 30 percent. We had 6,200 residential listings a year ago from today. We’re down to 4,100 listings. And of those sales we’ve had in the first two months, 80 percent were under $250,000; and of those sales, 80 percent were short sales or bank-owned properties.
I’ve never seen that situation in all my years of selling residential here in the Salt Lake Valley. Why aren’t people listing and selling their houses? Because prices are still going down. I keep looking for when we’re going to hit bottom, level out and begin going back up. Because your normal home seller, when we tell them what their home is worth in this market right now, they decide it’s not the right time to sell.
MCALLISTER: I work in the commercial side of Prudential, but I do look at the sales numbers for the residential side. Constantly in the last two or three months they are eating up inventory like crazy. The listing side of it is coming in 50 percent, sales twice as much, and they’re getting rid of inventory. They’re starting to ask where we are going to get that inventory from.
What do you think City Creek is going to mean for the downtown area?
PRISKOS: The impact for the most part has already been felt. I’m a little disappointed in some business owners next to City Creek—myself included—that we haven’t been more aggressive with our development plans. Look at the blocks south of City Creek and we still have some blight there.