Article Last Updated: 02/22/2008 11:50:22 PM MST

Strong demand for apartments pushed Salt lake County rental rates up 8.8 percent last year to an average of $733 - the highest increase in a decade.

Higher rents stem largely from years of home-price increases along the Wasatch Front that have made it difficult for many people to buy a home - even with low interest rates, according to a report Friday by Apartment Realty Advisors (ARA), formerly known as EquiMark.

Buying a home also became harder when tighter lending standards were enacted after the nation's subprime lending crisis, in which scores of people with poor credit received loans they could not repay.

"Rent growth that high in just a 12-month period is almost unheard of," said ARA's Jed Millburn. "We'll probably see another big increase, around 6-8 percent, this year." That would make three consecutive years of sizable rental increases. Rents also rose 5.1 percent from 2005 to 2006.

Rents typically climb in times of high demand and low supply. Demand is being fueled by Utah's strong population and job growth, Millburn said, while the supply is tight now. Vacancies in Salt Lake County fell from a high of 10.9 percent in December 2002 to 4.5 percent at the end of last year, the lowest in more than 10 years.

The apartment market is considered fully rented when the vacancy rate is 5 percent.

When vacancies were higher, many Salt Lake County apartment owners could not raise rents significantly. In fact, rents remained unchanged from 2001 to 2005 and many landlords offered incentives to fill empty units.

But that dynamic started to change in 2005, when population growth helped landlords fill more apartments. Now, renters now face higher rents, fewer incentives and fewer choices of where to live, Millburn said.

Four years ago, said University of Utah senior Juli Huddleston, it was easy to find a one-bedroom apartment near school for $425 per month. "Today you're going to pay $550 to $600," she said.

To save money, Huddleston leased a cheap studio apartment in poor condition on a month-to-month basis six month ago. But the landlord raised her rent from $320 to $350 in the second month.

She plans to move out soon and to sublet a friend's apartment. "It's frustrating, because I don't really want to have a roommate. But if rents keep going higher, I'll have to," she said.

While current conditions benefit landlords, low vacancies and higher rents hurt low- to moderate-income families already struggling with higher gasoline and food costs, said Glenn Bailey, executive director of Crossroads Urban Center in Salt Lake City.

"Higher rents mean they have to make a choice between paying the rent and buying food, paying their utility bills or putting gas in the cars," he said, especially with wages not going up much. "Finding affordable housing is difficult, especially for larger families."

While a studio apartment in Salt Lake County averages $465 per month, the ARA report said three-bedroom, two-bathroom units average $961.