Market Updates for February 2022

We hope this newsletter finds you excited for the upcoming Super Bowl. If you aren’t a football fan, we hope you are excited about Valentine’s day, and if that isn’t your cup of tea either, we hope you are at least staying warm! In this month’s update, we will highlight Utah’s climbing real estate values and why that’s expected to continue, provide a sneak peak at some upcoming improvements to our service, and discuss several hostile bills being discussed during the current legislative session. As always, thanks for reading!

Headlines

January Jobs Report - January’s jobs report was a welcome surprise with the U.S. Economy adding 467,000 jobs. Many economists were expecting a modest gain of 150,000 (with some actually anticipating a decline) as the economy weathers a wave of Omicron cases. Instead of the typical year-end slowdown we see with seasonal work ending, the gains were attributed to the overall employment shortage as understaffed businesses successfully filled some of the nation's 10.9 million open jobs.

Weekly Jobless Claims - Initial jobless claims for the week ending February 5th came in at 223,000, just below analyst expectations of 230,000. Following a jump in mid-January, initial claims have fallen steadily in recent weeks. Continuing claims (1.621 million) also dropped from the previous week, but did exceed the expected figure of 1.615 million. Locally, Utah saw all of 24 new filers compared with last week, bringing the states weekly total to 899.

Utah Legislative Session - The 2022 General Session of the 64 Legislature began on January 18th and will continue until March 4th. As such, we will have a comprehensive final report in next month’s update, but for a sneak peak of the bills we are tracking, skip below to this month’s headline story.

2022 Legislative Session Update

We are about half way through the 2022 Legislative Session, and as usual, there are several bills that impact housing. Please find an update below on the bills we are tracking. Also, thanks to our friends at the UAA for their tireless work on behalf of Utah landlords and for compiling this information.

Adversarial Bills

HB 119 - Utah Fair Housing Amendments Act, Jennifer Dailey-Provost (D), Salt Lake City

STATUS: ON HOLD, after a hearing in House Business and Labor, with the sponsor saying that she has no plans to move it forward this session.

This bill turns a section of the Fit Premises Act that lists best industry practices without penalties, into requirements and creates liability for housing operators. Over the years housing advocates and the UAA had negotiated to put things into law as “best practices”. This allowed the association, attorneys and others to teach these practices to operators. They included things like a requirement for a walk through inspection prior to move in, providing copies of contracts, including things in contract that inform tenants of state law, etc. Since many of the things in there are very minor and can be “he said, she said” issues, the agreement has always been that while tenants can always sue operators who breach contracts, they can’t sue on things like this. This bill would have allowed renters to sue landlords for things under that best practices session, and if successful would have caused us to seek to eliminate those requirements in the law altogether, hurting renters rights.

The bill had a hearing last week and UAA lobbyist Mike Ostermiller and attorney Dave Todd educated the committee why it was a massive change to policy and how it would create new lawsuits, increase costs, and ultimately hurt renters. The committee was not given an opportunity to vote, and the sponsor requested they end debate and hold the bill for now. Media has reported she says she has no plans to continue working on it

HB 255 - Fit Premises Amendments, GayLlynn Bennion (D), Cottonwood Heights

STATUS: House Rules Committee

This bill is back after we defeated it last year 50-20 in the house. The sponsor wants to require 24-hour notice to enter in almost all cases. Right now, the law says property owners/managers must give 24-hour notice to enter unless modified by contract. There are many reasons we may need to enter quicker: emergencies, suspicion of criminal activity, maintenance, etc. We think contracts should determine how much time is needed, not statute. We are hopeful we can find a compromise that eluded us last year, but it may be that the sides are just too far apart.

We have had lots of dialogue with the sponsor, who agrees the industry is an important stakeholder in the conversation. However, she did not agree to make any of the changes to her 24 hour notice requirements (below in italics) that we suggested (underlined below) and said we could agree to. The bill is currently in the house rules committee and has not yet been assigned to a committee for a hearing.

57-22-4

(2) [Except as otherwise provided in the rental agreement, an owner shall provide the renter at least 24 hours prior notice of the owner's entry into the renter's residential rental unit[.], unless:

(a) the owner receives express permission from the renter for the particular entry;

(b) there exists an emergency that poses an immediate risk of bodily injury or damage

to property, including a gas leak, fire, flood, or natural disaster;

(c) the renter abandons the property,; or

(d) a court of competent jurisdiction grants the owner

access,

(e)The owner has reason to believe that there may be criminal activity

occurring in the property,

(f) The owner has reason to believe that a lease violation exists or is

occurring in the property, or

(g) the property requires a repair that either the renter has requested

or has been notified must be repaired.

57-22-5

3. A tenant shall not unreasonably withhold consent for the

landlord peaceably to enter into the dwelling unit to:

 (a) Inspect the premises;

 (b) Make necessary or agreed repairs, decorating, alterations or

improvements;

 (c) Supply necessary or agreed services; or

 (d) Exhibit the dwelling unit to prospective or actual

purchasers, mortgagees, tenants, workers, contractors or other persons

with a bona fide interest in inspecting the premises.

Unassigned - Application Fee Amendments, Gay Lynn Bennion (D), Cottonwood Heights

STATUS: Waiting for bill language from the sponsor

We have not seen language but our understanding is this bill regulates application fees somehow. We have met several times now with the sponsor and stakeholders. While the industry has still not seen a single verifiable case of this alleged abuse, we have proposed to create and fund a website for tenants who feel they have been inappropriately charged application fees. It will educate landlords and tenants about application fees and will pay claims of tenants. It will also track alleged offenders (so we can reach out and train them) and determine if there is a real problem in this area that needs a legislative fix. We are working on that this week. Unfortunately, our dialogue and proposals do not seem to be enough to get the sponsor to not run a bill. When we see language we will analyze and update.

Other Bills

Unassigned - Eviction Records Amendments – Marsha Judkins, (R) Provo

STATUS: Sponsor negotiating with stakeholders.

This bill would allow some people to get some eviction records sealed/expunged if they applied for rental assistance to pay it or otherwise have paid it off in certain ways. We have met with the sponsor and tenant rights stakeholders to discuss the language they proposed. The language in the bill went too far, especially in it’s proposed implementation of penalties on landlords that disclose information about a prior eviction that was expunged. We provided alternative language to the bill and anticipate seeing a proposed new draft that we can further discuss. The main sticking points of the bill relate to penalties for landlord non-compliance, whether a petition is needed vs. a motion, and whether expungement should be automatic or require action from the tenant. We will continue to monitor this and review any language proposed.

HB 189 - Electric Vehicle Charging Amendments, Joel Briscoe, (D) Salt Lake City

STATUS: Assigned to a committee. On hold while stakeholders negotiate.

We met with the sponsor and stakeholders to discuss a proposed bill that would allow a tenant to make a request to install an electric vehicle charging station at the unit and would require the landlord to allow the installation under a variety of circumstances. We discussed that the overall idea of encouraging electric vehicles is good but encouraged the sponsor to modify the proposal to include something more flexible that would allow a landlord to come up with a process of handling such requests.

The bill sponsor will go back to the drawing board to come up with language that allows more flexibility and leaves more options for negotiating the issue in a lease agreement as opposed to legislative directives.

Proactive Bills

Unassigned - Appropriation for Section 8 Guarantee Fund

STATUS: Language in the bill. Since this is an appropriations bill, it will not likely pass until the last days of the session.

In 4 years since it has been set up, we have gone through the $1 million that was in the section 8 guarantee fund. We are requesting an appropriation of $750,000. This fund allows landlords who are damaged by section 8 renters (who you are required to work with if they meet your other criteria) to make a claim for up to $5,000 from the state. It was part of a compromise to keep Section 8 a protected class. We already have an agreement to put this money in the housing bill and are fairly confident we will get it! 

Utah Real Estate Market

The median sold price for a single family home in Salt Lake, Utah, and Davis county sits at a record high of $564,500, up a cool 24.0% in the trailing 12 months. Meanwhile, sales figures like the average number of active listings and the number of homes sold, have fallen to seasonal norms. There is simply not enough inventory to meet demand, and that has pushed 3 Utah cities onto a list of the most overvalued housing markets. Normally, making a list like that should cause alarm bells to ring, but look no further than the final slide of Jim Wood’s (the U of U’s Kem C Gardner Policy Institute Senior Fellow) recent presentation to the Salt Lake Board of Realtors where he predicted the housing shortage will continue pushing prices up another 10-12% this year and called a housing bubble “very unlikely”.

* all graphs/data are for single family homes in Salt Lake, Utah and Davis Counties. 

Industry Updates

NAA Fighting Rent Control in MA - On January 11th, the NAA’s Assistant Vice President of Industry Research and Analysis Paula Munger testified before the Massachusetts Legislature’s Joint Committee on Housing. The hearing highlighted the repercussions of a 3% rent cap, which were as follows: Apartment supply would drop by more than 700 units per year, apartment property values would drop by more than $260 million, and property tax revenue to the city of Boston would drop by more than $2 million annually. While rent control advocates have been increasing in number since the start of the pandemic, it’s important that lawmakers everywhere study the unintended consequences of decreased supply, falling property values, and lower tax revenues.

Renters Moving West - It’s no secret that Americans have been seeking new housing situations following the emergence of the COVID-19 pandemic, but where are they moving and why? According to data from the U.S. Census, U-Haul, United Van Lines, and the National Association of Realtors the answer is mostly West in search of healthy economies, remote work, and more affordable housing. According to the NAR, of the top 20 metro areas where the cost of owning versus renting ratio is higher than the national average, 13 are in the West. Salt Lake City, Utah checks in at #16.

Real Estate Investing Resources