It’s amazing just how much can happen in a single month. Around the time of our last update the S&P 500 was nearly 9% higher, 30-year fixed mortgage rates were 25 basis points lower, and there was no war in Europe. In a way, it’s a good reminder to be grateful for what you have because things can change quickly (cough…March 2020…cough), and to look for a silver lining (Utah real estate values!). In this month’s update we discuss the 2022 legislative session, rising home values, and a few new features about to be rolled out.
February Jobs Report - The U.S. Economy added a stunning 678,000 jobs in February and the unemployment rate dipped to 3.8%. Following February’s gains, which exceeded analyst expectations of only 400,000, we are only 2.1 million jobs below hitting the levels seen at this time in 2020. That’s not bad considering the massive disruption the economy saw from the Coronavirus pandemic. We will hope to continue our half-million jobs per month average pace despite new headwinds in the form of inflation and the war in Ukraine.
Weekly Jobless Claims - Weekly jobless claims came in slightly above expectations at 227,000 (vs, 217,000 expected) for the week ending March 5th. Continuing claims followed suit with an additional 44,000 claims above the expected 1.45 million. Locally, Utah saw 1,449 new filers, which represents an increase of 117 claims over the previous week. Coming on the heels of a great February jobs report, the labor market looks to be on solid footing as we further emerge from the pandemic. Let’s hope this trend can continue despite other brewing economic challenges…see below.
War in Ukraine - Unless you’ve been relaxing in your secluded cabin in the woods for the past month and this is somehow the only email to reach you, you’re probably aware that on February 24th, Russia invaded Ukraine. In response, countries from around the world imposed crippling sanctions, which have devastated Russia economically and thrown the global economy into chaos. The most evident fallout has been in the commodity and energy sectors with wheat prices climbing 50% (Russia and Ukraine are responsible for roughly ⅓ of the world’s total wheat exports), metal prices surging (Nickel prices soared on Monday), and oil prices jumping 35%. All of this adds up to higher inflation, slower economic growth and possible recessions at a time when supply chain disruptions were beginning to ease after two years of the Covid-19 pandemic. Let’s all hope this crisis ends quickly before the needless loss of life escalates and the economic impacts deepen.
2022 Legislative Session
We are yet to receive a final update on the results of the legislative session from our friends at the UAA, but we have updates on several of the bills we’re monitoring and provided a current status based on the state’s website.
HB 36 – Commission on Housing Affordability Amendments Steve Waldrip (R) Eden
STATUS: Passed House. Currently on Senate Third Reading Calendar
This bill has the $750,000 appropriation for Section 8 guarantee fund in it right now. The Section 8 (or Housing Choice Voucher) Guarantee Fund provides up to $5,000 to housing providers who rent to a renter on section 8, if the renter does damage or owes money at move out. Housing Providers simply need to get a judgment from the court, and then apply for the funds. In 4 years, we have gone through one million dollars in the fund and this money is intended to last another 2 years. Remember, Section 8 is a protected class in Utah, if you are not exempt from Fair Housing Law, and we are required to allow renters on section 8, if they meet all of our other criteria (because the government pays most or all of the rent, the only requirement that must be waived is any income requirement, like three times rent).
HB 189 – Electric Vehicle Charging Amendments by Joel Briscoe (D) Salt Lake City
STATUS: Passed House Business and Labor Committee. Did not pass on vote
This bill requires rental operators to create a process for renters to apply to install EV charging stations but does not require they be allowed. There is $3 million in grants for charging stations we will be promoting as a way for operators to improve their properties/amenities
HB 255 – Fit Premise Amendments by Gay Lynn Bennion (D) Cottonwood Heights
STATUS: Currently being held in the rules committee. Did not pass on vote
This bill requires 24-hour notice to enter in most situations. The sponsor has refused to work with us to find middle ground. Last year she ran the same bill and it failed 20-50. This year, it has been held in the rules committee, we suspect because the house doesn’t want to waste time on a one-sided bill that cannot pass because the sponsor would not find middle ground with the rental housing industry.
HB 359 – Eviction Records Amendments Marsha Judkins (R) Provo
STATUS: Assigned to house business and labor committee. To Governor for signature
This bill gives renters with an eviction a path to have the eviction expunged if they pay off the judgment. It also gives owners/attorneys a tool to collect judgements by being able to wipe the slate clean if renters pay off eviction judgements. It is a true win/win bill. After several weeks of negotiation on language we finally have language both sides support. Can it pass in just 6 more days? We hope so. It will help that a member of Senate Leadership, and an eviction attorney Kirk Cullimore Jr., is the Senate Sponsor.
SB 137 – Property Decontamination Amendments Karen Mayne (D) Salt Lake City
STATUS: Passed the Senate. Assigned to a house committee. Legislative Research and General Counsel / Enrolling
This bill allows cities to force interior meth remediation if an owner delays cleanup and the house becomes abandoned. However, we insisted that a period of at least 180 days be required before a city can force a decontamination specialist to be involved. Up until that time, an owner can still do the cleanup themselves. If this passes, owners will have to do cleanup within a reasonable time or risk the city hiring a decontamination specialist to do it. This bill came about because there are a couple hundred empty homes in Salt Lake Valley that were closed down for meth contamination – some for as long as 10 years. These abandoned homes become blights to a neighborhood, encourage homeless camps in the yard, and become magnets for vagrants to break in and engage in criminal activity. We are nervous about how cities will use this but hopeful it will only be a tool to deal with bad actors, not those who are genuinely trying to clean properties up.
Utah Real Estate Market
Utah home values continued to climb in February (up 2.2% since last month) with an impressive 26.8% year over year increase. The amount of successfully completed transactions also picked up steam with an 8.5% jump in sold listings since January. Inventory remains tight with less listings available than we saw at this same time last year. We do anticipate additional supply to become available as we head into the spring selling season, but it will likely be gobbled up immediately as demand remains strong despite climbing interest rates. To put Utah’s demand for housing into perspective, February saw CDOM, or the cumulative days on market before going under contract, at 5 days, equaling what we saw from February to May of last year. Simply put, Utah home values are the highest they’ve ever been and are climbing at the fastest pace since 1978.
Median Sold Price*
Monthly Change: Up 2.2%
Monthly Change: Up 8.5%
Year Over Year: Down 5.3%
Average # of Active Listings*
Monthly Change: Down 4.5%
Year Over Year: Down 7.4%
* all graphs/data are for single family homes in Salt Lake, Utah and Davis Counties.
What Comes After the Eviction Moratorium? - Following the end of nationwide eviction moratoriums, tenant advocates are pivoting toward new and increasingly hostile policies at both the state and local levels. The NAA is always vigilant in protecting the rights of landlords and created a list of four new hostile policies on the rise in markets from coast to coast. One, the right to counsel, isn’t entirely bad as we all long for good representation in legal matters, but others such as increased filing fees to deter landlords from pursuing evictions, legislation eliminating “non-payment” as a valid reason to evict if rent was increased, and the right of first refusal for purchases is simply unreasonable in our humble opinion.