Market Updates for August 2021

It felt like we were so close. Just days ago, the eviction moratorium was set to expire and COVID-19 was fading from our collective memory. Then, at breakneck speed, virus cases started surging in many parts of the country and we are facing another 60 days of eviction restrictions. If you are looking for a silver lining, it’s this: We’ve been there and done that for 18 months. While disappointing, there is nothing about these developments that we aren’t fully prepared to handle.

Headlines

July Jobs Report - U.S. employers added 943,000 jobs in July, marking the largest single month job gain since August of last year. The gains sent the unemployment rate plummeting to 5.4% which is the lowest we’ve seen since the start of the pandemic. The news was overwhelmingly positive and prompted the following tweet from Harvard economist Jason Furman: “I have yet to find a blemish in this Jobs report”. In March/April of 2020 the U.S. economy shed 22 million jobs. As of July 2021, we have added 16.7 million, leaving us only 5.7 million short of our pre-pandemic levels.

Weekly Jobless Claims - 375,000 workers filed for unemployment benefits in the week ending August 7th. New claims have dropped sharply since the spring and have averaged under 400,000 for the past month. Continuing claims fell to 2.86 million, which is the lowest level since March of 2020. On the heels of July’s stellar jobs report, this is more of the good news we are looking for as the job market recovers. Locally, however, Utah claims jumped to 2306 from 1576 last week.
 
 

COVID-19 Cases Spiking - On Wednesday, the Utah Department of Health reported 1,114 new cases of COVID-19. Utah is following suit as case numbers rise nationwide and ICU capacity back up to 80%. With the new school year rapidly approaching, case numbers are expected to continue their upward trend.

Eviction Moratorium Expiration/Extension

For a brief moment, the eviction moratorium expired at the end of July as planned. Then, almost as quickly as it expired, the moratorium was back for another 60 days. This new moratorium will span through at least early October, and applies in all United States counties experiencing substantial and high levels of community transmission. In other words, we are back to our pandemic era collection procedures.

To be covered under the moratorium, a renter must meet the following criteria:

• The individual has used best efforts to obtain all available governmental assistance for rent or housing;
• The individual either (i) earned no more than $99,000 (or $198,000 if filing jointly) in Calendar Year 2020 or expects to earn no more than $99,000 in annual income for Calendar Year 2021 (or no more than $198,000 if filing a joint tax return),5 (ii) was not required to report any income in 2020 to the U.S. Internal Revenue Service, or (iii) received an Economic Impact Payment (stimulus check).
• The individual is unable to pay the full rent or make a full housing payment due to substantial loss of household income, loss of compensable hours of work or wages, a layoff, or extraordinary out-of-pocket medical expenses;
• The individual is using best efforts to make timely partial rent payments that are as close to the full rent payment as the individual's circumstances may permit, taking into account other non discretionary expenses;
• Eviction would likely render the individual homeless—or force the individual to move into and reside in close quarters in a new congregate or shared living setting—because the individual has no other available housing options; and
• The individual resides in a U.S. county experiencing substantial or high rates of community transmission levels of SARS-CoV-2 as defined by CDC.

We had hoped that with the expiration of the original order, business could return to normal for pay or vacate evictions. We have made it through nearly a year of confusion and some changes to practice caused by the CDC Moratorium, but in Utah, we should consider ourselves very fortunate. Property owners and managers in other states around the country face state-specific moratoriums still in effect – through the end of the year in some cases.

Our rental assistance program allows landlords to apply for tenants and many requests are being processed in days and funds are paid out quickly to landlords for up to 3 months at a time. Many other states do not allow landlords to apply or their systems are so inefficient they have only disbursed a fraction of federal rental assistance funds that Utah has. New York State, for instance, hasn’t paid out any, not even a penny, of these funds and are arguing for their state moratorium to be extended until years end so the government has time to distribute their rental assistance funds.

What this means for our clients:

• We must Resume using the 3 Day Pay or Vacate Notice with the CDC language and rental assistance box.
• We will continue to implement and adhere to any CDC Declaration already given to us by a tenant.
• We will continue to serve pay or vacate notices and file for evictions if we believe a tenant will refuse to, or will not qualify for rental assistance. We can challenge their Declaration in court if we have good evidence that they are not attempting to qualify for rental assistance, or if their income exceeds the threshold needed to receive assistance.

We are very fortunate that our friends at Kirk Cullimore’s office and the UAA stay on top of every development and provide us with good resources to pass along (see above). As we mentioned in the opening, we’ve been dealing with restrictions on evictions for a year and a half so another 60 days isn’t the end of the world. As long as rental assistance funds remain readily available, these obstacles will remain manageable. 

Utah Real Estate Market

Well, it finally happened. The median home price in Salt Lake, Utah and Davis counties finally leveled off, climbing from $530,000 in June to $530,608 in July. This is not necessarily surprising considering the housing market is cooling nationwide, however Utah’s outlook remains strong in the short term and price declines are not expected.

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

Industry Updates

Utah Rents Climb - Along with home prices increases, Utah rents are also on the rise. In March of 2020, the median cost of monthly rent in the SLC metro was $1,384. A year later, that figure rose 4.8% to $1,451/month and has been climbing ever since. Since 2008, rent increases have averaged 3.4% in Salt Lake (over 4% in both Utah and Davis counties) and since 2016, the average rate of increase is 6.46%. 

New Moratorium Challenged - You may recall the supreme court recently failed to overturn the eviction moratorium by a narrow 5-4 vote with Justice Kavanaugh indicating his vote was due to the moratoriums pending expiration. Well, the new moratorium was barely a day old before it was challenged in court. Let’s hope their challenge is successful because landlords can’t be expected to shoulder more than their fair share of the pandemic’s burden indefinitely. 

Landlords Sue U.S. Government for Unpaid Rent - The National Apartment Association is suing the U.S. Government claiming that the eviction moratorium has left landlords to shoulder $27 billion in unpaid rent and “sets a dangerous precedent for future disaster response measures”. In our humble opinion, they are absolutely right and the CDC has clearly exceeded their authority.

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