Living with a moratorium on evictions is starting to feel a lot like Tom Brady winning the Superbowl...an inevitability. Eviction restrictions were just extended and are now in place until at least March 31st and could be extended further. In and of itself, that would be discouraging news, but we just hit a new post-pandemic high for collection activity, rental assistance is becoming more accessible, and Utah home values hit another record high. All things considered, Utah rental property owners are in a great place.
- January Jobs Report - The January jobs report did little to ease ongoing fears of a slow jobs recovery as the economy gained only 49,000 jobs but the unemployment rate did fall to 6.3%. The headline numbers might look good, but the details paint a troubling picture of slow jobs recovery and an economy that is still down nearly 10 million jobs since the start of the pandemic. Hopefully with COVID-19 cases falling nationwide, the employment crisis will begin to ease as well.
- Jobless Claims - 793,000 Americains filed for first time unemployment benefits in the week ending February 6th. The new claim numbers were the lowest we’ve seen in 5 weeks, but continuing claims exceeded expectations at 4.54 million. Locally, Utah saw new claims totalling 4,548. Continuing claims saw their first decrease in 5 weeks, falling to 33,691.
- COVID 19 Cases Dropping - Finally, some good news in the fight against COVID 19. The number of new cases in Utah fell to the lowest point in five months on Monday. Additionally, the positivity rate has fallen to around 15% and vaccinations are ramping up with over 100,000 state residents receiving both doses. We are far from heard immunity, but this is welcome news for those who’ve grown weary of the pandemic (everyone).
Eviction Moratorium Extension and Rental Assistance Updates
As you read above, the CDC Director has indicated that she is extending the moratorium until at least March 31, 2021. It’s also worth mentioning that the Biden administration has already signaled an intent to extend the moratorium even further (to September 30, 2021) with such language included in his new COVID relief plan. At this point, it wouldn’t exactly surprise us to see it extended all the way through the end of 2021 but that is purely speculation. With this possibility looming, the question becomes should we alter our leasing or lease renewal strategy? Since the moratorium only protects evictions due to non-payment of rent, it might be tempting to consider shorter term leases as protection. However, with collection activity at normal levels and the increasing availability of rental assistance for non payment, such a move might be unnecessary. We will monitor collection activity closely and might make this recommendation in specific cases, but for now, we don’t anticipate non payment issues to overshadow the security benefits of longer term leases.
NEW APPLICATION PROCESS FOR RENTAL ASSISTANCE
The Department of Workforce Services indicated they would finalize their new rental assistance program by the end of January. Unfortunately, this process will not be as easy as it was before and will require additional documentation and more information to be submitted. While requiring documentation is reasonable, we can’t pretend that all the red tape isn’t slowing things down as they are still processing claims made in December. Making matters worse, landlords shouldn’t expect funds from those applications until at least March. Hopefully they will work out any remaining issues in short order and the pace of processing claims will increase.
We do have a measure of good news as we can now include the fee charged by our attorney for processing in the amount owed by the tenant, making this a free service for landlords.
Utah Real Estate Market
Unless you’ve been living under a rock for the past year, you already know that 2020 was a good year for real estate values. How good? Well, existing home sales hit a 14 year high last year, sending values to record highs. According to the Salt Lake Board of Realtors, Utah has been near the top of the list. In fact, “Utah home prices increased 10.66 percent in the third quarter compared with the same period in 2019, according to a new federal report. Utah’s increase is the fourth highest among all states. Idaho, Arizona, and Washington were the top three states. Nationally, home prices increased 7.81 percent in the third quarter. Over the past five years, Utah home prices have climbed 56.53 percent”.
The total number of sales continues to fall, but that is due to low inventory rather than declining demand. Values reached another record high in January and show no signs of stopping ahead of the spring selling season.
Median Sold Price
% Change: Up 0.9%
% Change: Down 42.1%
Average Number of Active Listings
December: 1,227 (12/31)
% Change: Down 18.3%
- Pets or No Pets? - If you are like most landlords, the thought of allowing pets can be a scary proposition. Here is a great article outlining the many benefits of pet friendly rentals including longer tenancies and a larger pool of millennial renters. TLDR? Allowing Fido can be a landlord’s best friend.
- Rent Debt is Growing - According to a recent survey by Apartment list, over one in four renters started 2021 with unpaid rent debt. These figures are especially troubling due to the looming wave of evictions that promise to follow the expiration of federal and local eviction moratoriums. Hopefully, access to federal rental assistance programs will reduce these figures as local authorities expand access.