We hoped you enjoyed your 4th of July holiday! In this month’s update, we will discuss another extension of the eviction moratorium (hopefully our last), outline some liability concerns facing property owners and managers, gain insight into why the Supreme Court left the moratorium in place, and investigate where Utah’s real estate market is heading.
Headlines
- June Jobs Report - The June Jobs Report showed that the U.S. economy added 850,000 jobs, topping analysis estimates and continuing the upward trend toward pre-pandemic levels. The unemployment rate climbed slightly to 5.9% from 5.8% last month, but all in all, this is a positive development and we are now within roughly 7 million jobs of where we were in February of 2020.
- Weekly Jobless Claims - Jobless claims for the week ending July 3rd unexpectedly climbed to 373,000, up only slightly from the week before. The good news is that continuing claims, or “ongoing benefits”, fell 134,000 to 3.34 million while the total of all individuals receiving benefits (pandemic related) fell 449,642 to 14.2 million. Locally, new claims fell by 549 from the prior week to 1,848.
- Eviction Moratorium Extended - On June 24th the CDC extended its eviction moratorium through July 31st. While not what anyone who owns investment real estate wanted, the announcement isn’t all bad as the CDC stated that there will be no extensions past the new ending date of July 31st. It appears that we may finally be back to normal soon!
Rental Liability is Everywhere
Liability protection may not be the most obvious reason for hiring a professional property manager, but it is probably the most important. Most landlords are oblivious to the legal minefield all around them, naively thinking that the threat isn’t real or that legal problems only happen to other people making serious errors. However, ask anyone who’s faced down a federal fair housing lawsuit where liability protection ranks on their list of priorities and you’ll discover its importance.
At Wolfnest, our goal is to help landlords understand where liability issues arise and to create policies, procedures and processes that minimize these risks. The unfortunate reality of that job is that we end up making policies that don’t always make sense to those outside the industry and may appear unnecessarily strict. For example, we recently received a policy recommendation email from our attorney that illustrates this point well. See below:
With summer fast here you may encounter residents that want to decorate their windows or the exterior of their units with various flags and posters. Over the past year we’ve encountered situations where there were altercations between a tenant who displays a flag espousing a particular ideology, and their neighbor who displays a flag espousing an opposite ideology. There have also been situations where a tenant claims that their landlord is discriminating against them because the landlord allowed certain flags or signs, but not others. Additionally, many tenants who display flags don’t take proper care of them, and ripped/worn flags can become an eyesore throughout a community.
Our recommendation is that each community implement a rule that prohibits the flying of all posters, signs, and flags - except for the American flag. The rule should state:
No flag, poster, or sign may be hung or displayed in or on any window, balcony, patio, or any place where such display is visible to the public or other residents. An authorized United States Flag may be displayed provided it is displayed as required by the U.S. Flag Code. Nothing herein or within that Code shall be deemed to give permission to display any other flag. Nothing herein shall be deemed to give permission to attach the flag to any part of the exterior structure. This policy is in addition to any other policy or rule relating to what can be placed on balconies and patios.
The reason that the American flag is excepted is because Utah law says that a property manager can be held liable if they prohibit a tenant from flying an American flag, so long as the American flag is being flown consistent with the guidelines in United States law.
If we implement the above rule then we don’t open ourselves up to potential discrimination liability when a tenant says that we didn’t let them fly a flag or display a sign espousing a particular ideology, gender, or nationality. Our policy is that we don’t allow ANY signs or flags to be displayed – except for the one flag that the law requires us to allow. In addition to shielding us from discrimination liability, the policy will also help communities avoid unsightly flags that tenants let fall into disrepair.
Be honest. Doesn’t a policy banning flags sound crazy? Without proper context, such a policy could easily be viewed as an overreach at best or absolute insanity at worst. However, it is important to remember that such policies are forged by the issues experienced by other landlords and wouldn’t exist if someone hadn’t been burned previously on this particular issue. It’s only when we look to the “why” behind the policy does it start to make sense.
Utah Real Estate Market
Home values in Utah continue to climb, but are we headed for California prices? If demand remains high and inventory remains low, it’s certainly possible. Currently, Utah’s housing gap sits between 45,000 and 50,000 homes even after large increases in both listings and sales in June.
Median Sold Price
January: $438,725
February: $455,000
March: $482,161
April: $499,900
May: $505,000
June: $530,000
Monthly % Change: Up 4.9%
Sold Count
January: 1,170
February: 1,349
March: 1,726
April: 1,966
May: 1,955
June: 2,273
Monthly % Change: Up 16.2%
Average Number of Active Listings
January: 1,003
February: 987
March: 1,004
April: 1,422
May: 1,439
June: 1,762
Monthly % Change: Up 22.4%
* all graphs/data are for single family homes in Salt Lake, Utah and Davis Counties.
Industry Updates
- CFPB Warns Landlords - The Consumer Financial Protection Bureau issued a press release warning landlords to report accurate information. “As the federal eviction moratorium and other pandemic rental protections come to an end, the CFPB wants to protect families from being denied housing on the basis of inaccurate information,” the release said. It appears they will be watching closely to ensure that rental assistance payments are reported accurately and all charges are in compliance with CARES Act provisions.
- Supreme Court Leaves CDC Moratorium in Place - By a vote of 5-4, the U.S. Supreme Court failed to overturn the CDC moratorium on evictions. While disappointing, it appears that it wouldn’t have stood up if it were expected to continue. Justice Kavanaugh indicated that his vote was only because the moratorium was set to expire in a few weeks anyway.
