If you sensed frustration in the writing of last month’s update regarding yet another extension of the seemingly endless eviction moratorium, you’d be right. However, you will find no such tone in this update! After some helpful assistance from the Supreme Court, the moratorium was overturned and we are officially back to our standard collection procedures. With rental assistance readily available, this is truly the best of both worlds - rental assistance for those who need it and reasonable safeguards to prevent abuse.
Headlines
- August Jobs Report - There are letdowns and then there’s the August Jobs Report. The U.S. economy added 235,000 jobs in August, against expectations of 720,000 - yikes. The report marked our worst since January and fears that the recent surge in COVID-19 cases will halt the recovery are prevalent. On the positive side, the unemployment rate did drop to 5.2% from 5.4% last month, but hopefully we see a spike in job gains next month.
- Weekly Jobless Claims - The week ending September 4th saw 310,000 Americans file for first time unemployment benefits - a new low in the pandemic era. The drop in new filings coincides with the expiration of the government’s enhanced benefit program, although many states had previously suspended additional aid. Currently we sit down nearly 5 million jobs since February of 2020.
- COVID-19 Surge - As of September 8th, the rolling 7-day average of new COVID-19 cases in Utah stands at 1,362 with referral ICU beds 88.2% occupied. The spike in cases comes as the Delta variant surges across the country, schools reopen and Utahn’s traveled for the Labor Day Weekend. Let’s hope case numbers start to subside soon.
- Pandemic Aid Expiring - After 18 months, the pandemic safety net so many Americans relied on to make ends meet is about to become a thing of the past. Expanded unemployment benefits expired this week, the eviction moratorium was overturned late last month, and stimulus checks are a distant memory. Additionally, a temporary boost to the SNAP program ends this month and the expanded Child Tax Credit is set to go at the end of the year. Luckily, rental assistance is still readily available for those who need it, but additional stimulus is not guaranteed at this time.
Supreme Court Overturns Eviction Moratorium
On August 26th, 2021, the United States Supreme Court issued a 6-3 ruling that struck down the CDC eviction moratorium effective immediately, stating “the CDC has imposed a nationwide moratorium on evictions in reliance on a decades-old statute that authorizes it to implement measures like fumigation and pest extermination. It strains credulity to believe that this statue grants the CDC the sweeping authority that it asserts.”
There were also a few other noteworthy comments from the court’s opinion:
....it is a stretch to maintain that §361(a) gives the CDC the authority to impose this eviction moratorium.
.... The equities do not justify depriving the applicants of the District Court’s judgment in their favor. The moratorium has put the applicants, along with millions of landlords across the country, at risk of irreparable harm by depriving them of rent payments with no guarantee of eventual recovery. Despite the CDC’s determination that landlords should bear a significant financial cost of the pandemic, many landlords have modest means. And preventing them from evicting tenants who breach their leases intrudes on one of the most fundamental elements of property ownership—the right to exclude.
.... It is indisputable that the public has a strong interest in combating the spread of the COVID–19 Delta variant. But our system does not permit agencies to act unlawfully even in pursuit of desirable ends. Cf. Youngstown Sheet & Tube Co. v. Sawyer, 343 U. S. 579, 582, 585–586 (1952) (concluding that even the Government’s belief that its action “was necessary to avert a national catastrophe” could not overcome a lack of congressional authorization). It is up to Congress, not the CDC, to decide whether the public interest merits further action here.
.... If a federally imposed eviction moratorium is to continue, Congress must specifically authorize it.
In other words, we fully anticipate this to be the end of the 18-month nightmare known as the eviction moratorium. While it remains possible that congress could pass something or some other restrictions could be put in place, this looks like the end of the road for such measures on the federal level. Additionally, the opinion suggested that the CARES Act is no longer applicable making the eviction process, at least for now, exactly as it was the before the pandemic.
As we have from the start of the pandemic, we will keep you informed as we wind through the various twists and turns of this saga. For now, at least, all landlords can breathe a sigh of relief.
Utah Real Estate Market
August marked three months in a row where the median home price held mostly flat and the first month where we actually saw a modest decline. While few are expecting substantial declines long term, the torrid pace of price increases was unsustainable.
Median Sold Price January: $438,725 February: $455,000 March: $482,161 April: $499,900 May: $505,000 June: $530,000 July: $530,608 August: $526,000 Monthly Change: Down 0.9% | Sold Count January: 1,170 February: 1,349 March: 1,726 April: 1,966 May: 1,955 June: 2,273 July: 2,074 Monthly Change: Up 6.4% | Average # of Active Listings January: 1,003 February: 987 March: 1,004 April: 1,422 May: 1,439 June: 1,762 July: 2,422 Monthly Change: Down 5.2% |
* all graphs/data are for single family homes in Salt Lake, Utah and Davis Counties.
Industry Updates
- Will Forbearance Expiration Soften the Housing Market - There are currently 1.7 million borrowers enrolled in mortgage forbearance programs. These plans start to expire September 30th and it will take several months until the program is entirely phased out, but how will some percentage of those homes hitting the market contribute to the general slowdown we are already seeing?
- Renters are Behind - With the eviction moratorium officially over, how much rent debt is the average tenant carrying? With more than 11,000,000 renters reporting being behind on rent, the average American renter is behind $3,700. Utah renters sit slightly higher than the national average at $3,731 behind. Fortunately, rental assistance programs are starting to make funds available for landlords so hopefully we won’t see the “wave of evictions” some have predicted.
