In the rental business, we always look forward to March because it marks the end of the leasing “slow season” and rental demand starts to pick up. This year will be interesting as it’s the first time we’ve seen year-over-year declines in rental rates for most Utah submarkets. We know seasonal demand will pick up, as it always does, but the measurable impact that will have on values remains to be seen. In addition to launching our enhanced rental market update section, we will discuss the results of the legislative session and highlight a surprise jump in home values. But first, the headlines.
Headlines
February Jobs Report - In February, the U.S. saw a robust increase in nonfarm payrolls, adding 275,000 new jobs, surpassing market expectations of 198,000. However, this growth was accompanied by a rise in the unemployment rate to 3.9%. The report also revealed downward revisions to December and January figures, reducing initial estimates by 167,000 jobs. Despite the job gains, wages rose only slightly by 0.1% for the month, below expectations, and were up 4.3% from a year ago. Job creation was particularly notable in the health care sector with 67,000 new jobs, followed by significant contributions from government and hospitality industries. While the report painted a mixed picture, markets reacted positively, with stocks rising and Treasury yields moving lower. Despite ongoing job creation, the markets remain uncertain with traders now pricing in a greater likelihood of an initial Federal reserve interest rate cut in June.
Weekly Jobless Claims - The number of Americans filing new claims for unemployment benefits remained unchanged last week, signaling a gradual easing in the labor market. The report from the Labor Department revealed that initial claims for state unemployment benefits held steady at 217,000 for the week ended March 2, in line with economists' expectations. While job openings have increased compared to a year ago, the ratio of job openings to unemployed persons has declined. Despite this, labor market tightness continues, with challenges in attracting workers for highly skilled positions persisting. Planned job cuts are also down compared to the previous year. However, the number of people receiving benefits after an initial week of aid increased slightly, suggesting ongoing hiring challenges. In addition to the national data, the weekly jobless claim for Utah reported a decrease, with an advance of 943 compared to the prior week's 966, indicating a week-on-week change of -23. Federal Reserve Chair Jerome Powell expressed optimism about the economy but refrained from committing to a timetable for interest rate cuts.
Consumer Price Index - The anticipation builds as we await the upcoming release of the Consumer Price Index (CPI) on March 12 as it will weigh heavily in the next Fed Meeting. The previous report showed that the consumer price index (CPI) rose by 0.3%, exceeding expectations, with an annual increase of 3.1%. Federal Reserve officials, who had been cautious about interest rate cuts, might reconsider given the unexpected inflationary pressures, though they still anticipate inflation receding back to their 2% target.
Fed Meeting - With the Federal Reserve's next meeting just around the corner on March 19 to 20, we're all eagerly waiting to see what unfolds, today’s release of the February Jobs Report and the upcoming CPI report on March 12, are expected to play a significant role in shaping their decisions. Reflecting on the last meeting, the Fed hinted at pausing interest rate hikes, signaling no plans for cuts despite inflation exceeding the target. Policymakers are uncertain about what course to chart because we continue to see conflicting data. All eyes will now be on next week’s CPI report for any hits at cooling inflation.
2024 Final Legislative Update
The conclusion of the 2024 general session of the Utah Legislature marked yet another milestone, with a record-breaking number of bills passed. Over the span of the 45-day legislative session, a total of 591 bills were successfully passed, surpassing last year's count of 575. Notably, the final day alone saw the approval of 156 bills, underscoring the legislative fervor that characterized this session. Of particular interest to the real estate industry are the bills below that have significant impacts on various aspects of the real estate sector.
HB 104 – Property Owner Association Amendments
Sponsored by Norman K Thurston with support from Michael S. Kennedy in the Senate, aims to amend regulations pertaining to radon mitigation within the Condominium Ownership Act and the Community Association Act. Primarily, the bill seeks to limit homeowners' associations' authority to enforce rules that prohibit owners from making modifications for radon mitigation. It emphasizes equal treatment of unit owners by rules and addresses various aspects of property owner association regulations, including rights to display signs, install security cameras, implement water-efficient landscaping, and construct internal accessory dwelling units. Overall, the bill aims to provide clarity and consistency in regulations governing property owner associations while ensuring individual rights and safety measures, particularly concerning radon mitigation.
HB 174 – Automatic Renewal Contract Requirements
Introduced by Chief Sponsor Cheryl K. Acton and Senate Sponsor Todd D. Weiler, aims to regulate automatic renewal provisions in contracts. The bill mandates that individuals offering contracts with automatic renewal provisions must disclose specific information to consumers regarding renewal and cancellation terms. Additionally, it requires similar disclosure for trial period offers. The legislation voids any renewal contract provision that violates its requirements and authorizes the Division of Consumer Protection to enforce these provisions, imposing fines and civil penalties for violations. Fines collected are designated for the Consumer Protection Education and Training Fund. The bill also grants administrative rulemaking authority and provides definitions for key terms.
Proposed by Representative Matthew H. Gwynn, introduces amendments to towing requirements in Utah. The bill allows law enforcement officers to impound vehicles if operators willfully disregard signals or attempt to flee. It clarifies notice requirements for impounded and non-impounded vehicles and makes technical adjustments. No appropriations are made, and there are no additional special clauses. The bill modifies sections of the Utah Code related to driving violations and towing procedures.
SB 58 – Property Tax Administration Amendments
Sponsored by Keith Grover and House Sponsor Kay J. Christofferson, this bill aims to amend property tax administration procedures related to obtaining residential property exemptions. The bill requires owners of residential properties occupied by tenants to submit a written declaration stating that the property is the primary residence of the tenant. It provides the form of the written declaration and limits the information that a county assessor may obtain from the owner or tenant. Additionally, the bill recodifies a similar declaration requirement for residential properties under construction and makes technical and conforming changes. It passed the Rev/Tax Committee 8-0 and the Senate 28-0.
SB 116 – Eviction Notice Requirements Amendments
Presented by Chief Sponsor Jen Plumb and House Sponsor Steve Eliason, focus on the treatment of personal animals affected by eviction. The bill defines terms related to animals, imposes specific requirements regarding personal animals on the premises during eviction enforcement, and makes technical adjustments. Notably, it delineates the process for handling personal animals when executing an order of restitution, ensuring their safe custody and appropriate disposition. These amendments aim to address concerns regarding the welfare of animals impacted by eviction proceedings.
SB 171 – Municipal Rental Dwelling Licensing
Proposed by Chief Sponsor Karen Kwan and House Sponsor Andrew Stoddard, aim to adjust provisions of the municipal code concerning rental dwellings. The bill introduces a provision stating that a municipal ordinance requiring the licensing of an owner of a rental dwelling does not apply to an owner who does not receive compensation for the use of the rental dwelling. This amendment provides an exemption for such owners, potentially reducing regulatory burdens in cases where no compensation is involved.
SB 187 – Fair Housing Amendments
Sponsored by Kirk A. Cullimore and House Sponsor Brady Brammer, supported by RHA, this bill aims to remove barriers for small landlords operating under business entities and clarify the Attorney General's negotiation authority in fair housing complaints. It passed the Senate Business and Labor Committee unanimously and is progressing through the Senate reading calendars.
While these are the bills that we followed but did not pass, and will not become law.
HB 169 – Rental Property Disclosure Requirements
HB 180 – Short-term Rental Amendments
HB 255 – Residential Rental Modifications
HB 321 – Eviction Records Amendments
HB 359 – Homeowners’ Association Requirements
HB 578 – Property Manager Requirements
SB 184 – Expungement of Eviction Amendments
Utah Real Estate Market
In February, the median sold price for rentals stood at $580,990, marking a significant monthly increase of 5.63%. Year over year, this figure also rose by the same percentage, indicating sustained growth in rental prices. Sold counts followed a similar upward trajectory, with February recording 1,183 units sold, reflecting a monthly increase of 20.71%. However, despite the positive trends in median sold prices and sold counts, the average number of listings experienced a slight decline of 4.66% compared to the previous month. Year over year, this decline amounted to 2.24%, suggesting a decrease in available properties for sale. These figures underscore the dynamic nature of the housing market, characterized by both growth and fluctuations in supply and demand.
Median Sold Price* | Sold Count* | Average # of Listings* |
February: $550,000 March: $555,628 April: $567,750 May: $585,000 June: $590,000 July: $590,000 August: $586,000 September: $590,850 October: $575,000 November: $ 562,750 December: $549,850 January: $550,000 February: 580,990 | February: 1,113 March: 1,454 April: 1,308 May: 1,518 July: 1,372 August: 1,451 September: 1,130 October: 1,192 November: 1,034 December: 1,052 January: 980 February: 1,183 | February: 3,662 March: 3,333 April: 3,350 May: 3,480 July: 5,522 August: 4,801 September: 5,121 October: 5,166 November: 4,809 December: 4,377 January: 3,755 February: 3,580 |
Monthly Change: Up 5.63% | Monthly Change: Up 20.71% Year Over Year: Up 6.29 % | Monthly Change: Down 4.66% Year Over Year: Down 2.24% |
* all graphs/data are for single-family homes in Salt Lake, Utah, and Davis Counties.
Rent Report
The latest rent report presents intriguing insights into rent growth patterns across different cities in Utah. Draper and Millcreek experienced minimal MoM growth at 0.1%, while Murray saw a slight decline of -0.2%. Orem exhibited a more significant decrease in MoM rent growth at -2.2%, reflecting a notable shift in the rental market dynamics. Salt Lake City, despite a modest MoM growth of 0.3%, displayed a YoY decline of -1.6%, indicative of broader market trends. Sandy experienced a MoM growth of 0.2%, while Layton stood out with a substantial MoM growth of 2.5%, suggesting unique factors driving rental demand in these areas. South Jordan, West Jordan, and West Valley City maintained steady MoM growth rates, highlighting relative stability in these rental markets. The data shows that some cities experience minimal fluctuations or even slight increases in rent growth, others encounter more substantial changes, including both positive and negative trends.
*Rental data provided by apartment list.
Industry Updates
Rents on the Rise in February - National rent prices experienced a slight uptick in February, marking a turnaround after six consecutive months of decline, as reported by Apartment List. This trend aligns with the typical seasonal pattern of increased moving activity after the holiday season. However, despite this recent increase, rents remain lower year-over-year, reflecting ongoing challenges in the rental market. The discrepancy between rent costs and inflation, as highlighted in the Apartment List report and echoed in discussions by economists, underscores uncertainties in measuring rental market dynamics and their impact on broader economic indicators. Moreover, rising vacancies signal a potential oversupply of rental units, particularly notable in Sun Belt markets where growth has been slower compared to other regions. Looking ahead, while historical patterns suggest continued rent increases, factors such as a robust construction pipeline and potential rebound in rental demand may moderate future rent hikes, as noted in Apartment List's analysis. This suggests a complex landscape where market forces and economic conditions intersect, shaping the trajectory of rent prices in the coming months.
NAA Leads Opposition to HUD's Pre-Eviction Notice Rule - The National Apartment Association (NAA) spearheaded the response from the real estate industry against the U.S. Department of Housing and Urban Development's (HUD) proposed rule, which mandates a 30-day notice prior to eviction for nonpayment of rent for public housing agencies and owners of properties receiving project-based rental assistance. The coalition, including NAA and several industry organizations, submitted joint comments opposing the rule, citing concerns about financial hardships for property owners and managers, potential delays in eviction processes, and adverse impacts on housing supply and affordability. NAA's stance aligned with other housing authorities, emphasizing the need to respect state housing laws and eliminate federal interference in eviction processes. The association thanked its affiliate partners and over 3,000 members for their support and emphasized the ongoing advocacy efforts for legislative solutions, such as the "Respect State Housing Laws Act," to address these issues.
