A lack of affordable housing causes issues for homebuyers and economic development
Rebecca Lewis’ last home was a two-bedroom trailer with holes in the floor and broken windows.
She didn’t want to raise her three children there, but it was all she could afford.
Lewis of McPherson is college-educated and works three jobs, but she, like many Kansans, has struggled with finding affordable housing. Growing up in poverty, she has lived in 71 homes in her lifetime. In 2011, Lewis took in a mother and her four children who were about to be homeless.
The families had trouble scheduling bath times. The children fought. Tension grew between the adults.
“There was a tremendous toxicity that developed from that many people living in a house,” Lewis said.
Today Lewis lives in a four-bedroom home subsidized with HUD funding and she is an advocate for affordable housing. She and others in her community are searching for solutions to a lack of adequate housing.
This lack of housing is leading to increased cost for home buyers and renters and is hurting not only individuals, but economic development as well.
Inventory for housing is tight across the board in Kansas and, in some rural markets, it is considered extremely tight, said Luke Bell, vice president of government affairs for the Kansas Association of Realtors.
In a balanced housing market, there is generally enough housing stock for six months of sales. The statewide average is currently about 4.3 months. McPherson had 4.23 months of housing stock as of the month of August, said John Holthus, owner and broker of Four Season Reality.
“Right now, there are three things that make a home attractive — price condition and location,” he said. “If a home meets all three of those criteria, it likely will be on the market for only weeks.”
The average time to sell a house in a market the size of McPherson is 128 days.
Rural communities may not have had the big housing boom and bust places like Florida, California and Nevada had in 2009. Rather rural communities have had a slow growth in housing development that has not kept up with demand.
Bell said communities need a broad range of housing to meet the needs of every segment of the population from young families to seniors.
The lack of housing stock creates a snowball effect.
Those home buyers who wish to move up to bigger homes can’t because the housing stock is not available. Seniors also aren’t moving out of their homes because appropriate housing is not available. Older homes that could be starter homes don’t become available as a result.
Young families who wish to buy homes have to continue to rent, which drives up rent prices across the spectrum.
Slow growth in housing
Historically rural communities have seen slow growth in their housing stock.
In a metro area, a contractor may be able to build a development with 15 to 20 homes. In a rural community, developers may build only one or two homes at a time.
Contractors also make more money on more expensive homes. They have less incentive to develop homes in $100,000 to $120,000 range, which is what is considered a starter home for many families.
Fred Bentley, director of rental development for the Kansas Housing Resource Corporation, said homes in some rural communities will appraise for less than it costs contractors to build them. Some communities are trying to assist home buyers by buying down the cost of homes to their appraised values so prospective home buyers can qualify for loans.
Harder to get loans
Further complicating the housing dilemma has been changes to banking regulations that make getting home loans more difficult.
Lenders are requiring the highest credit scores in the last 15 year — at least 680 for most loan applicants, said Chad Alexander, of Peoples Bank in McPherson.
If home buyers have low-incomes and live in a rural area, they might qualify for rural development loans.
However, many middle income families don’t qualify for any assistance, and some niche home programs have disappeared since the housing bubble burst.
Some small banks have had to leave the home loan industry entirely because they can’t keep up with the regulations, and big banks are reluctant to loan individuals and contractors money for small projects, Alexander said.
“Housing has been most difficult for our segment of the population, and we have seen many changes in rural America,” he said.
Housing costs outpace income
Incomes are not keeping up with the housing costs.
The financial problems of 2009 have taken many families out of the home market and increased the number of renters, which Bentley said he saw as a national trend.
Supply and demand would normally keep rents steady, but high demand means the market is setting rent prices.
Apartment Ratings an online resource listed the average cost for apartments in Wichita during a nine-year period. Between 2008 and 2010, apartment rents rose 18 percent from an average of $473 to $558 for a one-bedroom rental. That has since leveled out some to an average of $533 for a one-bedroom unit.
Priced out of the market
As prices continue to rise in the rental markets, low-income families are priced out of the market, Lewis said.
Most of the families Lewis works with are living on an income of $800 to $1,200 a month. They can do what Lewis did and rent or buy a mobile home, but utility costs on substandard housing can be $250 to $350 a month.
Renting a multi-bedroom home or apartment can cost $700 to $900 per month, she said. That is if they become available. The waiting list for some apartment complexes in McPherson are as long as two years.
Programs such as HUD, Habitat for Humanity and rural housing have many regulations. Families who have been in generation poverty carry a lot of baggage and many are not be able to meet all the requirements of these programs.
McPherson Housing Authority director Chris Goodson said there is a human loss when families don’t have adequate, stable housing.
“We have people who are not obviously homeless, but they are living on someone’s couch,” she said. “Having a house is a part of a life that is safe. When a children is growing up, they need a stable home to become a good person. Whatever that place may be, they need to a place that is home. That is so important.”
Lack of housing is not just a social issue. Communities, such as McPherson, are experiencing economic consequences as a result of housing shortages.
A recovering economy has meant jobs are coming to rural communities, but housing has not kept pace.
Go McPherson recently completed a commuting study. The data revealed 58 percent of the McPherson workforce is commuting to their jobs. Fifty percent of respondents said the wait for vacancies was too long to live in the city and almost 19 percent said costs and conditions of units were also factors.
David Sell, director of energy operations for Mid Kansas Coop in McPherson, will be one of those commuters.
He looked for a home in McPherson after relocating here from Iowa, but found choices were limited in his price range.
He and his wife recently closed on a house in Hutchinson, which is about a 25-minute drive from his job.
“I think the value was different,” Sell said. “For our money, we were able to get quite a bit more house in Hutchinson. I was surprised in our range of $250,000 to $300,000, you can a lot better quality house where I’m from in Council Bluff, Iowa.”
Hospira is a provider of injectable drugs and infusion technologies with a plant in McPherson that employs about 1,500 people. More than 500 of those employees live outside of McPherson and commute to work.
Pamela Hamilton, human resources director for Hospira, said the lack of housing can affect turnover rates.
“Commuting can be quite a commitment,” Hamilton said. “Some people get hired here and decide commuting is not the best thing for their family”
Nation Pizza and Foods buses in two vans of workers a day from Wichita to fill production jobs. The workers, who make just above minimum wage, can’t afford housing in McPherson, Denise Gegen, Nation Pizza human resources manager, said.
Those workers who do move here often live with co-workers because they can’t find rentals in their price range, Gegen said.
Bentley of Kansas Housing Resource Corporation said commuting is a common response to lack of housing in rural America. Commuting results in communities losing the full economic benefits of job creation. They lose enrollment in their schools, tax revenue and retail sales, among other benefits.
Hamilton said social capital also is lost.
“People who commute, generally, don’t stay in the community after work hours,” Hamilton said. ... “We miss that economic layer. They tend not to participate locally in philanthropy projects or events or participate with the United Way or the YMCA or the SPCA or other local organizations. Those 500 return to their own communities where they are going to go out dinner and coach their children’s teams.”
Housing relief will come slowly. Housing shortages in rural communities have built to a head over years and sometimes decades.
The Kansas Legislature allocated $2 million for a moderate income housing program that is being administered by the Kansas Housing Resource Corporation. A city or county applies for these funds and then works with a contractor, developer or nonprofit to develop the housing. However, Bentley admits $2 million is not much when dealing with the current housing problem.
Communities can help builders by making infrastructure available, tearing down dilapidated buildings to make space for new development and identifying areas where in-fill can occur.
Some communities are offering tax credits for those who build new homes in their communities.
Lewis said she hopes her community can work with private developers to fix up homes and offer them to low- to moderate-income families at reasonable rents.
The Kansas Department of Commerce also has offered assistance to communities that wish to perform housing assessments.
As the wheels of finance and bureaucracy turn, individuals like Rebecca Lewis wait and watch for the right time to capture their American dream — home ownership.
Lewis has increased her income and paid down debt. Her goal is to own a home by 2014. She wants home 72 to be her last, but she is uncertain if her dream will come true.
“I am ready to put down roots,” Lewis said. “I want to put my kids in a community and stay there. I think McPherson has a lot to offer.”
She forced a smile, “We’ll see.”
Affordable housing could help employee retention
With a new job many times comes a move, which means a new house. That house often is directly tied back in to the availability of a new job.
"I think that available or lack of available housing people are looking for can have an impact on if a person accepts a position," said Linda Jolly, El Dorado Inc. executive director.
She said it also affects businesses' retention for long-term and reliable employees.
The amount of housing a community has available can have a direct impact on economic development in a community.
"It's a common problem amongst all communities," Jolly said. "Our challenge is we don't have enough housing that people seek."
Jolly said many families today are seeking at least a three bedroom, two bath house.
Another factor is the age of the homes available. Many homes are older and don't have a lot of the amenities people have grown accustomed to today such as dishwashers.
El Dorado conducted a survey a couple of years ago of people who made the decision to move here and those who did not. The majority said they were looking for at least a three bedroom, two bath house.
"Many times they were not able to find very many opportunities with homes that size," she said.
The average ago of all homes in El Dorado is 1955, which means they don't have a lot of amenities that people have grown accustomed to today such as dishwashers.
Of the 4,500 housing units in El Dorado, 1,750 are rental properties and the majority are over 50 years old.
Even with these statistics some employers are not having issues with employees finding a place to live.
El Dorado USD 490 brings people to town each year when they hire new teachers, but they said they did not hear of any issues this year with anyone finding a place to live.
BG Products, which recently expanded its operation in El Dorado, has not seen an impact on them either.
"I'm aware of some challenges with growth in the city," said Reggie Graham. "It hasn't been a major issue to us as to yet. We have employees who live in over 30 communities throughout Central Kansas here."
He said it is up to the employee where they choose to live.
"We recruit based upon the positions we have and whether or not they want to work here," Graham said. "Twenty percent of our employees live in and around the El Dorado area. That number will continue to grow as we continue to expand here."
Barton Solvents also opened an El Dorado branch last year, creating new positions in the community.
"We haven't had any issues," said David Williams, branch manager. "We actually had El Dorado people who were commuting to Valley Center when we had that facility. Now that we are over here we've hired some additional people. Two-thirds of our staff are El Dorado people who were already here."
He said they only had two employees who moved here and they did not have any problems finding a place to live.
He said they do like for their employees to live close to their place of work.
When employees can't live in the town in which they work they face challenges with their commutes, often because of weather, and being able to address family issues if their children are in a different town.
"That is something we hear from employers," Jolly said. "Employers would prefer their employees live as close to the job site as possible."
To make sure there is suitable housing, communities are being proactive.
Cities throughout Butler County have implemented Neighborhood Revitalization Programs targeting not only a specific areas but in recent years have been made city wide.
"That particular program addresses existing and new homes now," Jolly said. "It's an investment on the part of the city and citizens to give people the opportunity to either build new or improve existing and defer real estate taxes for either five or 10 years. That's a real positive move."
It also covers in-fill of an existing property. An in-fill in a neighborhood often leads to additional homes in that area doing rehab or upgrading.
Another option for communities are to offer HOME grants, which El Dorado has done, allowing for the rehab of properties for low to moderate income families who could not otherwise afford to make the improvements, such as improving safety, electrical, windows, doors and other health and safety issues with the home.
The latest opportunity is for grants from the Kansas Housing Resources Corporation for new moderate income housing.
"We think this is a great opportunity to see some new moderate incoming housing," Jolly said.
As communities continue to work to bring new businesses to town, they also will continue taking advantage of all opportunities to offer adequate housing.