Rural Housing Shortage, Catch-22

Rural America’s Silent Housing Crisis

Accounting for only 20 percent of the population, residents of more isolated areas struggle to find a safe, affordable place to live—and to make anyone else care. – http://www.theatlantic.com/business/archive/2015/01/rural-americas-silent-housing-crisis/384885/ 

 

The article focused on poverty and the accessibility to affordable housing, yet this topic is very much relevant here Republic County.

Low rents in rural Minnesota stymie new housing

This Daily Yonder article that stated the same issues that Republic County faces with rental housing development. www.dailyyonder.com/roundup-gas-station-dining-delta/2014/11/11/7609

“Housing shortages in prosperous towns like Roseau, Minnesota, are stifling economic expansion. Traditionally, demand for housing creates opportunity for developers to build more apartments. But lower rents in rural communities mean the numbers don’t add up for developers, reports the Minneapolis Star-Tribune.

Reporter Adam Belz writes about the complex factors that are holding up housing expansion in Roseau:

  • Lower rents in small towns like Roseau make building new apartments far less attractive to developers. A developer would need to charge about $1,100 to $1,300 a month in rent to get the desired return on investment for new apartments. Rents in Roseau are much lower – typically around $600 a month.
  • Economists usually point to low wages as the primary reason for lower rents. But that doesn’t explain all the difference in Roseau. Wages in northwest Minnesota are about 25% lower than wages in the Twin Cities, but rent is a whopping 80% lower in Roseau than the Twin Cities.
  • The rural rental market works differently than the urban market, where there are larger pools of potential renters all in the same income category – a key ingredient for making apartment development work financially. Fewer renters in the same income category means apartments in complexes are more likely to sit vacant and “wreak havoc for a landlord.”
  • Construction costs are higher because a number of contractors folded during the recession. Others are busy meeting construction demands in North Dakota, booming from oil production.
  • New apartment complexes typically appraise for less than they cost to build.

Government grants and loans can help fill the gaps, Belz reports. But there are no easy solutions.

The bottom line is that the housing squeeze is affecting employment opportunity. Snowmobile manufacturer Polaris says it could add 200 workers if housing were available for them locally.”

Republic County

We are seeing large growth in jobs with Reinke Manufacturing in 2013. Love’s Travel Stop (coming summer 2015) will hire 25 new employees. Our major industries like agriculture, healthcare, and education often struggle to secure housing when hiring new employees. Home sales have soared in the last two years with 77 homes sold in 2013 and 55 in 2014 home sold. Both years are well above the average of 45 homes sold annually since 2007.

RPHomesGraphic1

Republic County has a limited, almost underground, market for rentals. Potential residents won’t find many listings and are best suited going through connections from the employer, church, local coffee shop, or bank.  Our county hasn’t had to rely on the rental market to house residents. Home ownership is more common is rural areas because housing is typically more affordable where over half of the housing had been built before WW-II. Also the stigma for a typical rural renters was financial instability and potential damage to property. Now that some rural towns are seeing growth in jobs and housing demand and rentals are becoming pivotal to a healthy housing cycle.

Republic Co. has had some relief coming with the new Buffalo Apartments in Belleville. The project was taken on by the Pioneer Group who is renovating the old Belleville Middle school and adding towne homes behind the property. Of the 100+ occupancy of the mixed income project only 25% will be open market without income restrictions. We are hopeful that the income based units will open up housing in Belleville and around county as elderly and low income renters utilize the new property.

Housing Shortage – Catch-22

Many rural communities are finding ways to creatively access capital for housing development in their communities. Stafford County is similar to Republic County in size and housing demand. Their economic development group has been able to make some head-way in a recent story by Hutch News – www.hutchnews.com/news/local_state_news/towns-fight-housing-shortage-catch/article_9cf2a2ec-2031-574a-b3e6-fde589c4aad0.html

“… But there is resilience in rural Kansas as creative efforts emerge to tackle depopulation and vitality. Yet, as many county officials across western Kansas look for ways to grow and survive, even if they would attract people, they are having a hard time finding a place to put them.

It’s been a struggle in Stafford County, where Economic Development Director Carolyn Dunn is fighting the uphill battle to grow population. The U.S. census estimates that Stafford County, with a current population of 4,350, has lost 430 people since 2000. Meanwhile, only 3 percent of the county’s housing inventory was built in the past 25 years, and most of it is occupied.

Often times, the school district is one of the largest employers for rural counties. Stafford County has three school districts, including Macksville. Just a few years ago, the Macksville superintendent told Dunn that he hired five new employees but none of them could live in the county because they couldn’t find a place to buy or rent. Meanwhile, she added, a new Stafford principal a few years ago struck out in finding a rental and ended up renting an apartment in the assisted living section of a local nursing home….

The first step was to purchase the lot in Macksville for $10.

State funding has helped the county move forward with solutions. Last year, Stafford County Economic Development received a $168,000 Kansas Moderate Income Housing Program grant administered through the Kansas Housing Resources Corporation. Meanwhile, Dunn also was successful in garnishing $175,000 in Community Service Tax Credits through the Kansas Department of Commerce that generated $250,000 in funding. For every $1,000 a donor contributed, he or she was able to reduce Kansas income taxes by $700 dollars.

Leftover funds, along with corporate pledges and a $7,500 grant, will help spur the next project, which will take place in Stafford, Dunn said. The city of Stafford donated two lots for housing.”

Housing Assessment Tool

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In 2014 Republic County assisted communities with the Housing Assessment Tool. To date Belleville, Scandia, & Courtland have done the initial work to do windshield survey’s of their town’s housing stock and document standard, deteriorating, dilapidated, and vacant properties in these towns. Also done was identifying major employers trends and their demand in housing for new employees. From there they can assess better what their town needs in terms of single family or multi-family housing.  You can view the Housing Assessment Tool brochure here – www.republiccountykansas.com/wp-content/uploads/2014/06/HAT-HIAC-Brochure-3-2-12.pdf

The State of Kansas has recognized rural housing has many issues but still has a lot of work to do to create a major impact state-wide. www.cjonline.com/news/2013-12-04/kansas-council-explores-rural-housing-shortage