More Quad-Citians seek rental housing

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By Doug Schorpp | Monday, October 13, 2008 4:31 AM CDT | () comments

Mary Knox sits at her kitchen table and goes over her bills in her new home, a one-bedroom apartment in the Moline High School Lofts in Moline. She lived in a house for 27 years while raising her children, but eventually she could no longer afford to make house payments or pay for the upkeep of her home. Buy this Photo

Jennifer and Dan Wader of Davenport someday would like to purchase their own home.

But for them, like many others in the Quad-Cities, the current economic climate will not allow that to happen.

Mary Knox of Moline owned a home for 27 years. But after her marriage ended, she no longer could afford the mortgage payments or the upkeep of the home where she raised her five children. Today, she lives in a one-bedroom apartment at Moline High School Lofts and struggles to make ends meet.

“The upkeep was more than I could handle,” she said of her former home. “So, I sold it to my son as is. Then I moved to a house on the Rock River and went through my first flood. With the job I had, the rent was too much. So I started to look for an apartment.” She has lived in the converted high school building a year ago this week.

The Waders and Knox are representative of the changing face of the Quad-City rental market.

Nationally, experts say an increasing high demand for rental property is tied to the high number of home foreclosures or the fact that many people simply cannot afford to purchase a home now.

But in the Quad-Cities, that seems to be only part of the equation. Steve Henson, of Mel Foster Property Management in Bettendorf, offers a variety of scenarios why more Quad-Citians are seeking rental housing over home ownership.

“They may want to rent a house ... maybe they can’t afford to purchase a home at this time, but they can rent to get their credit improved,” he said. “As far as our area, I don’t see it as foreclosures,” being a primary cause.

Dennis Peterson has owned Peterson Properties for 20 years. He leases residential apartments in Eldridge and Park View. And he said he has been quite busy the past year.

He said everyone seems to have their own reason for wanting to rent instead of buying a home.

“I am 100 percent full and have calls every day from people looking for units,” he said.

Some calls were from people flooded out of their homes earlier this summer in places like Columbus Junction, Wapello and Oakville, Iowa. Others prospective renters, he said, are people who are building new homes but need a place to live for several months until construction is completed. But he also sees those who cannot afford to own houses any more

Lisa Stang is manager of three apartment buildings, including Crescent Lofts, that were renovated on Iowa Street in downtown Davenport. She sees the effects of a weak economy.

“I am always getting calls,” she said.

She said the financial woes have made her industry “kind of open.” Stang said people losing their jobs, mortgage payments increasing and the growing number of home foreclosures have left people searching for rental alternatives.

On the other hand, Celeste Mosher, who has been manager of Fox Pointe Apartments in East Moline for several years, said she is witnessing very little difference in the market.

“I see slightly more in demand,” she said. “What I am having here is people new to the area. ... And I have people coming here in their early 20s, figuring it is time to go out on their own. But I am seeing no foreclosures.”

However, Mosher said she is seeing tenants who remain for longer periods of time.

“I think they stay longer because of the economy,” she said. “We lose fewer people who leave to purchase their own house.”

Michael Steen, membership chair of the Quad-City Rental Property Association, said he is not seeing a “huge influx of tenants.” However, he said there seems to be more demand for all rental properties.

“I do see a definite increase, especially in the need for single-family houses,” Steen said. “I do think the demand is up. It could be a variety of reasons.”

In some cases, prospective renters might find themselves turned away by apartment owners scared off by the foreclosure history on their credit reports.

When Jane Garvey, president of the Illinois Rental Property Owners Association, informally surveyed the 500 members of her group, the landlords expressed some discomfort with renting to people with foreclosure issues.

“They need to know they’re going to get paid,” she said. “As a group, people seemed more reluctant to accept people going through a short sale. They look at it as signing a contract but not going through with it.”

Meanwhile, renters like Jennifer Wader and Mary Knox find themselves at different crossroads.

Wader moved here from Massachusetts in 1979 with her parents, moved back East a few years later, then came back to the Quad-Cities for good in 1998. She and her husband have one child and live in a duplex on East 15th Street in Davenport.

“We would like to own a house some day, but we couldn’t do it right now with the economy,” she said. “I am tired of renting, but now we do have the best landlord we’ve had in 10 years.”

Knox is adjusting to rental life.

“When I got divorced, I had debts,” she said. “I struggled paying for those bills. I haven’t had credit cards in seven years. I just don’t have the extra money. There is no way I would be able to afford to live in a house today.”

Knox said she pays $585 a month for a one-bedroom apartment. Her rent is on a sliding scale according to her income. “I have my car paid off. Then there is the gas and electric, my cell phone, my car insurance. I had to get rid of cable TV. I couldn’t afford it.”

And she now is looking for a second job.

She loves her new surroundings and is grateful for her new home, even though it still is an adjustment.

In addition to getting settled, she suffers from fibromyalgia, a condition that can cause widespread pain in the muscles, ligaments, and tendons and limits what she can do.

“My children thought I should try apartment life,” she said. “I am kind of crammed. I have five kids and 27 years of my life came with me. I had a lot of antiques I had to part with that belonged to family members who had passed.”

On the other hand, “I don’t have those worries like my house needing a new roof, or cutting the grass, or needing new appliances. And I don’t have to shovel the snow.

“My life is not bad by any means. God puts things in front of you. You don’t know exactly why, but there is a reason.”

Iowa, Illinois groups track rental trends

Julie Eckard, executive director of the Illinois Rental Property Owners Association, said on the statewide level, she sees home foreclosures as a big reason why rental property is in higher demand these days.

“The tenant base is increasing because of foreclosures,” she said. “We lost a lot of tenants a few years ago when they were giving loans to anybody, no money down. But now those (adjustable rate mortgages) are now coming due.”

With higher mortgage payments, more people cannot afford to keep their homes. “I think it is pretty consistent. We just know people are telling us a lot more renters are out there,” Eckard said.

In addition to foreclosures, she said others simply are “staying in the rental market because it is not as easy to buy homes anymore.”

Several years ago, when it was much easier to purchase a home, she said rental managers had to offer various incentives such as lower monthly rents, waiving the security deposit or giving a month’s free rent.

“But now we are seeing a lot less of those signs for free rent,” she said. “My rents have been bumped a bit. We can be pickier and not give away as much.”

Dave Sollenbarger, director of the Iowa Landlord Association, agrees that the changing economy is bringing more people into the rental market.

“I think foreclosures raised a part of what we are seeing. And what we are seeing is an increase in occupancies,” he said. “The economy still has a lot to do with occupancy. Sometimes, it is easier to pay a monthly rate than a mortgage payment. Unemployment plays a role, too.”

Sollenbarger said that at a recent monthly meeting of his organization, he heard feedback that overall there were fewer vacancies, which at allowed landlords to cut down on giveaways such as free rent.

Regarding credit histories, Sollenbarger said if the only red mark on a credit report for a potential renter is a recent foreclosure, he does not believe that would be enough for a landlord to reject that person as a tenant. “I couldn’t imagine turning them down for that,” he said.

Rob Massey is a consultant for Rentals.com, a comprehensive real estate rental site with one of the largest collections of single-unit and vacation rental information on the Internet.

“There is no question that the rental market as a whole has rebounded considerably since the lending practice has become more conservative,” he said. “However, some local rental markets around the country are still struggling. While subprime lending was at its peak, the rental market nationally was adversely affected.

“What we see now are the effects of many people returning to the rental market after home ownership didn’t work out and the resumption of consumers who are setting up households for the first time returning to the traditional model of renting prior to buying.”

Doug Schorpp can be contacted at (563) 383-2219 or dschorpp@qctimes.com.

Doug Schorpp can be contacted at (563) 383-2292 or dschorpp@qctimes.com. Comment on this story at qctimes.com.