Frankie Pelusi was no stranger to Bloomington-Normal when they returned to the area hunt for an apartment earlier this year.
Pelusi counts the Twin Cities area as home, although they spent the past five years living in Chicago.
Despite knowing the area, Pelusi was unprepared for the shock of navigating the downstate market.
“When I lived here before, in 2016, I was living in a three-bedroom house on North Main Street with laundry in the building, no pet fees and I paid $500 a month,” Pelusi recalled. “So when I moved back, I was like, ‘Oh, it’s going to be no problem finding an apartment.'”
As it turned out, finding an apartment was a problem.
First was the issue of availability — there was little to choose from. Then, when Pelusi did find an apartment within their desired price range, it was a place that “smelled like cat pee” and harbored roaches.
Pelusi ended up moving in with a family friend, choosing to pay more money for better living conditions while still looking for someplace affordable.
“I can’t find anything anywhere. It’s the same, like, four or five properties on Facebook Marketplace week after week,” Pelusi said. “It’s been brutal.”
Pelusi’s troubles are a microcosm of what renters and homebuyers have experienced across the Twin Cities for some time now: Demand is up, supply is low, and the market has responded accordingly.
A study published earlier this year by the Bloomington-Normal Economic Development Council quantified the issue that, until then, had been largely anecdotal: the area is short 4,300 units.
According to the study, the shortage has been driven by an influx of workers at the Rivian plant and later the Ferraro candy factory into a market that didn’t have a lot to choose from to begin with.
At best, it’s caused headaches for renters like the people who have been here for years, and that makes for a situation where people cannot find affordable housing. At worst, it’s left others toeing a fine line between being housed or homeless. And that’s not just because of a shortage of units; it’s because rent has gone up in the area for almost everyone.
“I’ve talked to multiple friends and they’ve all said, ‘No, on my salary, I can’t afford to rent an apartment right now,’ or ‘I can’t even find a place to rent,'” Pelusi said. “The people who have been here for years, and that really make Bloomington, Bloomington, are not able to find affordable housing.”
Mustaali Carbaidwala, a managing broker with Class Act Realty, agreed rents are going up — but they’re going up because the prices of everything else are going up as well.
“Inflation is a term I can’t really wrap my head around. What I do know is that our staff is getting paid, in some cases, 50% more than they were two years ago,” he said. “Our contractors that we work with for lawn care and snow removal, our tradespeople, their rates have gone up 33-50% more. Yes, rents are going up, but it’s to offset the costs for one and the spike in demand is another big piece.”
From Carbaidwala’s perspective, an increase in rental rates is overdue for the Bloomington-Normal market.
“I think rents had been relatively flat for 10-plus years,” he said. “Supply and demand was pretty much at an equilibrium for the last decade or more. I think rents are starting to catch up a bit to where, maybe, they should have been.”
The rent increases are applicable to both renters looking at an unoccupied or soon-to-be-unoccupied unit, as well as renters who don’t intend to move.
“It is painful for somebody who, a year ago, rented some apartment at, say, $650, and today we might tell them that it appears as though the market rent is $775,” said Young America president Andy Netzer. “It’s tough to swallow more than $100 increase in rent, so we’re usually trying to meet a renewal somewhere in the middle.”
Like Class Act Realty, Netzer said costs for Young America, also a company comprised of multiple property owners, have gone up across the board as well, with staff getting raises and things like maintenance and insurance costs rising, too.
Renters, at least those who can afford to do so, also are paying those rates. A few years before the pandemic, Netzer said Young America was at 91% occupancy rate, trying to entice renters to sign leases. With more demand, less effort is needed, and people appear to be paying those rents.
“If the supply-and-demand market doesn’t justify it, the rents can’t go up,” Netzer said. “So, you could have insurance going up a lot because there’s been a lot of insurance losses in housing in the past couple of years… and you say, ‘Well, I’ll just pass this onto our residents,’ and are higher than your peers, nobody will rent those apartments.”
The bottom line is about profit, but both Netzer and Carbaidwala emphasized the personal component of their respective companies: Netzer said most of Young America’s property owners are “almost entirely” central Illinois-based and Carbaidwala said the property owners of Class Act also are “mostly local.”
“The owners that we manage this for — this is their livelihood,” Carbaidwala said. “They’ve spent money and millions of dollars and hard work into purchasing or acquiring these properties. So now, if expenses are increased, they have to raise rents to off-set that.”
From a renter’s perspective, increased costs coupled with a lack of transparency can be frustrating.
“My ideal in Bloomington-Normal would be that we can hold landlords accountable and say, ‘You’re renting this place out for $800 — what makes it worth $800?'” Pelusi said.
Toeing the line
These, of course, are the issues facing those with the means to get into an apartment, or who already have one.
Kat Johns works with PATH Crisis 211 in McLean County, specifically with its COVID-era Rapid Rehousing Program. The program can only help people who are actively in a state of homelessness — of which there were 133 people at the time of this interview. But Johns said, anecdotally, she’s noticed an uptick in need beyond those who are homeless.
“That’s a pretty typical waiting list,” Johns said. “We definitely see more people couch-hopping. A lot of people who normally wouldn’t be toeing that line are toeing that line right now.”
Johns said requirements to rent an apartment also have increased, ranging from landlords or property managers setting credit score parameters to asking for proof of three-times-the-amount-of-rent from potential tenants.
“I definitely see a harder time for people getting approved for places and landlords needing more upfront,” she said. “Honestly, a lot of landlords are scared. Not as much as they were right when the eviction moratorium ended, but …. you see a lot of hesitancy to take those people that don’t have good landlord recommendations, or who do have an eviction on their record.”
In fact, one of PATH’s own leaders is in that exact predicament, were he to decide to move.
Six years ago, Liam Wheeler was homeless and struggling with addiction. In Bloomington-Normal, he was able to “rebuild my life from the ground up,” and “worked really hard to correct the mistakes in my life.”
Now the director of PATH’s Homeless Services Program, Wheeler said he’s lucky to have a good landlord right now because there wouldn’t be a place for him, given his housing record.
“I’m really grateful for our relationship, but looking at moving forward into a nicer place that fits my long-term goals — that’s not a possibility,” he said. “I don’t make enough money to be able to navigate within this housing market. There’s no potential for growth in this community.”
An added complication to the lack of rental units is people who don’t want to rent, but otherwise can’t afford to buy a house in the current market.
Amanda Marks and her husband are currently renting in Normal, after deciding to wait until the pandemic was over before they committed to a house.
“Whenever I look online and I find something… the really cheap ones are gone right away,” Marks said. “They are just gone really fast. We’re in kind of a hard spot, because do we stay, and not be able to have much to put into savings because rent keeps going up? Or do we take our chances with a house and a mortgage rate with the interest rates so high?”
There are no easy answers for people like Marks, Pelusi, Wheeler and others — and there are no easy solutions, either.
“It can’t be like the landlord’s solution or job, or just community partners or the government,” Wheeler said. “It’s going to take literally all of us working together to find the solutions because the disparity is too great for any one group of people to address.”
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September 14, 2022 at 06:15PM