Using construction of new property as an indicator, even the casual observer might gather that the rental industry in the Blytheville area is experiencing an upswing.
According to both local experts and national trends, the ebb and flow of renters can serve as a barometer for the current state of the economy.
Over the past year, the construction of rental properties has grown, both on a local and national level. According to an article published by the Wall Street Journal at the end of 2011, last year saw a national increase of 25.3 percent in the construction of residential developments with two or more units; while single family home construction only rose 2.3 percent. In Blytheville, developers and property investors are increasing their purchases, because it is always easy to keep rental property full.
"New apartment complexes have been built because developers can keep them full," said Judy Willard of Blytheville's Professional Home Sales. Willard's company, in addition to traditional real estate sales, also sells properties to investors who plan to use them as rental homes.
"The housing market here is still good," she said, "but we are most certainly in a credit crunch since 2008. It's harder to buy a home in the lower income bracket. Several years ago, if you had a credit score of 500 you could buy a house, now it has to be upwards of 600. It's much tougher to sell a $50,000 house than a $200,000 one. Some people can never buy a home, because such a high credit score is required by lenders - they're not selling junk loans anymore."
With the door to home ownership closed to such a large portion of the local population, rental properties become the only option, whether they be apartments, duplexes, or single family homes. Frank Iacampo owns multiple rental properties in the area, and has been in the rental business for 20 years. He said that he owns a few properties which are multi-unit, but prefers to work with houses, and that the past few years have been prime time to buy homes in foreclosure.
"I love remodeling houses," he said, "and the market right now as far as selling is so bad that a lot of investors, including myself, will just end up renting those home that we've bought and remodeled. There are always renters...people who have lost their homes to foreclosure have to rent somewhere. All of my properties stay full and I have waiting lists."
Iacampo echoed Willard's opinion about the reason why so many Blytheville residents choose to rent instead of buy. "People who would be buying what makes up about half of the property in Blytheville - in the range of $50,000 to $70,0000 - have terrible credit. They have medical bills or cell phone bills or whatever, and their credit is too low to receive a loan, so the only people buying those properties are investors. "The rental market is definitely better over the past few years. I've been buying repossessed homes in Blytheville for eight to 10 years, but over the past two years there's been a definite uptake in the amount and the quality of repossessed homes. At first they were in really bad condition, then we started seeing that the houses were okay but the neighborhood might be undesirable, but now we are seeing nice houses in nice neighborhoods that were repossessed. A lot of them only need a coat of paint."
As for the price of rent in the area, Iacampo said that in the newer apartment constructions it does trend high, but that many of the new apartments being built towards the river are used by industry to house their employees, and those companies are measuring local rents on a national scale. "I do think that rent here is high based on the value of the property," he said, "it's just my opinion, but a $50,000 house should rent for $500 a month. In this town, though, you see lower end houses going for that same price. It's just a suppressed market -- people can't get loans and there's no demand except from investors."
The increase in both the amount of rental property and the prices they can name may indicate poor news for area residents who dream of owning a home, and the increase of foreclosed homes does show that area residents have suffered as a result of the national economic collapse over recent years, but Willard said that it can also be interpreted in a positive way.
"People come where the jobs are," she said, "and we do not have a lack of jobs in Mississippi County. So we are keeping rental properties full and the housing market is continuing to move, and that is a rarity in our country these days."
sharris@blythevillecourier.com