Editor’s note: This is the final part of an Idaho State Journal series titled Housing Crunch about the shortage of housing in the local market. Today’s article explores the competitive rental market. Part II, which ran in the March 24 print edition, focused on new construction, and Part I, which was published on March 21, highlighted the causes of the housing shortage.
Isaac Delgado gathered his five children and asked them to kneel for prayer when he discovered a local rental home listed on a classified advertising website for $1,200 per month.
“We really need this,” the Pocatello man, who works as a welder for an agricultural equipment company, prayed.
He then assured his children, who range in age from 2 to 13 years old, that everything would work out in the end.
Renters throughout the Pocatello and Chubbuck area share Delgado’s frustration regarding the increasing difficulty of finding an affordable apartment or rental home.
In the current seller’s housing market in Southeast Idaho, many people who had hoped to buy a home have given up on finding a viable option and are instead competing for rentals. Consequently, rentals have also become scarce in recent months — and the shortage has reached a critical juncture for the area’s lowest wage earners.
In Bannock County, 32% of households rent, which is 1% above the state average, according to United Way of Southeastern Idaho data.
For the past four years, Delgado has rented a townhouse for $850 per month. Last November, however, his landlord gave him notice that he intended to capitalize on the hot housing market and sell the property.
Delgado made an attempt to buy the townhouse but couldn’t qualify for the mortgage because of his lopsided debt-to-income ratio. He’s been looking for a place to rent close to his work and his children’s schools ever since, yet he always seems to call property managers a moment too late.
“Everything has gone so fast and everything I’ve applied for and wasted money on applications for, I’ve been in line and any time an opportunity has come it’s been taken,” Delgado said.
The rental home Delgado prayed to land was just a mile away from his current residence. It would have been perfect. Unfortunately, a few other people had already made offers ahead of him. He’s had to add about 30 miles to the radius for his housing search, knowing his current rental home could be sold at any time.
‘At the mercy of the landlord’
One of Jim Price’s tenants recently approached him simply to thank him for renting to him.
The renter had been living alone in a small apartment, searching for a larger unit so he could move his family to Southeast Idaho. In January, he signed a lease with Price for a two-bedroom rental and was subsequently able to reunite with his wife and kids.
“If a family doesn’t have a place to live they can’t set down any roots and they’re always at the mercy of the landlord,” Price said. “If we want families to succeed, we’ve got to figure out how to get them affordable housing that they own and they can live in for decades.”
Advertising open units is no longer necessary for Price. The moment one of his tenants decides to move out, he usually hears from a friend of the tenant requesting the space.
“There are no rentals available,” Price said, referring to the fact he currently has no vacant rental homes or apartments.
Price rents four homes with three to four bedrooms that experience virtually no turnover.
“They’re just taken. People aren’t going to leave,” he said.
He also has a dozen one- to two-bedroom homes that are all currently occupied by renters as well.
“If your landlord says, ‘I want to get rid of my investment,’ your kids are changing their school district. Everything changes,” Price said.
Local builders have been busy trying to add new inventory to the local rental market.
Kartchner Homes of Idaho Falls is now building 384 apartment units and 20 townhouse units in the Northgate area of Pocatello. The units will all be available as rentals.
Gate City Builders is constructing 18 four-plex buildings off of Quinn Road in Pocatello. Those 72 new rental units should be finished by the end of April, according to Gate City Builders official Brad Merzlock. The Pocatello company is poised to start construction on 14 additional four-plex buildings in Chubbuck.
Merzlock said, “They’re all sold to investors who I’m sure are renting them out.”
The company also plans to build 16 townhouse units off of Yellowstone Avenue in Chubbuck.
“You can’t build them fast enough,” Merzlock said. “At least half of them are bought up by the time we start them.”
‘Pushed out of the game’
About 100 local people with low incomes who have federally funded vouchers to subsidize their housing costs are still searching for a home to rent, according to Sunny Shaw, CEO of Housing Alliance and Community Partnerships.
“I bet at the end of the day only 25 of those will lease up,” Shaw predicted. “The others won’t be successful.”
The vouchers, offered through the U.S. Department of Housing & Urban Development, cover rent costs beyond 30% of a household’s income. But with virtually no rental housing inventory in the community, having the ability to pay is only the first hurdle to clear for Shaw’s clients. Many of them are forced to remain in their current situations, such as having two families share a home, living in a trailer during warmer months and even “couch surfing.”
“The buying market is so tight. That’s what this all stems from,” Shaw said. “It’s pushing my folks out of the game.”
Shaw’s organization, formerly known as Housing Authority of the City of Pocatello, serves roughly 600 clients who earn no more than half of the local median income. Pocatello’s median income in 2019 — the most current figures from the Idaho Department of Labor — was just over $46,000. Even now, however, Shaw believes that number is inflated. Her most well-to-do clients are making significantly less than half of the area’s estimated median income. She’s convinced the real local median income figure is well below $42,000.
Within the past six months, Shaw has seen rental costs skyrocket, and landlords have created a slew of new fees. In addition to application fees to cover credit and criminal background checks, some landlords are now charging lease-preparation fees, rent payment transaction fees, online payment fees, lease renewal fees and even fees for moving out once a lease is up.
“I’m seeing new fees I’ve never seen before in 21 years in the market,” Shaw said.
Shaw emphasized that she and her staff appreciate the community’s landlords, who fill an essential need. She warns against implementing policies that might force landlords out of the business, thereby further limiting options for the very renters who struggle with housing insecurity.
The United Way of Southeast Idaho tracks local poverty in its ALICE Project report. ALICE is an acronym for asset limited, income constrained, employed. Last summer’s ALICE report, which was based on 2018 U.S. Census data, found 12% of Idaho residents were living in poverty and another 28% were classified as asset limited, income constrained, employed — a category that’s been on the rise.
In Bannock County, 43% of residents lived below the ALICE poverty threshold, according to last summer’s report. Furthermore, 44.8% of Bannock County households were not living in housing deemed to be affordable — meaning housing costs exceeded 30% of household income. Statewide, only Oneida County had a higher percentage of households living in unaffordable housing.
The ALICE report listed the median annual income of Bannock County’s population of renters at $29,418. A Bannock County family earning less than $30,000 annually could afford to pay no more than $735 per month in rent, an amount below HUD’s $771 estimate of the fair market monthly rate for a two-bedroom apartment in the county.
The ALICE report referenced rising worker vulnerability in Bannock County, with local economic growth concentrated in low-wage jobs.
“The number of (asset limited, income constrained, employed) households has continued to increase as a result of rising costs and stagnant wages,” the report stated about Bannock County.
United Way of Southeast Idaho CEO Kevin Bailey said housing instability makes it tougher for families living from paycheck to paycheck to retain jobs and access health care, and their children have a tough time keeping up with school work.
“If you’re not in stable housing you’re not taking care of all of that stuff that leads to a stable life,” Bailey said.
The challenge of fulfilling their mission
In addition to running the community’s homeless shelter, the Pocatello nonprofit Aid for Friends provides financial assistance to help people who are struggling to pay rent and make deposits on rentals.
“They cannot find housing they can sustain. It’s not affordable and the minute it goes on the market — I mean within hours — the landlord and property manager are going to have five to six applications,” said BJ Stensland, executive director of Aid for Friends.
The lack of rental units has impaired the nonprofit’s ability to meet its mission of lifting local households out of poverty.
“There’s no housing, and yet we’re expected to move people out of the (homeless) shelter and into housing,” Stensland said.
NeighborWorks Pocatello offers assistance to help low-income families make a down payment on buying a home. Home ownership has become largely unattainable for the organization’s clients, however, leaving them to try their luck in the increasingly competitive rental market.
“Most of our clientele is definitely getting priced out of the market,” said Heather Pimentel, home ownership center manager with NeighborWorks. “They tell me they’re approved for an $80,000 to $90,000 loan amount, and I have to tell them (housing in that price range is) just not available right now.”
Pimentel has also dealt with many renters recently whose landlords have sold their homes.
Seeking to bolster the inventory of affordable housing, NeighborWorks built four 1,100-square-foot homes last year, each priced at about $175,000.
NeighborWorks has also leveled the former Bonneville Elementary School building in Pocatello to make way for up to 26 affordable homes, which will be priced for various income levels.
“It’s been really typical these last couple of years before we get a house built completely we get an offer on it and it’s under contract, whereas four or five years ago we had to build it and the interest didn’t really happen until it was done,” said NeighborWorks Executive Director Mark Dahlquist.
The Pocatello City Council has been discussing options to make it easier for builders to obtain permits. Councilman Roger Bray said the scope of the build-out that the housing crunch should have stimulated hasn’t come to fruition, due in part to the loss of builders during the last economic downturn.
Bray believes the City Council must play a role in fostering an environment that’s supportive of builders willing to add badly needed housing inventory.
“I think we’re just pushing poor people down further,” Bray said. “Those who have decent skill sets and decent education are probably getting in on Idaho’s boom, but I really think there are others that are just stuck in a rut.”