Springfield’s rental picture marked by complexity

Amy Blansit: Younger people may have traumatic views of homebuying.

Amid an ongoing discussion of the high percentage of renters versus homeowners in Springfield, one organization backs the choice to rent instead of own.

“With higher mortgage rates, higher home prices and the lack of overall inventory, the economics of renting versus owning has never been more favorable,” said Brent Brown, board president of the Springfield Apartment & Housing Association and a multifamily housing developer and property manager through Greenway Development Group LLC.

Commercial real estate firm Cushman & Wakefield reported in January that the national average cost of a home mortgage is now $400 more expensive per month than the average rent, and this figure does not include taxes, insurance, upkeep and other nonmortgage home expenses. If all costs of homeownership were included, the report states, the monthly savings from renting versus owning would be close to $1,000 on average.

High rental rates in Springfield often bring accounts of blighted properties and poor treatment of tenants – situations SAHA condemns and aims to help mitigate, according to Brown. But he notes there’s more to the rental story.

Nationally, Brown said there is a shift in attitudes about rental housing, with a rise in renters among all demographics. U.S. Census Bureau data shows the number of renters nationally earning over $200,000 per year quadrupled from 2010 to 2022.

A Springfield housing study commissioned by the city and released in December 2023 showed the local homeownership rate at 42% of its census-reported 79,100 households. That rate had declined by 17% from 2010 to 2020. In the state of Missouri, the homeownership rate is 71%, according to the Federal Reserve Bank of St. Louis.

Brown said SAHA’s membership includes owners, developers and other businesses in the rental housing industry, representing 15,000 single-family and multifamily dwelling units.

“We hope to be a significant part of the discussion regarding future housing needs for our community,” he said.

Brown said there is a clear demand for housing, but offerings need to be diverse if Springfield is to remain an attractive destination.

“We cannot take a one-size-fits-all approach,” he said. “Economic vitality will depend on our providing a variety of housing stock to meet the needs of those wanting to live here.”

The U.S. Department of Housing and Urban Development put fair market rent prices at $921 for a two-bedroom apartment in fiscal 2024, up from $871 in fiscal 2023.

Rent.com reported Kansas City rental rates jumped 16% in the past year. In Springfield, rates have risen by about 9% in the last 24 months, Brown said.

Using data from their listings, both Rent.com and Apartments.com reported this month that the city’s rent prices rose 1.5% in the past year.

“Springfield is still about half of the national average when it comes to average rents,” Brown said. “It’s still considered to be a very affordable place to live.”

Brown said the choice to rent is an attractive one for many, though it is one that is often driven by financial factors as well as a desire to avoid spending time and money on maintenance. Many would-be homeowners prefer to spend their money on travel and other goals, he said.

“Demand is changing, for a variety of reasons and a variety of demographics,” he said.

Brown said Springfield requires many different housing types, including rentals, to meet the needs of the growing city. He acknowledged, however, that city officials often have to contend with bad landlords who rent blighted properties and ignore tenant health and welfare needs.

A report on blighted properties within the city at the November 2023 City Council meeting tracked 521 cases in the first six months of 2023. Some 68% of the blighted properties were rentals.

“I believe we have to be very strategic about imposing unreasonable regulations on our industry based on a few landlords that aren’t handling their business in the right way,” he said. “There are good and bad landlords. As an association, we have standards that we set. I’d like for some of those landlords to join our association so we can help them find their way in doing so.”

Shifting priorities
Titus Williams, president of real estate services and development company Prosperiti Partners LLC, whose portfolio of development projects includes market-rate multifamily housing, said many potential homebuyers regard rent as a better option, at least in the short term.

“People are kind of seeing that economic stability has been so unstable for the last 20 years that it’s potentially safer to rent than to own because you’re not burdened with large debt over your head,” he said.

Like Brown, Williams said priorities have shifted among potential homebuyers.

“Individuals are taking longer to get married, and it’s taking longer for them to have children,” he said.

These same people are not buying small starter homes that they fix up to create equity as they may have done a generation or two ago, Williams said.

“If you’re waiting to have a family until your mid-30s, like I did, you have to kind of jump into something that’s a lot more difficult to get into,” he said. “That can be harder to budget for. Their financial metrics are out of whack. They’re not used to spending $3,000 on a mortgage; they’re used to spending $1,000 in rent. Because of the big economic jump, that’s probably daunting for most young families.”

He noted the city, through its Forward SGF comprehensive plan, is looking to provide diverse housing types, like Prosperiti’s planned 72-unit townhome development south of Commercial Street.

“Historically, there have not been many townhomes or condos built in Springfield with smaller unit types built for economies of scale,” he said. “That diversity of housing types allows for entry to be a little bit less for a person buying a property.”

The Drew Lewis Foundation recently announced its plan to develop a pocket neighborhood of roughly a dozen homes for purchase in Grant Beach.

Amy Blansit, the foundation’s founder and CEO, said Springfield’s current codes prevent some types of housing, which she referred to as affordable middle housing, such as condos, duplexes or quadplexes. She said Springfield city policy is just beginning to allow pocket or cluster neighborhoods like the one the foundation is planning this next year.

Blansit said today’s potential first-time homebuyers saw their parents live through and potentially lose their homes in the catastrophic mortgage crisis of 2007-08, and more recently they witnessed the loss of homes or the fear of missing payments during the COVID-19 pandemic.

“The generation that would be buying homes now have had a lot of unfortunate traumatic experience with what homeownership means,” she said.

While the American dream has traditionally been to own a quarter- or half-acre of property with a picket fence far from the city center, Blansit said that’s not the desire of most people ages 35 and under.

“They’re interested in life that has more flexibility,” she said.

They don’t want to spend their weekends working on a lawn, Blansit said; instead, they’re aware of the environmental toll of maintaining a large green yard. The foundation’s planned development looks to have some of the smallest lots in the city, depending on Springfield City Council approval, with easements for the foundation’s management of shared spaces.

Ownership desire remains
Although anecdotal evidence suggests a shift away from the conventional American dream of homeownership, some data suggests the dream remains but is tempered by practical considerations.

The Cato Institute 2022 Housing Affordability National Survey found 87% of Americans were concerned about the cost of housing, with housing prices rising more than 40% nationally since the start of the pandemic. The survey found 76% of Americans said now is a bad time to buy a house.

In a June 2023 report from Fannie Mae, 87% of survey respondents said homeownership is a factor in living a good life, and 94% cited living in a location they like.

The Census Bureau reported that 2022 was the first year that more than 50% of millennials were homeowners. The National Association of Realtors reported qualifying income required for the average starter home rose to $96,000 in the second quarter of 2023, compared to $49,000 only three years before in 2020.

Tenants organize
Nationally, about 64% of people own their residential units, according to census figures. That rate is eclipsed by China with 89% and Brazil with 72%, according to a January report in The Wall Street Journal.

Other countries that outpace the U.S. include Russia at 89%; India, 87%; Mexico, 80%; and Canada, 67%. The European Union reports its homeownership rate at 70%.

Though renters comprise a majority within the city, some tenants have joined forces to amplify their voices before decision-makers. Members of the renters’ rights organization Springfield Tenants Unite are frequent participants in the public comment portion of Springfield council meetings.

At the Feb. 12 meeting, several STUN members protested conditions experienced by residents of Jenny Lind Hall, an apartment for people 62 and over or with disabilities. STUN members pointed out that both elevators in the six-story building had been out of commission for a sustained period of time, leaving residents stranded. Alice Barber, one of the leaders of STUN, urged council to take steps to help tenants, like establishing right to counsel to protect them from eviction and prevent homelessness. Member Sarah Hines urged council to establish a property registry and a landlord licensure system that would require background checks, continuing education and a board to oversee their qualifications.

“Springfield residents have had enough, and we’re not going to take it anymore,” Barber said. “I urge everyone on City Council to listen to the people that you represent and make safe, accessible, truly affordable housing not just a priority, but your top priority. We cannot live without a home.”

Councilmember Heather Hardinger noted the issue has been going on for a long time.

“A lot of the inventory that’s been rented for so many years is deteriorating, and there’s all these issues happening – and the rent’s going up,” she said, noting there are limited resources for renters in bad situations.

Council will hold a retreat noon to 5 p.m. April 2 at the Lake Springfield Boathouse to discuss housing and other issues. The event is open to the public, and Councilmember Monica Horton invited members of STUN to attend and listen in.