Kokomo Tribune; Kokomo, Indiana

May 26, 2013

A flooded market

Renters struggle to find a place.

By Scott Smith
Tribune staff writer

— Lashonda Thomas thought she’d found a good deal in the form of a big, four-bedroom house down in a cozy hollow just south of the Wildcat Creek.

That was before a couple of feet of water swamped the house in the 300 block of East Murden Street, putting Thomas, her husband Michael, and their five children back into the rental market, erasing three years of faithful contract-buying payments. She said she had $8,000 left to pay before the flood hit.

“The rental market sucks,” she said. “There are horrible landlords, and horrible property management services. They rent out places that aren’t even clean, just to take advantage of the situation.”

From paying $500 a month on contract in the floodplain to paying $700 a month in rent for a smaller place she doesn’t like and doesn’t want to keep, Thomas, an administrative worker with the Kokomo Center Schools, is hoping to get back to the affordable living situation she had before the flood.

The rental market in Kokomo is going through a major squeeze, with quality, affordable rentals in short supply in the center of the city, and almost non-existent in the outlying school districts.

Vacancy rates skyrocketed during the recession, but real estate agents agree both home buyers and renters have come back into the market in the past couple of years.

Until April 19, that movement was largely fueled by good economic news. But the flood took at least 23 housing units out of circulation, putting a further crunch on an already tight rental market.

Mitch Figert, executive director of the American Red Cross of North Central Indiana, was in charge of helping displaced flood victims with first month’s rent and a damage deposit. The Red Cross processed 217 cases in the wake of the flood, with renters making up the majority of the families.

“We did hear stories from clients that they had difficulty finding apartments that were affordable and in decent condition,” Figert said.

The Red Cross’ policy is to not put clients into a higher-priced rental. “We don’t want to set our clients up to fail,” Figert explained.

But many of those displaced said they no longer want to live near the Wildcat Creek, he added, making the clients’ task of finding a replacement rental even more difficult.

Jackson Street

West of Apperson Way, Kokomo city officials are spurring a development blitz, combining plans for reconstruction of Jackson Street between Main Street and Apperson with a future housing project aimed at helping low-income veterans.

But east of Apperson, Jackson Street is a combination of vacant lots, decently kept homes and decrepit rentals. Crime is a problem.

In early May, the 600 block of East Jackson was also the location of the only available three-bedroom rental house managed by Kokomo-based CRM Properties, a group which markets more than 200 rentals in central Indiana. With the kitchen ripped out and a musty smell throughout, it wasn’t ready to be rented.

CRM owner Chris Mullinax apologized for the state of the rental, and explained that it still needed to be cleaned, and appliances and flooring were yet to be installed.

“There’s a pretty big demand right now, so we’re pre-showing properties,” Mullinax said. “If it’s in a good location, it rents instantly. We have a lot of people looking for these properties, and we just don’t have anything to offer them.”  

For a surprisingly broad section of those seeking rentals, apartment complexes are too expensive, and the available homes for rent in the $500 to $600 a month price range are quickly snatched up, regardless of condition.

Tim Hargrove of Apple Tree Realty doesn’t even manage rentals, but he said so many people call his office each week looking for some place to rent, he decided to start a Facebook page for local renters.

The Kokomo Area Rentals page has become a meeting place for renters and owners, with properties listed and renters announcing their needs.

In early May, local businesswoman Holly Robertson posted her need for a quality rental in the Western Schools district. As of Thursday, she was still looking.

“Apartments are insanely expensive. We saw a three bedroom at one complex where they were asking $910 a month. To me, that’s just too much to pay. It really sets us back when our goal is to eventually purchase a home,” she said.

Hargrove said a business opportunity exists for property owners, particularly with Chrysler hiring. Some of the people coming back into the workforce might not have great credit, but they can still afford $600 to $650 a month in rent, he added.

“If you can rent a place for that much, I say do it, because you’ll get it,” Hargrove said. “It seems high, but it’s not compared to what they’ll pay for apartments.”

The marketplace

Kokomo Mayor Greg Goodnight has made bringing new residents to Kokomo — and keeping existing residents from leaving — two of his top priorities.

A lack of affordable rentals is a roadblock, but Goodnight said the city is doing its part to address the problem, both by promoting new development and by increasing code enforcement efforts on existing properties.

In October, the Washington Street Senior Residence will add 54 one- and two-bedroom units to the downtown area for renters age 55 and older.

And on the north side, the Kingston Square apartments will bring another 68 units of low-to-moderate income housing, including some townhomes. The city has contributed considerable infrastructure work around both properties.

“There is a fine line there. We need available housing, but we also need to make sure it’s habitable and it meets code,” Goodnight said. “You want enough apartments available for potential renters to have choices, but you don’t want so much inventory it creates financial problems and the owners struggle to find enough income to maintain the properties.”

In the past year, the city has started issuing “orders to repair” on nuisance properties.

Formerly, the city had one card to play, which was to issue an order to demolish unsafe properties. If the property owner didn’t want to bring the property up to code, the city could take bids and have a contractor tear it down.

But ordering demolitions permanently takes properties out of circulation, and city officials can’t easily find places for displaced renters to live. So the city has started ordering specific repairs. If a property owner doesn’t comply, the city can hire a contractor to make the needed repair, and put a lien on the property.

But it may take a while for code enforcement and new housing to make a dent in the local marketplace.

Census figures show new construction almost completely ground to a halt in Kokomo during the recession, and the city lost more than 800 housing units during the period between 2007 and 2011. Just over 9 percent of the housing units in Kokomo were built between 2000 and 2011, compared to 14 percent of the housing units in Indiana and 16.7 percent of all housing, nationwide.

Without much new housing stock to choose from, renters seem increasingly willing to take anything available in a certain price range, regardless of condition.

That’s why Lashonda Thomas, who didn’t grow up in the area and who wasn’t aware of how flood-prone her block of Murden Street was, is still holding out hope there’s some way of salvaging what she invested in her home.

“Between the basement and the first floor, we got 11 feet of water in there. I couldn’t believe how the water kept rising. I actually left for work that morning, and I got text messages from my kids that the water was coming up,” she said. “We didn’t evacuate until the water got in the front door.”

Scott Smith can be reached at 765-454-8569 or at scott.smith@kokomotribune.com

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