DecorahNews.com Community Conversation Series: Housing challenges in and around Decorah, Part Two: Affordability and Accessibility

Editor's note: This is the second installment in a three-part series reporting on the housing challenges in and around Decorah based on the Community Conversation held Thursday, Oct. 19, 2023. Part One: Short-term Rentals, was published Wednesday, Oct. 25, 2023. Part Two: Affordability and Accessibility, including long-term rentals, published on Friday, Oct. 27, 2023 and Part Three: Solutions and Innovation will be published on Monday, Oct. 30, 2023. The second major topic addressed in the Community Conversation on Thursday, Oct. 19, 2023 was long-term rentals and the availability of affordable housing in and around Decorah. Decorah residents in attendance, including Christopher Miculinich and Gayle Jurgenson, shared their personal experiences and frustrations trying to secure affordable long-term rentals or purchasing a home that was affordable for them. Other attendees talked about their unsuccessful attempts to move to Decorah because they were not able to find homes for sale in their price range. Senior Mortgage Lender and Vice President at Decorah Bank and Trust Mike Huinker addressed the need for an increased volume of long-term rentals in the community. "The State of Iowa has recognized the need for workforce housing and has developed the Workforce Housing Tax Credit in which our community has benefitted from that," Huinker said. According to Huinker, three new apartment complexes being built on the edge of town, two near Toppling Goliath and one near Walmart, will add a total of 112 new long-term rental units to the housing market. Huinker stated that another possible incentive that may help increase the number of small long-term rental properties could be provided by mortgage lender Fannie Mae. According to Huinker, Decorah Bank and Trust has been financing the purchase of multi-family homes for over 30 years but a positive new incentive announced recently by Fannie Mae could make financing easier. Beginning Nov. 18, 2023, Fannie Mae will lower the down payment requirements for owner-occupied, 2 -, 3 -, and 4-unit multi-family homes to 5%. "So, these types of things are being recognized, where one of the four units would be occupied," Huinker explained. "It would be financing for a one-to-four family unit where in one unit the owner actually lives." The cost of renting One challenge raised by Miculinich was the cost of rental units in Decorah. He shared that he pays more for his current rental unit in Decorah than he has paid in metropolitan areas for long-term rental apartments that were larger and had more amenities. Miculinich added that one of the frustrating things with the new apartment complexes is the cost of rent. For example, rent at Briar Grove Apartments, one of the new complexes mentioned by Huinker, ranges from $850 per month for a studio to $1600 per month for a two-bedroom, two-bath apartment. An unidentified attendee asked Huinker if there were any financing options or subsidies available for the companies that are building the new apartment complexes to help make the housing affordable for renters. "Well, the bank has not provided subsidized financing for these types of [complexes]," Huinker said. "All I'm saying is we have a lot of challenges with housing. And these challenges are trying to be met with investment in the community to provide additional spaces for people to live. I didn't say that those particular apartments were affordable," Huinker continued, "but they are apartments for people to live and the rents are a little high, but they're brand new facilities. "And a lot of the other properties that were being financed, you know, are more affordable than those are, but at least there's some volume," he added. "So these challenges that we're facing, we recognize it up here, and we're not going to be able to fix it overnight. We have a housing shortage. There's a supply chain shortage. And that's why we're here to talk about it, [and why we're] trying to find solutions." Mike Kelly, owner of Kelly Real Estate and Kelly Building Systems also expressed concerns about affordability. "I think the affordability thing [...] this is a national problem. You're exactly right. It's not just us. It's a statewide problem; it's a national problem. And I know there are things going on on a national basis," he said. "Well, I think it's great that we're having a local conversation, with the input from everybody also [...] to see if we can meet the challenges we've got." Accessibility and availability of affordable homes to purchase in Decorah Jurgenson shared the difficulties she has experienced as a single, working adult who wants to live in Decorah and wants to own her own home in Decorah. She, like many potential homeowners, is looking for a relatively small home under $200,000. Many of these homes, when they become available, are purchased by LLCs and other buyers and turned into short-term rentals. "When I came here to Decorah two years ago, I spent $3,500 in Airbnbs for six weeks, because there were two apartments available when I came here" Jurgenson said. "Not everyone is a young family moving into town. Sometimes it's a newly divorced older woman with perfect credit, money in the bank and willing to buy a smaller home. But she only makes $30,000 a year. [...] I want to live here forever. And I have perfect credit and I have money in the bank. I have a full-time job. And I can't even buy my own home here in Decorah." The panelists responded to concerns about the affordability and availability of homes to purchase in Decorah with examples of what their companies are doing to address these challenges. Kelly explained how Kelly Building Systems is addressing the low housing stock directly. "We know that there's a need for more housing stock," he said. "So we are working on expanding the subdivision we have that would provide approximately 17 Lots, because there are not many available spots to build. And we just think there are a lot of people coming to this community. We need places for them. So that's one of the things we're working on." Huinker provided extensive information about the first-time homebuyer assistance programs available through Decorah Bank and Trust. He said that when the mortgage lending officers meet with people, they try to find the best programs available for each individual situation. Huinker said that the biggest problem for first-time homebuyers is often coming up with the downpayment on a house or paying closing costs. Some of the programs he discussed to assist first-time homebuyers include the USDA Home Loan program with zero down loan programs and the Veterans Affairs (VA) Home Loan program. He said there are also programs that are intermittently available, like the HomeStart grants, which are income-sensitive grants for $7,500, and the regional trust fund that can give a grant for up to $12,500 for a first-time homebuyer that meets the income requirements. "So some of these programs are really designed to break down the obstacles that keep somebody from actually buying a house and being a homeowner," Huinker explained. "There's a lot of different programs that can be available. We meet with our clients one on one and every file has its story. But these programs are able to be deployed to help people get into all this." Kelly also took a moment to address Jurgenson's individual situation and others in similar positions. "And then, I think, your comments, they pain me a little bit because, I think, I and all the real estate professionals in this room, there's a lot of us here [...] that's our goal. Our goal is to find a good place for people that are looking for a place," Kelly said. "So when we hear a story like that, I hope you don't mind me addressing it, I think a lot of us would love to turn over every stone that we can to find a way to make something work for somebody that's got the desire to own their own home." Community Conversation Series: Housing challenges in and around Decorah, Part Three: Solutions and Innovation forthcoming on Monday, Oct. 30, 2023, will discuss additional options presented by panelists to solve some of our community housing challenges.