The Lennox rental market
By Garrett Ammesmaki,
It seems every week there’s a post on Latest in Lennox of someone looking for a place to rent. Often, they are met with meager responses, if at all.
One community member compared it to finding a “needle in a haystack,” in response to a recent search for rentals posted by Amber Nickels.
Nickels and her family are currently living at a rental property in Lennox, but have been looking for different options since September. So far, Nickels said the search hasn’t been going well.
“The prices have sky rocketed,” she said. We’ve looked at “a couple of independent renters that are around $1,500 to $2,000, while any other places are for older generations or income based.”
Nickels is a mother of two and works part time at a bridal store in Sioux Falls. Her husband is a trucker for Wayne Transport. While the apartments and rental houses they’ve looked at have fallen outside of their budget, Nickels said their current income isn’t low enough to qualify them for income-based housing.
It’s common knowledge for community members that Lennox doesn’t have many available rentals — most houses for rent are owned by private investors that don’t do much advertising, and there isn’t a large selection of apartments. Those things, combined with the numbers, spell a tricky situation for current and potential renters.
While surveys and recent reports have shown a growing median household income across Lincoln County, that doesn’t ring true for the City of Lennox.
According to a 2019 Lennox housing study, the median household income in the city showed an almost 8 percent drop between 2010 and 2017. Median family income also fell roughly 8 percent.
The study reported median income for Lennox residents at $49,102. Using the common standard of 30 percent of your gross income going toward housing expenses, a median income household could reasonably afford around $1,228 per month.
As of 2017, almost 30 percent of households in Lennox rented.
Around 39 percent of those renters were dedicating 30 percent or more of their income for housing, with “a significant majority” paying 35 percent or more, which is considered a “severe” cost burden.
Those numbers may have fluctuated slightly with the recent closure of the Good Samaritan Society,
as around 48 percent of the households with a rental cost burden were senior citizens.
Another facet of the issue is that, while rent continues to rise, renters are paying more and more for older units. According to the study, roughly 70 percent of the 268 rental units available in 2017 were over 40 years old.
Single-home rentals have only lessened over the last few years as well, as property owners sold their investments in response to a strong housing market, according to Sharese Ihnen, president of the Lennox Area Development Corporation.
Ihnen said that any increase to single-family rental units being available would be up to investors who can see a decent return on any future investment.
“With the Lennox market as it is, I’m not certain the city has that available,” she said.
When it comes to building more apartments, townhomes and other multi-family rentals, there are some different issues.
Though the city is aware of the problem and is looking at options, there isn’t an easy answer, according to City Administrator Nate Vander Plaats.
“It’s not just a matter of ‘we need more rentals, let’s build,’ there’s also an issue of where we’re going to put them, who’s going to build them, what incentives those builders want and what the city has to offer, all within a market where building costs continue to increase,” said Vander Plaats.
Many small communities that are just beginning to rapidly expand go through this, he said, such as Tea, Harrisburg and Brandon.
The main barrier when it comes to any developments is land access. There are certain tax incentives that can be extended to builders, but even if the city did that for residential construction, Vander Plaats aid there are just a couple plots that are currently available for multi-family developments.
When it comes to the open plots for multi-family construction, the city is waiting on a willing developer. While Vander Plaats said some positive conversations were happening, he couldn’t divulge any more information.
“In economic development, nothing happens until it happens,” he said. “To me, it often feels like a waiting game.”
Though he said the city is having some conversations surrounding the extension of tax incentives to residential builders, there is currently nothing formal in the works.
A compounding difficulty is the public pushback the city has received when it comes to expansion, Vander Plaats said, referencing conversations surrounding the city’s purchase of the Eining property. The property is meant to be zoned for future commercial or industrial development.
In the city’s first Q&A Facebook Live event, some residents were critical of the purchase and thought the money could be better suited elsewhere. There have also been residents who are distrustful of the city’s intention when it comes to any expansion or annexation.
The city has focused on residential development in the past, but after the Countryside addition they pivoted to a focus on zoning for commercial and industrial. They have given tax incentives to entice those developers, but have left it largely up to the market when it comes to residential properties, which has worked out well for Countryside.
Vander Plaats said the city expected the 150 housing units available at the neighborhood to take around 20 years to fill, but the addition is at roughly 50 houses after only two years.
That rapid growth is comprised of solely homeowners.
Currently, Nielson Construction has no intention of making any rental properties available, according to General Sales Manager Lexi Ricci. They are giving rent-to-own options, but that only extends to families who are able to make a down payment and purchase the home within 12 months.
For Nickels, her family and other Lennox households, that just isn’t in their budget.