By Erin M. Gentz
Index Interim Editor
Supply is not meeting demand, and West Liberty needs to be building more homes for both low-income and financially advantaged families in order to grow and overcome its current tight housing market.
That’s the conclusion WELEAD director Ken Brooks suggested during a work session with the West Liberty City Council prior to the June 4 meeting.
Brooks and the council held the work session to discuss the results of the Muscatine County Housing Study.
The study was commissioned in 2022 to examine the housing market in the county as a whole, as well as three sub-markets: Muscatine, Wilton and West Liberty, and was conducted in the last half of 2023. Its goals were to analyze the current housing market, identify challenges and opportunities, and to provide actionable recommendations to improve housing opportunities.
“What the data shows us is that, because we have such a scarcity of homes, people are taking whatever kind of home they can get into,” Brooks said. “So, a family that makes in excess of $150,000 a year combined income for the family should be able to afford a house $500,000 in value. We don’t have very many of those homes. So those families are buying a house that costs perhaps $300,000 or $200,000 and living under their means.
“When that happens, that removes that (home) as a possibility for a family that can afford that on the upper end. Families that are looking at a $200,000 home are now living in a $100,000 home, and those at the lowest end of our socioeconomic scale are finding it very difficult to find housing in West Liberty.
“We need to be building homes on the lower end – not in quality, but in cost – and on the upper end. We need to be hitting both of those, and then everything in the middle will sort itself out over time.”
Council member Joshua Shiltz asked Brooks about the number of single-family homes that seem to be serving as rental properties in West Liberty. Brooks explained that, during the 2008 housing market crash, many properties were sold to investors when homeowners were evicted due to non-payment. “We saw a huge uptick in what had been single-family homes converted to rentals in the late 2000s and early 2010s. It’s not necessarily a problem, but it is what it is,” said Brooks.
City manager Lee Geertz added that often, when homes do go on the market in West Liberty, they are snapped up by investors before many prospective home buyers realize the home is for sale. “I think the way to level that playing field is by increasing the housing stock,” Brooks said.
As to rental units, citizens surveyed said they were concerned about the community meeting housing needs for low-income families, adding that renovations needed to be made to many of these units to fulfill “modern expectations.”
“Homeowners don’t necessarily have or want to spend funds to support these renovations, while renters can find more modern units in surrounding counties … for slightly higher price points,” in places such as Johnson County, Brooks read from the survey.
He added that managing expectations in housing realities is also an obstacle the community faces.
“There is a huge discrepancy between renters that completed the survey and homeowners that completed the survey as to what an appropriate monthly mortgage should cost, to the tune of two to three times difference – with people currently renting thinking that a mortgage should cost under $800.”
He said that it would be a benefit to the community and the local economy to encourage homeownership, as that sees citizens making an investment, whereas renting does not. “Managing expectations and beliefs is going to be a very important part of what our strategy should be going forward.”
The researchers concluded in part that many families in West Liberty, including 95 percent of those identified as being in the lowest economic bracket, are currently “housing burdened,” which Brooks said was defined as spending greater than 30 percent of income on housing. The current median household income in West Liberty is $63,910 and Brooks said using that metric, a family should be able to afford a $1,600 per month housing payment. However, factoring in taxes, benefits and other recurring expenses, such as student loans, Brooks explained this often leaves families with significantly lower spending power. “We need to be very sensitive that the 30 percent rule, even though it is an industry standard, what is it 30 percent of?”
Housing doesn't keep up with growth
Brooks noted that the council is already aware of West Liberty’s current housing limitations and said that the community has the tightest housing market of any community in the survey. This was especially noteworthy in light of the fact that Muscatine County as a whole has a limited housing market. He said the survey also revealed the population of West Liberty has grown 15 percent in the last two decades, despite the limited housing market. Meanwhile, the median household income has doubled in the same period. The data also showed that West Liberty has the youngest median age and has a larger average household size than any other community surveyed. Brooks said the researchers concluded that could be due to “cultural diversity and how much of our Hispanic and Latino community chooses to build multigenerational households, which is not necessarily consistent with other cultures.”
He said the researchers further recommended that, since there was such a desire for multigenerational households in the community, whatever housing plan the city implements should find ways to facilitate that happening. “Even in an apartment type setting, build larger apartments with more bedrooms geared towards larger families sharing common living areas. Or if you were looking at a pocket neighborhood, which is where you have smaller homes built on smaller lots that all back up into a shared green space … so it looks like you’ve got a great big backyard, but it’s not yours, it belongs to all of your neighbors. We’re seeing more and more of that happening, even in communities this size.”
Homes in new subdivisions sell quickly
Council member Tim Parizek asked Brooks about two ongoing housing developments in West Liberty. Brooks said his understanding was that completed homes had sold quickly. He also discussed the Meadows housing area, which consists of manufactured homes. Brooks explained that there are certain challenges obtaining traditional mortgages on manufactured homes because of the way depreciation is calculated. Geertz said that developer Brad Akers was working to identify financing options, as well as lock in lot rates.
Mayor Mark Smith also brought up one of the researchers’ conclusions that the community needed to be “creative” in creating housing options. Brooks said that there were several developers looking to build in West Liberty and he believed the “market would bear out whatever they do. But when it comes time for the council to create its own initiatives, I think we can be targeted in what we do there.”
Brooks asked council members what they thought of the current housing situation, and Omar Martinez asked about whether the city could get grants for beautification of older homes, some of which are run down. Mayor Smith agreed that while it is nice to live in a community with beautiful older homes, some families feel a burden in maintaining or updating those homes, particularly with respect to utilities. Brooks agreed that making improvements can sometimes be difficult for homeowners, especially keeping older homes up to code. He gave an example of a business owner he knew that wanted to do improvements on his property, but he would have to upgrade the entire electrical process, which would turn a $5,000 project into a $40,000 project. Mayor pro tem Cara McFerren said she could relate, as she lives in a home that is 130 years old.
Single-family homes split into duplexes
City manager Geertz also expressed concern about single-family homes that had been split into rental duplexes, which sometimes had significantly smaller square footage than newer units. “But the cost for those spaces is equal to what it costs for a new duplex or even a house payment. We have a very mixed inventory, and we don’t necessarily always have inventory being properly priced for the square footage. I think that’s going to come up in our discussion as we go along, some opportunities for us to correct that.”
Brooks said that the research indicated with a tight housing market, there were few incentives for landlords to make rental property improvements, “because they’re going to be filled whether they are improved or not. I think that’s another issue that you can plainly see, just walking around town.”
Council member Shiltz asked if improvements were things that could be addressed in property inspections, especially as the city is implementing a series of nuisance ordinances. Brooks said that while the ordinances were a good step, they were seen as a way to guarantee safety in housing, and “there’s a difference between minimally safe and that next level of basic improvement.”
Incentives for residential restoration
Brooks said that he and Geertz had been discussing a residential program through tax increment financing to help with restorative home improvements. “We’ve got this amazing program for businesses and improving them, and I’d like to see that program continued. I’d like to see that program renewed, but using a similar approach, using some matching funds to help homeowners.”
McFerren said that giving landlords and homeowners assistance would be a great opportunity for the community. Geertz added that West Liberty has seen success in revitalization of older properties in the downtown area, improving commercial spaces and adding residential space on upper levels.
Geertz also said that there are some homes in town that have been passed down from generation to generation, and so haven’t necessarily undergone strict inspections or upgrades. Brooks agreed, saying he was surprised to learn about the number of homes that had been deeded, rather than sold, thought multigenerational channels. He said that more than 40 percent of homes in West Liberty do not carry a mortgage, in part due to deeding.
Brooks added that, while the researchers had identified some properties that needed work, generally West Liberty was doing well in that regard.
“We do have some work to do, but the good news is, compared to Muscatine, we’re actually doing great as far as housing stock goes.”
He expressed optimism that West Liberty was more than equipped to handle its housing challenges. This is in part because there are landowners in the area that are willing to sell property to be developed for housing. Brooks also encouraged the council to look for ways to assist with tax burden relief and provide incentives to build.
Collaboration to upgrade infrastructure
However, growth will require some advancements, and Brooks said the city will need to spend money to upgrade and expand utilities and infrastructure. He said the city may also want to start having discussions about updating zoning or other longtime regulations to align with future growth, as well as develop a comprehensive housing plan. He also encouraged the city to develop a communications plan to help increase awareness and financial literacy among residents regarding home ownership and renting.
“Whatever we can do to foster a positive environment for folks to develop land in West Liberty is something we need to do. So, if that means the city needs to start working a little bit closer with out local banks … we go out and maybe start working on some programs together, maybe that’s what we need to do. If the city takes a step and maybe starts working closer with the Community Foundation of Greater Muscatine – they’re the ones that are spearheading the housing council. Perhaps there’s an opportunity there.”
Brooks also said that one recommendation the survey made was that the city explore a “pattern book,” where architects can draw up plans that would fit on specific sizes of lots, and those plans could be designed to fit the codes of every municipality in Muscatine County. He said the City of Muscatine was already looking into this.
He also gave the council some food for thought, saying the town loses and gains about the same number of commuters each day – for every West Liberty resident that goes into Iowa City, Muscatine or the Quad Cities to work, about the same number from each of those communities comes into West Liberty to work. “Think about where we could be if we can keep our own citizens working here in town. Think about where we could be if we had housing for those thousands of people that come to work in West Liberty.” The top employment sectors for commuters into West Liberty included production, education, science, installation work, and what was termed “general business.”
The researchers contacted the largest businesses in West Liberty and learned that most of those commuters fell under entry-level salary employees. Brooks said if any of those employees were looking to purchase a home in West Liberty, it would fall into the less than $150,000 price. And right now, there are no homes in town for sale under that price, with perhaps two sold in the last two years at that price point. Currently, it costs about $375,000 to build a three-bedroom, two-bath home in town.
“We’ve got a gap,” he said. “How do we close that gap? We’ve talked about tax relief … what we haven’t talked about it partnering with non-profit organizations. We have a wonderful non-profit organization in town that provides subsidized housing to low-income and disabled residents. So, we can continue to look at how we can best continue to support that non-profit doing that work. There are a lot of different avenues that we can pursue when it comes to subsidizing the cost of housing without talking about scary things like Section 8. It’s always a big red flag when it comes to government and housing development. I’m just telling you there are other options and other avenues to consider. But when this data is showing that all these people that are coming to town, many of which would like to live here but don’t have an option, need a home where they can rent for under $1,000 a month, or buy a house for under $150,000, $100,000, we’re going to have to start thinking outside the box.”