The discussion wasn't pretty.
The property management here does complete credit and criminal background checks on applicants that wish to rent properties represented by this firm. There is a noticeable change in the applicants.
Helena (the property manager extraordinaire), estimates that one in every five applicants has a felony criminal record including such crimes as theft and drug use. Checks are also made for sexual predators and the like and they too are submitting applications. The noticeable change probably started about nine months ago and before then applicants with a criminal history might have made up one in about twenty or more.
Around the time frame of nine months ago, Kingman probably saw the pinnacle for single family homes that were available for rent (it hasn't changed much either). As a result we have seen owners of rentals fiercely compete for live bodies to place as tenants, monthly rents have dropped. To sweeten the deal many times the first month rent is offered for free. The available rental list is still large in comparison to where it was last year and certainly in years past.
Yes the price of a home since early this decade has boomed upwards spurred on by demand stemming from easy financing and low interest rates. Another large factor in the rise of property value was demand from the investor sector who intended to purchase property to offer as rentals.
There are not many typical high density apartment complexes in Kingman. Because of that, a good portion of single family homes have been available as rentals. That good portion exploded upwards in the last few years especially.
It is less expensive to rent on a monthly basis than it is to purchase a home at today's home prices. There are still advantages to owning over renting but so often these days people make decisions based on monthly cost... and renting sure is a lower monthly cost.
So here we are. Who are we attracting to the community??
Mohave County is actively looking to place another prison in our backyard near the what once was sold to the community as a low security level DUI prison that actually turned into something more on the lines of a maximum security prison. The convicts there are not your typical 'one too many' drivers to say the least. They are hardened criminals from metropolitan areas in Phoenix.
Kingman also hosts the Mohave County lockup for criminals from Bullhead City and Lake Havasu (as well as Kingman). Where do you think the criminals are released?? Yep right here near Kingman. Where do they look for a cheap roof over their head?? Yep right here in Kingman, and there is plenty of very nice single family homes to choose from.
I normally have to be careful when talking about 'people' because of my status as a Realtor, but I am a concerned citizen that is running for city office in the next election. I do want 'people' moving to Kingman, but we must make every effort to attract something other than what we have been attracting.
Sometimes we are the product of the market and it is very difficult to control a market. Markets have a mind of their own based on the minds of buyers and sellers, but in the end markets are never wrong.
I cover the sales market in Kingman right here on this blog. It is easy for me to do so because I have access to pretty dog gone good data. For the rental market I don't have the access to the same kind of hard data. I simply have a list of available properties, and I've been shown enough scary rental applications to know that Kingman is not attracting an ownership society at this time.
Another market that has a higher degree of difficulty for me to follow on is the coming foreclosure market. We know foreclosures are in the news and we've been told that Mohave County has the highest percentage of pre-foreclosures compared to all other counties in the USA. It really shouldn't be a surprise though, Arizona's foreclosure laws allow for an easy out in most cases to property owners. From this...
A note regarding Deficiency Suits: A lender may not bring a deficiency suit against a person who lost a property that is 2.5 acres or less at a foreclosure, provided the property was a single one-family or a single two-family dwelling. This is so even if the high bid at foreclosure was less that the balance due on the loan.
The real risk on the property owner is their credit the way I read the source I linked to. I am beginning to see what may start to happen. We may start to see secondary property owners simply walk away from their rental investment properties. Current rents are very low and I doubt that most even cover the mortgage payment. Add in the other expenses that a property owner is liable for (repairs, taxes, etc.) and many such property owners could be very upside-down on things. It wouldn't make sense for these owners to sell the property because they would be bringing money to the closing table.
If this does indeed start to pan out this way, it is doubtful in the current sales market that the banks would find takers at trustee sales in the foreclosure process. This means the banks themselves will have to sell the property in a Real Estate Owned (REO) sale. It is also likely that the banks will offer the properties for much less than current sales prices (not asking prices). This will have effects on the real estate sales market, the market prices will be reset by this.
Like I said, none too much sounds all that great does it??
The key will be who the buyers are for those REO properties. I believe that the buyer needs to be primary residents, not simply a churn of investors with intentions of rentals. What can Kingman and the community do to attract interest for primary residents??
I have my ideas and visions on this, and since I have declared my intention to seek city office I will be sharing them in the coming days and weeks. I'm always looking for suggestions though so feel free to join the discussion. Lets collaborate and make this community attractive to the owners, the folks who will take ownership of the community, the folks who will be great neighbors.
We can do this.
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