Floyd Street in Covington is the county's most recognizable corridor, lined with antebellum mansions, impeccably manicured landscaping and..."for rent" signs?

The fallout from the housing collapse has reached even Covington's most coveted real estate. Sellers can't get the prices they want and need, and buyers don't have access to the capital or credit they need to make a home purchase.

Former Covington resident and attorney Scott Cole embodies the rental phenomenon. He hasn't been able to sell his 2104 Floyd St. home, three blocks from the square, for the right price, so he recently decided to entertain the idea of renting it out.

He's also become a renter himself, moving closer to Atlanta for work. Until he sells his home, he doesn't have the resources to afford another one. His landlord wants to sell that home, but has also consented to leasing...and the cycle continues.

Total housing units in Covington increased to 38,342 in 2010, a 66 percent increase from 2000, according to recently released census data. During the same time, rental housing units increased to 8,554, a 78.6 percent jump.

Waiting game
Real estate agent Rick Spires, who specializes in rental properties, said sellers are turning to rentals because they need help and time. Help with monthly payments and time for housing prices to recover.

"People are banking that if they rent their home for a period of time the real estate market will be on its way back," said Spires with Coldwell Banker Gerri Murphy Realty. "The rental market has increased because people are trying to protect their investments one way or another. I'm seeing more (rentals) today that at any other time. Houses have been on the market for two years, owners have discounted them as much as they can go. All they're looking for is some help and time."

Those owners who didn't buy during the housing price peak or have a fixed-rate mortgage are generally able to recoup much of their mortgage costs in rent, but others aren't as lucky.

"Variable mortgages are really the bugbear in all of it, driving the mortgage rates up. In time those mortgage payments escalate so much," Spires said.

Buyers market
Everyone in the housing business is being affected by increased rental competition and the continuing availability of cheap foreclosures and short sales. Spires said rental prices have decreased about 15 percent from two years ago, and landlord Sarah Tamayo said renters are negotiating harder than ever for those bargain prices.

Landlords haven't just had to yield on price, but they've also had to become more flexible on credit history.
"Credit checks are a whole different lot anymore, because people are losing their houses. A lot of people are walking away from them; it's senseless to keep paying big mortgages if you can never get out of the hole," said Tamayo, who owns houses in California and Newton County, including one on Floyd Street.

"You've got to be very open to everything. We'll consider any offers. A lot of people can't get loans from banks, because of credit. We'll consider owner financing, where we would be the bank."

Spires, who seeks out qualified renters for his clients, said he's placed an increase emphasis on employment history in lieu of sterling credit. Personal references are also an important factor.

Although Leaf Stone Apartment Homes doesn't face much competition from other full-service apartment homes, they haven't been exempt from the housing market.

"Historically, we haven't done a lot of concessions; however, they are a sign of the times," said property manager Riki Mitchell. "At the same time, with the economy still the way that it is, the real estate market still not being on path it should be, people are hesitant to invest in something so that ensures business."

New model?

Covington Planning Director Randy Vinson keeps a close eye on the latest housing trends as he helps guide city officials efforts to revitalize the city's housing stock. He said multi-generational households have increased substantially as grown children move in with parents and vice versa.

According to census data, the average household size in Newton County grew from 2.77 people in 2000 to 2.85 people in 2010. The move is one of financial necessity, and if those financial burdens lessen, Vinson said rentals and small houses will be the most attractive properties.

"While we've seen a recent trend of more rentals, a lot is due to the fact there is no way they can buy. The banks are absolutely frozen still. There are low interest rates, but banks are just skittish," Vinson said. "If you have all the money you need to borrow sitting in the bank, then they'll loan to you. They'll give you a loan if you don't need it."

Neither Vinson, nor other housing experts, believe there is a fundamental shift toward renting, but Vinson did believe that more energy efficient, smaller, more reasonable homes may become more popular.

"I think (the rental movement) is a blip. I think we'll view homeownership a lot differently. Keeping up with the Joneses will diminish some. It may eventually be ‘Let me see how small and efficient I can go,'" Vinson said.
While the human instinct to nest and settle down is likely to remain, homes may never be the same investment they were.

"It may not be let's sell a house in a few years and buy a bigger house," he said. "But by buying a home, you still eventually do own it. Then you only have to pay the taxes. That's a pretty nice feeling to remove that cash flow element out of your life."