Buying an old house is an adventure — alternately fun, frustrating, surprising and rewarding. That’s especially true the first time.
Years ago after my wife and I purchased our first house, I squirmed into the crawlspace to pretend I was a plumber in the middle of the night. I clicked on the flashlight and discovered the floor joists were actually trees, sawed in half length-wise, with the bark still intact. They were rock solid, though, and that thought comforted me each time I bumped my head on the joists while searching for a leaky pipe.
We loved that little house. It’s where our family began.
Twenty-first-century young people — 25-to 44-year-olds often identified as “millennials” — are increasingly entering into home ownership, along with other age groups in Indiana. Thus, existing homes are in high demand and short supply in Vigo County and throughout the Hoosier state.
Existing home sales hit a record last year, according to a report released this week by the Indiana University Kelley School of Business.
More than 88,500 existing homes were sold in 2017. The number of building permits granted for new residential construction (21,664 total) also increased last year by 16 percent over 2016.
Still, the new single-family home sales total for 2017 is just half of what it was from 1998 to 2005, according to Matt Kinghorn, the senior demographer for the Indiana Business Research Center, who compiled the Kelley School report.
“Another leap forward in new home construction is sorely needed to help alleviate problems caused by the short supply of existing homes on the market,” Kinghorn stated in his report.
Vigo County mirrors the state’s situation in some ways. As of June 1, home sales in the county during the previous 12-month period totaled 1,085 — the largest number in several years, said Brian Conley, president of Conley Real Estate Appraisals in Terre Haute and a veteran analyst of the local housing market.
Meanwhile, there were only 256 residential listings in Vigo County on June 1, which amounts to a three-month supply of housing for buyers. That supply is down from June 1 totals in previous years — 370 in 2017, 427 in 2016 and 526 in 2015. Thus, the number of Vigo County homes listed now is about half the number just three years ago.
“That tells me that as houses come on the market, they’re selling almost immediately,” Conley said.
Despite the strong demand, existing home prices ironically haven’t yet surged in Vigo County, according to Conley’s market analysis. The average price of those 1,085 local homes sold during the past year stands at $117,802, a 3.23 percent drop from a year earlier. That oddity contradicts conventional economic theory that high demand coupled with short supply results in higher prices.
“So it’s kind of a real mixed bag,” Conley said.
The statewide picture is more predictable. Home prices rose 6.6 percent in 2017 as buyers quickly scooped up a limited supply of existing houses, the Kelley School reported.
The slower pace of newly constructed homes involves several factors, said Rick Jenkins, owner of Rick Jenkins Builders in Terre Haute and a contractor for the past half-century.
Lumber and building material prices have sharply risen in recent years, Jenkins said. Indeed, lumber futures on the Chicago Mercantile Exchange reached an all-time high of $639 per 1,000 board feet on May 17, USA Today reported earlier this week. Prices have moderated since last month, but the cost remains well above the $400 range of past years. The higher price of materials makes it more difficult for builders to recoup the construction costs.
Those increased costs limit the number of “spec houses” built by contractors, meaning homes constructed on the speculation that a buyer will come along and pay enough to generate a profit.
Also, fewer builders are entering the trade, at least in Vigo County, as older contractors retire. “There are less builders in the business today than there’s ever been since I’ve been in business,” Jenkins said Thursday. He’s spent all but two years of his 50-year career in Terre Haute. Spec house building, for example, can be financially difficult for entry-level contractors, he explained, as is satisfying governmental regulations.
“It’s just difficult to get in the business today,” Jenkins said.
Still, Jenkins believes this is a good time to purchase a home. “Prices are going to go up, and interest [on mortgage loans] is going to go up,” he said.
A growing number of those buyers around Indiana could be millennials. The number of 25- to 44-yearolds among the state population jumped by 4,000 in 2016 (the latest figures available), marking the fourth straight year of growth among that young-adult group. That age group had dwindled for 12 years prior to that uptick, the Kelley School reported.
Terre Haute needs that influx of young people settling down to start families, and it can encourage its growth by investing in quality-of-life amenities. Young homeowners and families energize a community and brighten its future.
And they buy lots of stuff a home repair stores.