Northeast Indiana home builders are still playing catch-up after the worst winter in memory stopped new home shoppers in their snowshoes.
“The winter was catastrophic, of couse, in terms of keeping people from going out to model homes, and that affected everyone,” said builder Jim Lancia, of Lancia Homes.
Halfway through the year, builders had obtained 339 new home permits in Allen County, compared with 413 in the first half of 2013, a decline of almost 18 percent, according to data compiled by the Home Builders Association of Fort Wayne.
HBA builder members did a little bit better in the outlying counties they serve — Adams, DeKalb, Huntington, Wells and Whitley — where numbers were basically flat year-to-year.
Usually, sales begin to pick up in February, as people start looking toward spring, with February to May being the strongest months for sales, noted Charlie Giese, vie president of Westport Homes and last year’s HBA president. Typically, the market sees a lag of at least 45 days between the sale and when the builder obtains the needed permit and gets to work, so building was slow through most of the spring.
“Sales got a late start, but things came to life in late April and early May,” Giese said.
“I think there’s a lot of positive things going on in the marketplace,” Lancia agreed.
Mortgage rates were a little higher in the first part of this year, but have dropped again to the 4.25 to 4.5 percent range. Deborah Sturges, owner of Hallmark Home Mortgage, doesn’t think that had an impact on new home sales.
“I think, generally, people know rates are still low,” she said.
As long as they have good credit and can make a good down payment, prospective buyers are able to get loans, Giese said. It’s the buyers on the margin who may still have trouble.
New home sales also had taken a hit in the last few years because owners couldn’t sell their existing homes, at the price they needed to get, in order to move up and move on. That no longer seems to be the case.
“If you have a house that priced right, that is in reasonably good shape, it’s going to sell,” Lancia said.
Through May, the average price of an existing home sold in the greater Fort Wayne area was up 1.6 percent from the same period in 2013, according to data from the Upstate Association of Realtors.
A 5.5 months supply of inventory existed of homes for sale at the end of May, the same as a year earlier; and the percent of original asking price sellers received was 94.1 percent, up from 92.8 percent in May 2013.
One thing new home buyers may notice is that prices are higher, and that’s from the ground up. The recession started with an inventory of lots that is taking builders years to work through. Finally, more new development is taking place, and the new lots are priced higher than the old ones were.
“There’s a little sticker shock,” Lancia said. “It’s like someone who hasn’t bought a new car in six years.”
Building supplies also are more expensive. In June, according to HBA statistics, the framing, roofing, drywall and other components for a basic, 1,400 square foot ranch house built on a slab cost $20,910, up from $18,759 two years ago, an increase of about 11.5 percent. The cost of materials for a custom, 3,000 square-foot ranch with walkout basement was up 17.5 percent.
“Prices are creeping up, although that has slowed somewhat, but the numbers are still up from two years ago, and I don’t think we’ll see that change,” Giese said.
While Westport used to be known for building mostly entry level homes, “we have moved up. We now do very few starter homes,” Giese added.
Many Fort Wayne home builders do construction in areas beyond what the HBA tracks. But data for those is harder to track.
The Builders Association of Northeast Indiana publishes permit information in its monthly newsletter, but it doesn’t compile or compare each month’s data with other months, said Jan Garman, co-executive officer. And even if it wanted to, the permit numbers from LaGrange County, which doesn’t differentiate between home construction and things like barns and sheds, wouldn’t tally with Noble and Steuben home permit figures.
Numbers aside, builders are more optimistic this year than last, Garman said.
One thing Lancia has begun to notice is a bit of a labor shortage among plumbing, electrical and other subcontractors. A lot of people may have gotten out of those businesses during the economic slump in favor of manufacturing and other more stable occupations, he speculated. Thus far, it hasn’t been enough to slow the building process, he added.