It’s no secret that in recent years Kokomo’s housing market has rebounded significantly, a trend for which homebuilders like Heath VanNatter have found a new appreciation.
From 2006 through 2011, VanNatter’s company, VanNatter Construction, didn’t build a single home, relying instead on remodeling and restoration work to stay afloat.
In recent years, though, VanNatter’s home construction numbers have returned, from four in 2012 to 22 in 2015. It’s a progression he expects to continue, or at least stay steady in upcoming years.
That growth is also evident in the amount of improvement location permits issued in 2015 and the first half of 2016 by the city of Kokomo. In 2015, 73 “house and garage” permits worth a total of $10.5 million were issued in Kokomo, with an additional two “house only” permits worth $134,000 issued.
In comparison, 49 “house and garage” permits worth $7.2 million already have been issued through June 9 this year, putting Kokomo well ahead of last year’s home building pace. Two “house only” permits worth $311,000 have been issued as well.
“It’s been phenomenal,” said VanNatter, who also serves as a state legislator. “I think there is just pent up demand because we went so many years without building. People want to build and it is affordable. All of my customers, when they find a house, they realize they can build one of their own for the same price.
“So why not build and customize it to become your own given the low inventory of houses available?”
Low inventory was a reason for increased home construction also cited by Paul Wyman, managing broker of The Wyman Group.
With foreclosures down from 42 percent of all sales after the economic crash to less than 20 percent of current home sales, and with low unemployment and reasonable interest rates allowing qualified buyers to eat up inventory, Wyman said the market is ripe for home construction.
Wyman also noted, however, that real estate is likely to soon see equilibrium in the market place, bringing construction and existing home sales back to a more balanced level.
“From our standpoint in the real estate profession, we are having a record year,” he said. “It is very healthy. There is great value, people have jobs. It is making for a good and healthy rebalancing of the market.
“Assuming the economy doesn’t tank again, we will also get back to a normalized level. There will be a balance on both sides again, assuming we have a normal uptrend in our economy.”
Another hindrance that could arise in home construction is a potential shortage of building lots, according to VanNatter.
VanNatter estimated that within the next year to year-and-a-half, Kokomo could see a situation where more lots need to be created, an option that creates no shortage of risks.
“The solution is to build more subdivisiosns, which is risky because if you put in a new subdivision and the economy goes down again, someone is left with an empty subdivision,” he said. “That has happened previously when the market tanked and a lot of those subdivisions failed.”
One company, however, has decided to utilize an existing Kokomo subdivision for home construction.
Recently, Arbor Homes, which has been built more than 11,000 homes in central Indiana in the last 22 years, announced plans to build on 28 available lots in the Frederick Farms community.
So far, the company has only made progress in the subdivision on its model home, which is expected to be completed by the end of July, according to the company’s director of marketing and research, Ben Watkins.
Watkins said the company, which has yet to sell any homes, will then base the number of homes they build on the local demand they receive.
If demand is high for the homes, the company could potentially purchase more lots, increasing its ownership as high as a possible 45 home sites, noted Watkins.
The homes will start at $137,000 and have a build time of four to five months.