It costs less to buy a home in Terre Haute than in all but a handful of cities in the United States and eight other countries.
Homeowners spend a smaller portion of their incomes to purchase a home here, compared to most places, according to the 13th annual Demographia International Housing Affordability Survey. Researchers from America and around the globe compiled the report released this winter, focusing on middle-income people. Median home prices in the third quarter of last year were $88,000, while median household incomes were $41,800. That gave Terre Haute an impressive 2.1 ratio in Demographia’s calculations.
Terre Haute’s home affordability beat every town in the nation and eight foreign countries, except Racine, Wis.; Bay City, Mich.; Decatur, Ill.; and Elmira, N.Y.
That can be a plus. A community with affordable housing can use that virtue as a selling point to people looking for a new place to live or relocate a business. A low-cost housing market could help spur growth in a local economy, but not necessarily.
“Simply having low home prices or low rents doesn’t mean a community is actually thriving,” said Janet Viveiros, acting director of research at the National Housing Conference in Washington, D.C.
Economic prosperity involves other factors, too. Sixty-two percent of company executives involved in facility site selection rated housing availability and affordability as important considerations in a survey cited in a 2011 affordable housing report by the Center for Housing Policy. Labor costs, crime rates and health care facilities ranked higher on the exec’s lists. Public school quality, climate, recreational amenities, colleges and cultural opportunities rated close behind.
So, Terre Haute has a big check mark in the affordable housing category. On the downside, the forces creating those low housing costs pose a problem for the community. The segment of the local population in the family-raising years — a demographic group that tends to buy homes — has declined significantly.
The dwindling number of young families is reflected in the enrollment at Vigo County schools. The district-wide enrollment has fallen from 16,420 in 2005-06 to 14,689 last fall, an 11 percent drop.
In 2015, only Muncie and cities in Indiana’s northwest region saw more residents migrate elsewhere than Terre Haute, according to the Indiana Business Research Center report “The State of Indiana’s Housing Market,” due out later this month. Terre Haute had the state’s highest outbound migration rate in 2014.
That loss of middle-class families affects home prices. “There’s no new demand causing prices to go up,” said Brian Conley, who operates Conley Real Estate Appraisals in Terre Haute.
The peak for local home sales in the 21st century was reached in 2006, with a total of 1,465. A year later, Pfizer scrapped Exubera, the primary product made at its Vigo County plant. The pharmaceutical giant soon shut down the plant. Seven-hundred and 50 people lost their good-paying jobs, and many moved away. Home sales dropped and haven’t reached the 1,400 per-year mark since, Conley said. Sales have gradually improved, though, nearing the 1,100 level the past two years. Conley sees that as “a good sign.”
Building permits for new single-family houses have risen slightly, from 13 in 2014, to 20 in 2015, to 25 last year, said Chuck Ennis, the city engineer.
Alongside the modest number of new homes built is an existing housing stock on the older end of the spectrum. The average construction year of the 1,083 houses sold in Terre Haute last year was 1955, Conley said.
The infusion of new employers, young workers to fill their staffs, and enough jobs and amenities to keep hometown young people from moving elsewhere after college would change the situation. Existing efforts to trigger those changes need constant support. “The big thing is to attract businesses that bring families into Terre Haute,” said Danny Tanoos, Vigo County schools superintendent.
More new houses would go up. More old houses would get rehabilitated. The prices of those homes might jump, too.
“All of a sudden a community becomes more desirable,” Viveiros said.
Those communities have to guard against seeing longtime, low-income residents priced out of the market, she added.
Terre Haute isn’t that position yet. The city’s affordable housing asset hasn’t yet resulted in an economic surge or an influx of young residents to replenish the shrinking thirty-something age group. That’s a signal that the community must focus on other elements of economic growth. Low-cost housing can’t do it alone.