Kokomo housing market in spotlight

It's been a while, but Kokomo is back in the number one spot for affordable housing nationwide, a distinction both good and bad for the City of Firsts.

According to the most recent Housing Opportunity Index, published quarterly by the National Association of Home Builders, Kokomo ranked first in housing affordability among more than 200 metropolitan statistical areas.

That means average income families in Howard, Tipton and Miami counties can afford a greater percentage of homes for sale here than average income families in any of the other surveyed markets.

The median income in the Kokomo area is just under $60,000 a year, enough to purchase 93.5 percent of all the homes on the market locally.

Compare that with the least affordable locale, Los Angeles/Long Beach/Glendale Calif., where someone with a $61,700 median income could only afford 3 percent of the homes for sale.

It's a distinction not unfamiliar to Kokomo, which showed up regularly at the top of the survey throughout the 1990s and the early part of this decade, before the company collecting the data began to exclude the Kokomo market in 2002, NAHB economist Gopal Ahluwalia explained.

But Kokomo's "re-emergence" as the nation's most affordable housing market didn't escape the notice of Kokomo Mayor Matt McKillip, who last week issued a press notice and a city newsletter calling attention to the survey.

The CNN story also coincided with a story on Yahoo! Finance, which placed Kokomo among numerous other communities on a "most affordable" list (based on the NAHB index). Almost all of the communities listed were located in or near formerly booming industrial areas often referred to as "Rust Belt" cities, like Buffalo, N.Y., Cleveland, Ohio, and Pittsburgh, Pa.

Niranjan Pati, dean of the Indiana University Kokomo School of Business, said there are positives and negatives about Kokomo's conspicuous ranking.

IUK can use affordability as a positive when trying to bring new faculty to the school, he said, and the school's search committee does that on a regular basis.

"But then looking at it realistically, there are a lot of houses on the market that aren't selling," he added.

Housing prices in Kokomo are also falling slightly, as they are in many places across the U.S. The nation's housing slump has continued for three financial quarters.

Ahluwalia said Kokomo's median home price in the first quarter of 2003 was $94,800, compared to $93,000 on the most recent study (first quarter, 2007).

Kathy Harbaugh, director of the Realtors Association of Central Indiana, said foreclosures have contributed significantly to falling home prices in Kokomo, saying average sale prices are off about 5 percent this year compared to 2006.

Last year, 26 percent of all the homes sold in Kokomo came on the market through foreclosure, Harbaugh said.

Buyers are taking advantage of the bargains out there, however. Home sales this year are up 12 percent in the Kokomo market, after falling a whopping 16 percent between 2005 and 2006, she said.

"We've always been proud that more people can purchase a home here than about anywhere else," Harbaugh said. "It's great that you can purchase much more home for your money."

Kokomo has typically had a large number of homes for sale over the years; the city's population peaked in 1978 before economic downturns in the late '70s and early '80s hit hard. Despite modest growth in the 1990s, the city is still home to several thousand fewer people now than 30 years ago, according to census figures.

And while affordable housing is attractive, people won't purchase homes unless they have jobs here, Pati said.

"The housing market outlook is entirely intertwined with the industries we have here," Pati said. "The long-term outlook in Kokomo is going to be flat, and I don't think there will be any change from that."

Harbaugh said she prefers to maintain a positive outlook on the local housing market.

"Sales are up - that's good news. Interest rates are low, that's great news. And people are still employed at Delphi and Chrysler - that's super news," she said. "There are a lot of positive indicators out there."