By Mary Ellen Shedron, Truth Staff
mshedron@etruth.com
Peer into a crystal ball to predict Elkhart County's new-housing market and you'll clearly see a seesaw.
"When new housing goes down, remodeling existing homes goes up. When remodeling goes down, new-housing starts go up," says Larry Harrell, Elkhart County building commissioner.
"In the 18 years I've been doing this work, this new-housing market is the worst I've seen. We -- Elkhart County -- rode on top of new housing Cloud 9 in 2004-2005. We're kinda spoiled," Harrell says.
Elkhart County boasts the third-busiest building department in Indiana, Harrell says, noting this area's new housing market has "never fallen off like the rest of the nation."
This time it's different.
Fluctuating interest rates prompted owners to dump houses on the market. When property taxes went up, rental properties flooded the market.
Appraising permits
As for projecting new-housing permit numbers, Gretchen Helman, Builders Association of Elkhart County executive officer, offers cautious optimism.
"I'd hope every bit of 500 this year, similar to last year, but it remains to be seen."
Harrell's not venturing a guess, instead recalling the good years like 2004 with 866 new homes. "At this early point in 2008, there's no talking plans for apartments or condos in Elkhart County," he says.
Elkhart County has roughly 1,100 subdivisions of varying sizes.
"Every month one or two come in," Harrell says, "some small, some larger."
Speculation slows
"Builders here have slowed down on spec homes, because the eight-month average that new homes sit on our area market is too long and too costly for builders to carry," says David Campbell, builder and Southwestern Michigan Home Builders Association president.
"Builders are being market smart about spec homes in Elkhart County," Helman says. "There's not a large number of specs out there right now."
Foundations forming
"I visualize new housing rising again as soon as government is done tinkering with taxes," Harrell says, and "we get past November's election."
Helman says there is good news in Elkhart County's cyclical new-housing market nature.
"It's going to get better -- but maybe not until 2009. Still, our area rebounds strongly. This is not a recession, we're calling this a 'cyclical market correction,'" Helman said.
"There is no crystal ball in this. A lot of builders are sitting on contracts with people trying to sell their present home before starting a new one," Helman said.
In Campbell's field of vision, he sees a slow recovery until after the November election.
"We've seen new-housing market recoveries after the last two presidential elections. I think strong new-housing market recovery is a year away. We're not a boom or bust market like California. Our market has only slow appreciation."
Market sway
"People need an overall feeling that things are good with the nation before they'll make the decision to make the biggest investment of their lives," Campbell says.
At least in southwestern Michigan, "the new-home market is not nearly as saturated as people think," he said. People envision the housing market is bad because the national news tells them it's bad, Campbell said.
Harrell buys into the problematic media theory, too.
"The media hypes so much bad stuff like gas prices, home heating fuel costs, electric costs, taxes to the point people are kinda sitting and waiting to see how this all plays out."
Campbell's banking on his view that "money is cheap to borrow, given two interest rate cuts we've just seen." Even with the subprime market debacle, "No-down on new homes is still out there for the taking, it's just that better credit is needed to secure that."