By Derek R. Smith, Daily Reporter
dsmith@greenfieldreporter.com
HANCOCK COUNTY - Customhome builder George Sherman doesn't see a light at the end of the tunnel just yet for local builders yearning for more work.
"We're hurting. There's no question about that," Sherman said. "I'm not optimistic for 2010. I believe it will be slightly better than 2009, but not much more."
Greenfield-area realtors and builders have mixed opinions on whether the local housing market will rebound in 2010 as the nation attempts to work its way out of the worst recession since the 1930s.
Recent signs suggest the recovery may have begun. Orders to U.S. factories posted a large gain in December, the U.S. Commerce Department reported last week. That was the latest evidence of a strong turnaround in manufacturing.
Still, there have been mixed signals about the economy and many American builders aren't expecting a strong rebound this year.
Sherman points to the monthly Housing Market Index released by the National Association of Home Builders and Wells Fargo - a monthly survey that gauges builder confidence in single-family home sales. Any number over 50 in the seasonally adjusted index indicates more builders view sales conditions as good than poor.
The index dropped one point in December to 16 as builders expressed concern about continued weakness in the economy and job markets. But keep this in mind: last January the index was at 8, the lowest level in its 25-year history, according to www.nahb.org.
At the local level, houses were built in 2009 at a snail's pace. There were only 112 single-family building permits in the county.
Compare that to the banner year of 2002 - when the county had 629 single-family permits.
Still, McCordsville saw 17 more residential building permits last year than in 2008.
"While the number is still low compared to the early part of the decade, we are encouraged by the growth," Town Manager Tonya Galbraith said.
Greenfield had only 28 single-family permits at the end of November - on pace to mark the city's lowest singlefamily permit total since 1991.
One reason for the housing slowdown involves financing. Banks are stricter in their lending now after getting burned in the sub prime mortgage debacle, experts say. Some observers think we may see a housing turnaround this year as lenders loosen their purse strings.
"We're starting to see just a little bit of improvement now on the residential side," said Michael Dale, executive director for the Hancock County Area Plan Commission.
Dale says he's had several meetings with developers looking to build townhouse or apartment projects. Right now there is opportunity for building multi-family housing because it's easier to get financing for those types of projects, he added.
"I think the building industry is hoping to see the pendulum swing," Dale said. "The numbers might indicate there's some positive speculation that the housing market is going to turn around in the near future."
Some positive housing numbers are found in recent sales data for existing homes.
Hancock County has seen an 18 percent increase in the number of properties sold over the last three months, compared to 2008, according to the Metropolitan Indianapolis Board ' of Realtors.
"I've seen the market improving the last six months," Century 21 realtor Kathy Hall said recently in eReporter/biz. "The first time home buyer credit and now the move-up credit have been instrumental in helping the market recover ... We will be anticipating the market continuing to improve and prices starting to stabilize as the foreclosure and short sale markets are getting more in balance."
The housing market has been rebounding from its worst downturn in decades; the government has been aggressive in lowering mortgage rates and offering tax credits designed to entice more homebuyers
An $8,000 tax credit is for first-time homebuyers has been extended through the end of April (or the end of June in the case of some pending transactions). There's also a $6,500 move-up credit for current homeowners who meet certain conditions through April (or June in some pending cases).
At the national level, sales of existing homes surged in November to the highest level in several years, but analysts expect December sales to show a large decrease.
Many homeowners still aren't aware of the tax credits or are skittish about taking the leap of getting a new home, experts say.
Sherman says the $8,000 tax credit tends to benefit tract home builders who cater to people buying $100,000 to $150,000 homes. He says the move-up credit is a help for custom home builders, but it's not enough.
Many local homeowners have chosen in recent years to add on to their homes instead of build or buy a new home. With fewer people wanting to build, many builders have resigned themselves to smaller projects like adding on to houses, finishing basements and putting up garages.
"We're doing whatever it takes to survive," Sherman said. "People are cautious (about buying a new home) because they don't know if they're going to have a job tomorrow."
Despite the uncertainty, local builder Dave Sego expects things to pick up.
"I already have more work scheduled now than I did for all of 2009," Segosa said in an eReporter/biz interview. "I think with the prices of lumber and other materials down, as well as the tax credits being offered, people are starting to get excited about building again."
As slow as residential housing has been, Dale points to some degree of momentum in commercial construction, as well as an upswing in interest for future projects.
He says University Loft is moving forward with an expansion of the business park where it is located. With a new name, Mt. Comfort Air Park, Loft is submitting a secondary plat for 160 acres just north of Interstate 70. The plan calls for four quadrants of 40 acres apiece, with the existing Loft facility taking up one of the quadrants. Dale sees the petition as an indicator that developers are optimistic about future demand for the area.
Dale also mentions EnerDel's interest in locating a manufacturing facility in Mt. Comfort. The lithium-ion battery pioneer will seek county approval this month for a heavier manufacturing use in a speculative building built by Browning Investments.
EnerDel is attracted to the location's access to I-70 and strong labor market; such attention is a good indicator the county is well-positioned for further development and growth, Dale said.
However, a bit further north in McCordsville commercial development has been stagnant. A Hancock Regional Hospital medical office stands out among recent projects that have moved forward.
"We are very pleased that the Hancock Regional Medical Office Building is moving along and that a ribbon cutting may be in the offing in the spring," Galbraith said. "We were also pleased that the Bureau of Motor Vehicles moved to McCordsville and that the new post office opened early last year. But, some of the bigger developments, namely Lowe's and the McCord Square project did not get off the ground.
"Star Financial Bank had hoped to start construction in 2009, but that didn't happen either," Galbraith continued. "However, a senior apartment project, located near the Hancock Regional Medical Office Building, is hopefully going to begin this spring and a new restaurant is planned for the area vacated by Joe's Grille."
As painful as the downturn has been for Sherman, he thinks homeowners should take advantage of a perfect storm of factors now in their favor. He says there are deals to be had due to tempting interest rates and low costs for labor and materials.
"There's probably never going to be a better time to buy a custom home than right now," Sherman said. "This is a golden opportunity for people who want to build."
The Associated Press contributed to this report.