New home market hasn’t fully recovered but improvement showing
By Christin Nance Lazerus email@example.com December 1, 2012 7:08PM
Michael Basile, (from left) Anthony Fekete and Aaron Spearson of Basile Construction Masonry Inc. work on the east side of a new house under construction for Pebblebrooke Homes at 75th Avenue and Burr Street in Schererville, Ind. Wednesday November 28, 2012. Home sales and new house construction numbers are up across Northwest Indiana. | Stephanie Dowell~Sun-Times Media
On the mend
Recovery in home prices in Northwest Indiana varies from community to community.
City Median price (as of October) Change from one year ago
Chesterton $164,700 -1%
Crown Point $181,600 9.9%
Dyer $190,200 7.6%
East Chicago $74,300 -2.1%
46402 $ 45,500 -18.3 %
46403 $ 97,200 22.6 %
46404 $ 59,500 6.2 %
46406 $ 52,600 -3.0 %
46408 $ 58,900 -0.2 %
Griffith $129,700 30.9%
Hammond $77,900 8%
Highland $129,100 23.8%
Hobart $130,700 18.9%
Lake Station $88,200 12.8%
Lakes of the Four Seasons
Merrillville $128,000 24.2%
Michigan City $108,300 -1.8%
Munster $187,500 9.5%
Portage $134,300 0.3%
Schererville $186,400 9.3%
St. John $240,400 9.2%
46383 $165,700 0.1%
46385 $179,500 -2.7%
Whiting $107,200 7.6%
Winfield $275,300 17.8%
Updated: January 3, 2013 6:20AM
Schererville resident Levy Wash started his home search in 2008 — right when the bottom dropped out of the housing market. He looked at existing homes thoughout Northwest Indiana, never really finding exactly what he wanted.
“You name it; I looked at it,” Wash said. “I got caught in the time frame where prices were going down on existing and new homes. I decided, for what I wanted, I could build a new house.”
He talked to several builders, and after meeting Pebblebrooke Homes owner Bob Pharazyn in 2010, Wash decided to build a new home — a 2,000-square-foot ranch home with a full basement in the Camden Woods subdivision.
The economy made Wash a little wary of making such an important purchase, but he maintained a certain budget and moved into the home in June. He advises potential homebuyers to determine what it is that they really want before launching a home search.
“If you’re looking at a more permanent structure, as I was, or looking at something for a shorter time, you can get what you want if you do it now,” Wash said.
It’s definitely a buyer’s market, but prospective sellers may feel heartened by data showing rebounding home prices across Northwest Indiana.
The region is a bright spot on the Chicago housing market map, with eight communities showing significant recovery in terms of median home price.
Compared to a year ago, Merrillville ($128,000) showed the biggest recovery in October at 24.2 percent, according to research company FNC. Highland ($129,100) was close behind at 23.8 percent and Hobart ($130,700) saw healthy growth at 18.9 percent. Prices were up in Crown Point (9.9 percent), Munster (9.5 percent), Schererville (9.3 percent), Hammond (8 percent), and Dyer (7.6 percent).
In addition, communities are seeing builders break ground on home projects at a faster pace than 2011. But the market hasn’t recovered to pre-2008 levels, and some officials wonder if those days are gone altogether.
New home construction
Cities and towns across Northwest Indiana are seeing definite increases in the number of new home construction permits over 2011.
In Crown Point, the rate of single family home permits is up 50 percent with a month to go — 149 compared to 107 in 2011. Building and Planning administrator Christopher Meyers said the number is not too far off the 172 permits issued by the city in 2007.
St. John Town Manager Steve Kil said the town is on pace to double the 68 permits it issued last year.
“We have 135 units through October and we expect to go higher,” Kil said. “It’s still a far cry from where we used to be. We were always close to 400 prior to the collapse of the housing market.”
Valparaiso Building Commissioner Vicki Thrasher said the 83 permits issued so far in 2012 could make it the biggest year for single-family housing starts since 88 permits issued in 2005.
“Valparaiso had a fee waiver period that included part of this year, but many builders told me that they would have been building anyway,” Thrasher said.
Customers interested in building new homes are back in the mix, with several local developments sporting houses in various states of construction. Pharazyn launched his company in 2010 after he was laid off from the town of St. John.
“I’ve talked to dozens of home buyers, and in the past six to eight months I’ve seen a significant rise in confidence from potential new home clients,” Pharazyn said.
He’s built nine custom homes so far this year and next year looks “very promising.”
“A contributing factor we’re seeing is that lot prices have begun to come down commensurate with market conditions,” Pharazyn said. “In the boom, developers paid top dollar, so they needed to charge a certain amount to recoup a profit.”
Pharazyn said contractors recognize that the market isn’t what it once was, but they’ve survived by lowering their profit margins.
Greater Northwest Indiana Association of Realtors CEO Peter Novak said October marked the 16th straight month of growing home sales. Novak was pleasantly surprised that October sales marked a 34 percent spike with 782 single-family homes sold in the region — including Lake, Porter, Jasper, Newton and LaPorte counties — compared to 582 in October 2011.
“I don’t know whether we’re seeing an anomaly or seeing more recovery occurring — that remains to be seen,” Novak said. “But this is the biggest increase of the year, which is obviously a good sign.”
Novak said Northwest Indiana and the state didn’t see the huge dips in home values common in California, Florida and Nevada.
“In our peak year of 2007, $136,000 was the median home price, which only dipped down in 2009 to $124,000,” he said. “So that wasn’t a huge drop. It climbed back up in 2010, remained flat in 2011, and it’s inched back up.”
In October, the median selling price for existing homes in Northwest Indiana was $124,007 — up about 1 percent from 2011. Novak said prices lag about 12 months behind a dip or spike in sales. He said most houses are selling at what they are appraised for.
The length of time houses spend on the market can vary widely. In October, a Westville home sold after being on the market only 39 days, while an East Chicago home spent nearly three years up for sale. Even similar communities vary quite a bit. St. John and Dyer homes spent an average of 124 and 155 days, respectively, on the market, while Schererville homes averaged nearly 18 months on the market.
Realtors are hopeful that the glut of foreclosures and short sales are gradually disappearing from the market. Currently, distressed sales are about 25 percent of the market nationally — down from 40 percent in 2009.
Foreclosure rates in Lake, Porter, Jasper and Newton counties decreased in September compared with the same period last year, according to data from CoreLogic.
The rate of foreclosures among outstanding mortgage loans was 3.84 percent for September 2012, a decrease of 0.26 percentage points compared to September 2011. Foreclosure activity is higher than the national foreclosure rate, which was 3.25 percent.
The mortgage delinquency rate also decreased; 7.85 percent of mortgage loans were 90 days or more delinquent compared to 8.08 percent for the same period last year.
“All of the data is telling us that foreclosures and short sales are generally decreasing,” Novak said. “Does that mean another wave will hit? We’ll see.”
Distressed sales also negatively impact the median housing price, since short sales tend to sell at a 14 percent discount and foreclosures are discounted 20 percent.