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home : most recent : residential development August 14, 2018


8/10/2018 1:57:00 AM
Home inventory low and prices high, as Kokomo development continues upswing
Construction crews work on the Flaherty and Collins luxury apartments on South Main Street on Feb. 13, 2018. The apartments are now near completion. Kelly Lafferty Gerber | Kokomo Tribune
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Construction crews work on the Flaherty and Collins luxury apartments on South Main Street on Feb. 13, 2018. The apartments are now near completion. Kelly Lafferty Gerber | Kokomo Tribune

George Myers, Kokomo Tribune

Across Indiana, real estate agents have gone to battle, fighting over a meager supply of homes as they juggle a growing number of potential buyers emboldened by a robust economy.

And the amount those buyers are willing to pay is only going up.

The state’s housing market, therefore, has come to mirror a situation in Kokomo that’s led to a notable sellers' market and seemingly constant development. 

And the data shows, agree public officials and researchers, that there is a need for increased housing supply.

A media release distributed by the Indiana University Kelley School of Business shows “a dramatic imbalance between strong demand and scant supply” led to a 6.6-percent bump in home prices during 2017.

The jump constituted Indiana’s largest annual increase since 1991, according to a report from the school.

"In many respects, Indiana's housing market is in good shape," said Matt Kinghorn, senior demographer at the Indiana Business Research Center. "The state had a record number of existing home sales in 2017, and house price appreciation is as strong as we have seen in the last quarter century.

“Indiana's foreclosure rate continues to fall, and residential construction is finally beginning to perk up. With Indiana's economy doing fairly well and mortgage rates likely to stay below 5 percent for a while longer, these facets of the housing market will likely remain strong.”

Overall, Hoosiers bought more than 88,500 homes in 2017, a new record for the state, and total sales jumped by 2.4 percent over 2016.

Those same trends have created a sharp decline in the amount of homes available in Howard County.

In 2014, buyers had well over 500 listings available for sale in the Howard County area, said Realtors Association of Central Indiana President Dee Dee Richards, but now the current market has only 242 active residential listings.

And the average listing price is up roughly 12 percent from June 2017 to June 2018 in Howard County, jumping from $123,500 to $139,178.

 “It’s nationwide, the low inventory,” noted Richards on Wednesday. “As long as the home is finance-able ... sellers are getting probably 95 to 100 percent of asking price.

“I wish more people would put their houses on the market. There are a lot of buyers. When a house goes on the market, all of us agents are like frenzied fish in a pond that are starving.”

Many homes, she noted, are spending less than 60 days on the market. And while sellers are often getting full asking price, and getting it quickly, some potential sellers are scared to put their home on the market, worried that it will be sold before they can find a new home for themselves.

“I’m glad that we’re busy, I’m glad that we’re working. We have – there’s tons of buyers. It’s just, the market, inventory, is extremely low. And prices are increasing,” Richards explained.

In an ironic cycle, sellers often feel like “there’s nothing out there that fits their needs” because of the low inventory and increasing prices that eliminate the buy-low, sell-high possibility, said Richards, further exacerbating the small amount of available homes.

“They might as well stick where they’re at and either put money into what they have or just wait,” she explained.

“I’m just hoping that Kokomo and our area will be steady and it won’t over-inflate too quickly and then people get in over their heads.”

But it’s become the focus of local officials to utilize a strong economy to increase home construction and residential development.

“The strength of the Indiana economy will determine whether measures such as residential construction and household formation rates improve,” said Kinghorn. “Growth in employment and wages will draw more people to the housing market and spur new construction.

“If the state’s economy can continue to improve, the Indiana housing market could soon be hitting on all cylinders.”

There’s a similar outlook in Kokomo, a city that currently draws roughly 9,000 commuters into the city each workday morning but has taken steps to both draw in new residents and retain existing ones. It’s also become one of the fastest-growing economies in America since the Great Recession. 

Kokomo has, in fact, made the third most dramatic economic improvement since 2009, according to a study recently released by Bloomberg, bouncing back from an unemployment rate that hit 20 percent in 2009 but has been as low as 3.1 percent in 2018.

From January 2009 to January 2018, specifically, Kokomo’s labor force jumped from 36,065 to 38,146 – an increase of more than 2,100 workers.

The number of people employed jumped more than 7,000, while the number of unemployed workers declined nearly 5,000, according to data provided by the city of Kokomo.

While home building permits for 2018 could not be obtained through the Howard County Plan Commission office, there’s undoubtedly been an influx of development in Kokomo.

A study released by the city of Kokomo in early 2018, conducted by Indianapolis-based Mitchell Market Analysts, clearly displayed the need for housing options in the city.

The average occupancy rate for apartments is 96.7 percent, found the study. And fewer than 90 units were available for rent at the time of the survey. 

No complex in Kokomo – which also saw 85 housing construction permits obtained in 2017, compared to two in 2010 – was less than 91 percent occupied.

At the time, Goodnight said that “millennials and baby boomers are flocking to urban apartments nationwide. … We must have the diverse housing options these groups are looking for in order to attract and retain a talented workforce.”

Mirroring that philosophy has been the construction, and partial opening, of the 306 Riverfront District luxury apartment complex.

Located across from Kokomo Municipal Stadium, next to ongoing public trail improvements and a new dog park, down the road from the likely future home of a downtown hotel and conference center, 306 Riverfront District – marketed to young professionals – displays better than possibly anything else Kokomo’s current trajectory.

Flaherty & Collins Properties developers expect about 70 percent of the residents to come from out of the county, which they believe will create a direct economic impact to facilitate the growth of downtown Kokomo.

But there’s also a need to create more options outside of the city's downtown.

One project approved by the Kokomo Common Council will bring 70 homes, ranging in price from $250,000 to $350,000, to a southside Kokomo neighborhood; another is set to build 220 homes in coming years in the Webster Crossing neighborhood.

Planned apartment projects have also been plentiful, including within downtown Kokomo, in the former YMCA; on Kokomo’s near east side, in the form of townhomes; and student housing near Indiana University Kokomo.

City and development officials have also announced projects for 51 units of affordable housing north of downtown on Washington Street, which could be close to 56 units of planned senior housing.

One or two of the buildings in the 250-unit Park Place Apartments complex could even be open by the fall, following its closure after the 2016 tornadoes.

That list, far from comprehensive, doesn’t include other recently-completed or announced projects, like an initiative announced in August 2017 that will include the construction of such homes on vacant and underutilized lots in Kokomo neighborhoods.

The city specifically plans to incorporate its nascent urban infill project in the area surrounding the housing development. The infill project, said Kokomo Deputy Mayor David Tharp, will bring “new single-family, market-rate homes” to the neighborhood.

Notably, the homes will be sold on the open market, and funds collected from home sales will go back into the city program to finance the construction of additional homes.

“There’s no inventory,” said Richards about the need for increased housing supply. “We have to do something.”

 

Related Links:
• The State of Indiana's Housing Market

Related Stories:
• Kokomo OKs affordable-housing rezoning, redevelopment plan

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