Barclay Allen is a medium-sized builder of custom homes in the Fort Wayne area. The company of which he’s president, Timberlin Homes, doesn’t build hundreds of houses every year – it’s “more like 20 to 25,” he says.
But, standing on the back porch of a home the company just built for this year’s Parade of Homes & Lifestyle Show in the Forest of Foxwood addition in northeast Fort Wayne, he’s a happy man.
This year, the company has seen an increase in sales and plenty of orders. “I’ve got people looking to build two or three years out, as well as currently,” Allen says. “I think it (the market) is looking very good. I would say I’m encouraged.”
After several years of bad news, those who provide new homes for area residents have, for the most part, regained optimism from the slow climb out of the doldrums.
Since 2010, says Dave Fuller, Allen County Building Department commissioner, building permits for new homes generally have been trending higher, and affordability has remained strong, compared with the situation in other markets.
In 2009, Fuller says, a low of 390 permits were issued through Aug. 18. By 2011, that number was 419 permits during the same time frame and by 2012, 444. Last year, the number rose to 529.
This year, permits are down again, to 466, a 12 percent drop. But Fuller says he attributes that to the prolonged cold winter, which delayed the building season, and not an economic slump. He believes the numbers will catch up by year’s end, despite news this month that nationally, sales of new homes fell in July by 2.4 percent.
In any case, Fuller says, the numbers now represent a more sustainable situation.
Current housing starts are dwarfed by the boom years of 2006 and 2007, when about 1,900 homes were being built, Fuller says. “We were overbuilding tremendously there,” he says, noting the overheated atmosphere was fueled by lower-end volume builders. Some of them have gone out of business, and the overstock has been largely sold through, Fuller says.
He says the area can easily support 800 to 900 new homes a year.
Call that the new normal says Realtor Tamra Stier of Rockfield Realty Group in Leo-Cedarville and president of the Home Builders Association of Fort Wayne.
“We’re nowhere close to where we used to be,” she says. “But we’re not sitting still, and we’re not (struggling). Let’s be thankful for where we are and hopeful that we’ll be maybe moving up.”
Area builders to whom she’s spoken have told her they have been busy and so have their subcontactors and suppliers. That means recovery throughout the industry, she says.
Kim Ward, Realtor with Fort Wayne developer North Eastern Group, says more permits might have been issued if more lots had been ready. “I think some (builders) would be building more if there were more lots on the ground,” she says. “If there’s demand in the spring, it takes about six months for us to get lots ready, which is in the fall.”
For new-home buyers, however, the most conspicuous change has been in home prices
Prices reflected in Allen County permits, which do not include lot prices, are on the rise. About 55 percent of new homes in the first six months of 2011 were priced at $150,000, while less than half that percentage, 24 percent, priced at that level this year.
So far in 2014, nearly 25 percent new homes were priced at more than $300,000, compared with only 10 percent in 2011.
Builders say several factors may be in play. Costs for infrastructure and other considerations in developing new neighborhoods are up. Builders also have been paying more for lumber and other materials over the first six months of this year, according to the statistics from the National Association of Home Builders.
Also, with interest rates on mortgages around 4 percent, some buyers have been deciding to roll the cost of amenities – such as built-in lighting, upgraded floor coverings, security systems or wiring for theater rooms – into the cost of their mortgage instead waiting to install them using higher-interest credit cards.
Builders also suggest their compatriots in 2011 may have still been fulfilling orders for first-time homebuyers with lower-priced offerings because of a tax credit that expired in 2010.
Builders say the good news is that this year’s new home offerings have been more balanced in terms of price than in the past, even if they tip slightly into upper-end territory. About 25 percent of Allen County permits are in each of the four major categories – $150,000 and under, $150,000 to $200,000, $200,000 to $300,000 and more than $300,000.
That last category accounted for only 10 percent of new homes in 2011. “I think the builders have given enough range of homes for the economy we’re in. We’re not looking at building mansions; no one is looking for that anymore. But we do have some people moving in or moving up still space for that (end of the market) and there are still plenty of homes for first-time buyers.”
According to statistics gathered by the Upstate Alliance of Realtors, or Upstar, the median sales price for new single-family home construction in Allen, Adams, Huntington, Jay, Wells and Whitley counties in July was $187,220, up more than 8 percent over last July. That compared with a 3 percent increase for existing homes, where the median price was $103,000.
Some builders have been working to keep cost down. Tyler Kees, in sales with Quality Crafted Homes in Decatur, says that company is no longer building as many homes with basements – or as some put it, he says, “$40,000 holes in the ground.” Others are not finishing basements.
Other builders are increasing their emphasis on smaller, and generally lower-cost villa-style homes for the downsizing generation, including Granite Ridge Builders of Fort Wayne, which is showing two villa styles this year’s Parade.
As for supply, the number of new homes on the market shifted from a 3.7-month supply, or a shortage situation, last July to a more balanced5.8-month supply this year, according to Upstar statistics. That represents a 40 percent increase of available homes, and confirmed several builders’ impressions that more of them were willing to build homes “on spec,” or without a confirmed buyer.
Fuller says the most popular areas for new home-building in Allen County remain unchanged, with Perry Township absorbing the most permits followed by Aboite Township.
But he says, possibly spurred by the new Parkview Health campus and surrounding development, areas in St. Joseph and Washington Township in the northern part of the city and Eel River Township even farther north are picking up.
“I think locally there’s now a lack of inventory on the market for both new construction and existing homes, but (for new) I think it is easing somewhat,” Allen says, adding he doesn’t place too much stock in numbers.
“I think if you build the right home in the right place at the right price, you’ll sell it.”