The number of new homes permitted in Allen County grew 5 percent last year, and builders say many of the major factors contributing to that increase remain in place.
The total value of the homes came to $284.8 million, for an average of $264,645 per home. That compares with a total value in 2017 of about $261 million, for an average of $254,406.
In addition to Allen, the association tracks home building permits in Adams, DeKalb, Huntington, Wells and Whitley counties, and their total for 2018 came to 1,487, up 3 percent from 1,444 the prior year.
The total value of the homes in the association’s coverage area came to $365.5 million, for an average of $245,796 per home. That compares with a total value in 2017 of about $339 million for an average of $234,779 per home.
The association said not all the values were recorded for Wells County. Its breakdown of permits by more than 50 builders showed the region’s three largest — Granite Ridge Builders, Inc.; Lancia Homes; and Westport Homes — together built 31 percent of the 2018 total.
The breakdown showed Granite Ridge with 240 permits, Lancia with 114 and Westport with 110. The data related only to the six counties the association covers, and the companies built homes outside that area.
Business was good for home building in the area last year primarily as a result of “modest interest rates that have not gone up like we thought they might,” said Lonnie Norris, vice president of sales for Granite Ridge.
Mortgage rates in the area were near 5 percent toward the end of last year, and early in 2018 “people were thinking it could easily be 5.5 or 6 percent by this time, but that hasn’t been the case,” he said.
Other factors driving last year’s increase in area new home starts included a good supply of lots and good locations and a strong economy, which boosted consumer confidence, Norris said.
“People are feeling pretty confidently about things, and our area continues to be one of the most affordable places to live in the United States,” he said. “We’ve got some things to be thankful for here.”
Granite Ridge saw modest growth last year in its villa business, in its sales to first-time home buyers, and in its construction of country homes on wells and septic systems, Norris said. Between 20 and 25 percent of its business is with first-time home buyers.
Looking ahead to 2019, “we think it could turn into a little better year this year than last,” he said.
Demand for new homes remains strong partly because the industry continues “to produce a little bit under what the national need is,” Norris said. “Consequently, we’ve got to catch up.”
Rising apartment rents also were an important factor that contributed to the area’s increase in new-home starts last year. For a good location, monthly rent of “$1,000 is very common now for a two- to three-bedroom apartment,” he said.
A tightening housing market that has raised the price of existing homes has encouraged new-home construction in the area, said Jamie Lancia, president of Lancia Homes.
“The price of existing housing has gone up significantly in the last few years, and there’s less homes on the market, less inventory or existing homes to choose from,” he said.
“As existing-home prices go up, people look and say, ‘I can get a new home that doesn’t have a 10-year-old roof on it or a 10-year-old furnace. I can be getting all these extra energy-saving features that come with a new home today, and all these warrantee factors.’”
Northeast Indiana mortgage rates are very competitive, and after rising in 2018, they have come back down below 5 percent since the start of 2019, which makes them very attractive, Lancia said.
There has been a fair amount of job growth in the area and its unemployment rate has been at very low levels, he said.
Many new communities and subdivisions have been developed, designed to appeal to a variety of potential customers, from first-time buyers to move-up or second-time buyers to villaminium buyers, Lancia said.
“There are more locations for people to build homes today than there were even three or four years ago,” he said.
Lancia homes has been contributing to that, by starting the Cappelli Cove development in mid-2018 on the north side of Fort Wayne and by getting Victoria Lakes started this year in New Haven.
“What we see in 2019 is we’re going to continue to have reduced inventory levels of existing homes available on the market,” Lancia said.
Shrinking inventory levels will present a lot of opportunities to build homes this year in a wide variety of price points, “with a lot of new locations and new subdivisions coming about,” he said. “Pricing is still very affordable, and interest rates are phenomenal.”
A breakdown of 2018 new-home permits in Allen County by price range showed 12 percent at $150,000 or less, 22 percent between $150,001 and $200,000, 40 percent between $200,001 and $300,000, and 26 percent above $300,000.