In 1917, the song “(Back Home Again in) Indiana” was first released.
In 1971, The Jackson 5 sang “Goin’ Back to Indiana.”
But since about 2017, Indiana’s song could be Woody Guthrie’s “I Ain’t Got No Home.”
Anyone who’s tried to buy a house in Cass County knows that properties don’t stay on the market long.
“If a house is priced right, it’ll have an offer on it within a few days,” said Steve Schwering of Schwering Realty LLC in Logansport.
In Cass County, there are 129 houses on the market with 25 of those pending sale completion — an offer has been accepted and paperwork is being done.
“We’re used to having 250-350,” said Schwering, who’s been a real estate agent for 20 years.
There are also waiting lists for both new houses and new apartments that are going up in the city.
Last year, a housing master plan funded by the Logansport City Council revealed that the city has an immediate need for a minimum of 250 new housing units and as many as 400 in the coming years.
It’s not just hard to find a place to live in Cass County, though.
The housing shortage is “all around the state,” said Brian Thompson, president of the Indiana Association of Realtors. “We’re seeing fewer stays on the market. We’re seeing a higher sale price.”
Real estate throughout the state is a seller’s market, says Abby Miller, owner of Homestead Realty Group in Logansport. The average family home in the city stays on the market one to two days, although higher-priced ones last a little longer than that.
“This has been happening for the last three years, and it’s coming to a head,” Thompson said. “Right now, housing is on the tip of everyone’s tongue. And it’s not just here. It’s everybody.”
It’s not only home buyers who are experiencing scarcity.
“There’s a need for good rentals here,” said Rachel Henry, owner of Modern Real Estate in Logansport. “For the investor, the rental market is really good here. Rent is high here.”
Thompson said that in some areas people are driving an hour to work to be able to rent a decent apartment.
Miller said, “It seems every day, people are wanting a rental, needing a rental.”
The median cost of a house in Cass County increased 15 percent from September 2018 to September 2019, going from $66,500 to $78,250, Thompson said. That’s higher than the increase in the median statewide, which rose from $160,500 to $175,000 or 9 percent. But the statewide median cost of a house is still more than double Cass County’s.
Pending sales in Cass County have increased 38 percent over the last year as well.
Reasons for shortage
Low unemployment may be pushing the demand for houses. However, there are simply fewer on the market.
“There’s absolutely a need for houses,” said Henry. “There are more buyers than sellers.”
For the uneven supply and demand, “there are a lot of factors,” said Thompson. Some can be traced back to the recession of 2008-09, driven mostly by the housing bubble created by sub-prime mortgages. At the same time, many construction firms went out of business or changed focus away from building dwellings.
“The building industry has just never fully recovered after the market crash,” Thompson said. “It’s been a slow recovery for new housing starts.”
The recent tariff wars have also caused problems. The U.S. gets most of its lumber from Canada, and import costs have gone up on goods from there, Thompson said. Even without considering tariffs, expenses have increased.
“The average cost of building materials always goes up,” he said. So developers or construction firms aren’t likely to build in a neighborhood where they can only put in one house.
But subdivisions are restricted by a lack of available land, which is a limited resource. Farmers often don’t want to sell their land. “That’s a relevant factor, especially for Indiana,” said Thompson.
There are also increased government regulations in some areas, like as around the Bloomington area where Thompson lives and works, he said. “Overregulation can stop new development,” he said.
Schwering said that with the good economy and low interest rates, the houses going fast aren’t the ones priced at $80,000 or less. People who might have bought those houses in the early part of the century are buying ones in the $100,000 to $170,000 price range today. A $150,000 mortgage over 30 years will result in a $694 monthly payment, he said. It used to be a 20-year mortgage for $80,000 at 7 percent interest meant monthly payments of about $620. So today, people are able to afford much more expensive homes without seeing a sizable difference in their monthly payments.
People are also making improvements to their homes with low interest rates in place, so that work ties up many construction firms.
In Northwest Indiana, the demand is up because of people moving in from the Chicago area, Thompson said. What would be a $500,000 house in the Chicago suburbs would cost $300,000 and be subject to lower taxes. Because of good mass transit systems, it’s easy for homeowners in Northwest Indiana to get to their jobs in the city. In Indianapolis, the Red Line bus line is expected to allow people to move away from the city, perhaps changing the housing landscape there as well, he said.
Redevelopment of blighted areas
Not all areas of Indiana are experiencing a housing shortage, though.
In Gary, there’s a 10,000-home inventory, with many of the surplus houses being abandoned or blighted, Thompson said. It would cost an average of $10,000 to tear down each home. Gary has recently been pursuing grants to help with that.
In Logansport, the Indiana Housing and Community Development Authority (IHCDA) awarded $925,000 in 2014 to demolish 37 blighted houses. The Blight Elimination Program is backed by the U.S. Treasury Department’s Hardest Hit Fund started in 2010 to provide mortgage relief to homeowners affected by the 2008 recession.
Last November, the IHCDA recommended that tax credits be awarded to Indianapolis-based Crestline Development Co. to help fund a project that would add 30 new homes — 15 affordable three-bedroom homes and 15 affordable four-bedroom homes — on those formerly blighted sites. The ReVere Homes project — named after the ReVere Motor Corp. that built cars in downtown Logansport in the early 1900s — is over halfway complete, with 17 homes now finished.
“There have been 360 prospects on my wait list,” said Bridgett Williams, manager for ReVere Homes and McKinley School Apartments.
It’s not just standalone residences that are being looked at for redevelopment. Indianapolis developer John Dugan, who also has rentals in the Lafayette area, is creating new apartments in a former downtown hotel in Logansport. He formed Logan Square LLC to remodel the building that was once the historic Captain Logan Hotel from its most recent use as business space for about 50 offices. The new Logan Square Apartments will offer four studio apartments, 23 one-bedroom apartments and 12 two-bedroom apartments by the end of the year.
People began contacting him about renting the apartments almost as soon as reconstruction began in May after four months of internal demolition.
“We’ve had extreme interest in the apartments. It’s exceeding the 43 units we have,” Dugan said in August. “I’m pretty confident we’ll have the apartments filled fast.”
Today, more people are willing to buy and reinvest in homes as well.
Schwering said the low interest rates and a desire for more expensive homes is driving the house-flipping market. Developers are buying inexpensive homes and rehabilitating them into homes that can be resold for more than $100,000.
Henry said her buyers tend to be young and would rather have up-to-date homes that don’t require a lot of work. However, Logansport is an older town. “Most of the houses here were built in 1900,” she said.
More options for buyers
Many potential home buyers are getting pre-approved then looking at the different choices they have for the terms of their loan. “There are options out there with no money down,” Henry said.
With a secured loan, buyers will have an idea what they can afford and can tell the real estate agent what they’re looking for and be prepared to make an offer quickly. “Buyers have got to be ready. They’ve got to be pre-approved,” she said.
After securing a potential loan, “talk to a Realtor. They’re knowledgeable,” Henry said.
Schwering said that good real estate agents will educate buyers.
The last time he saw a housing demand like this was before the 2008 bubble burst, and there were also mortgages with little or no down payments at that time. However, when people needed to repair the furnace or roof, they had no equity in their homes to borrow against. That’s when trouble happens.
“We don’t want to see people foreclosed on,” Schwering said.
He thinks this housing bubble will also burst, and if the cycle continues as it has in the past few decades, there will likely be a drop in home prices every 10-15 years. That’s not necessarily a bad thing, he said, but potential buyers should be prepared for it.