HOUSING AND DEVELOPMENT: New home construction could take a turn

Builders and buyers adapting to navigate the changing market
2010-02-28T00:00:00Z HOUSING AND DEVELOPMENT: New home construction could take a turnBy Joyce Russell - joyce.russell@nwi.com, (219) 762-1397, ext. 2222 nwitimes.com

New home construction took another dip in Porter County in 2009.

But the downturn in home construction during the last few years could come to an end if certain measures fall into place, said Bryce Pickering, president of the Porter County Builders Association.

Two positive things the decline has done, he said, is produce more educated homebuyers and a construction industry learning to adapt to the market.

According to U.S. Census Bureau statistics, there were 223 single-family home building permits issued in Porter County in the first 11 months of 2009. There were 344 permits issued in the same time period in 2008.

"I think that it will start improving," Pickering said.

For that to happen, favorable support needs to be in place, he said.

The federal income tax incentive of $8,000 for first-time homebuyers and the $6,500 incentive for the move-up buyer has helped the industry. Pickering said he and others would like to see the incentive continue and even increase in the coming year.

"When it was first announced, I received three telephone calls within a couple of weeks," he said. "Those clients cited the tax incentive as why they wanted to build now.

"Historically, the housing market has led the country into a recession, and the housing market can lead it out," he said.

Home construction means jobs, from builders to suppliers, Pickering said.

The banking industry also will be key to the recovery of the construction industry. While home mortgage rates continue to be at historically low levels, banks have tightened up their lending practices.

"It the banks are not lending, it doesn't matter what the interest rate is," he said.

That's where homebuyers are becoming more educated. There is more of a concern about credit scores and the need to improve credit scores to receive mortgages, especially for first-time homebuyers.

Buyers also are becoming more realistic.

"People are coming to their senses more now," Pickering said. "They don't see the need for the 3,000-square-foot homes and have learned they can live in 1,600- to 1,800-square-foot homes. They don't see the need for micro-mansions when they learn their money doesn't go as far."

The industry is adapting, too, marketing toward what people want and need. There is also an increase in green building, especially for those looking to move up into their second or third home. People are becoming more energy conscious, Pickering said.

Perhaps the most important ingredient in the recipe to improve the home construction industry is a boost in consumer confidence, Pickering said.

"Don't be scared. The economy will start back. And there is a certain group that are sick and tired of being sick and tired about worrying about the economy," he said.

Those people likely will take the leap of faith needed to get home construction restarted in the coming year, he said.

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