As the President-elect of the Porter County Builders Association I have the opportunity to see a glimpse of what's going on countywide. I got an email late last week asking for my interpretations of the market for new homes here locally. This is a reprint of the response I sent.
I believe that 2007 will be a very solid home building year for Porter County. I know that I'm expected to say that, but I can honestly report my projections. I was also honest in 2005 in my feeling that new homes would decline, I did not expect 25%, that was a bigger decline than I expected.
A couple things that lead me to project so much more activity in 2007:
- In 2006 we underbuilt the demand. Our projections would have been for 200 more homes demanded in 2006 and frankly builders got nervous and slowed way down.
- As the Post suggested a couple days ago, home values did not decline. They are expected to increase even more in 2007 by at least the 3.7% that the paper projects.
- There a couple terrific new neighborhoods that just didn't get rolling in time last year. I think people will love them and flock to build.
- Interest rates will remain level or even go down a little in the second quarter, our most powerful selling season.
- The home buyers I've talked to in even the first 10 days of this year are much more ready to purchase than at any time last year. I know it's subjective, but we all use our gut.
What could go wrong, let's be honest:
- Well frankly we have some municipalities that have gotten carried away with extra fees, Valparaiso and Portage have increased some pretty fake fees by thousands. This has an adverse impact on the first time buyers for sure. If they continue to raise fees, less people will buy entry level.
- We could lose a major employer. I don't think this will happen, but jobs are the fuel that drives the economic engine in our region.
- There are still too many specs. A good run on spec sales would be good for buyers and sellers alike. But if they sit, they hurt the whole market. One major builder dumped 30 plus specs last year and no one has that many going into this year.
All in all, I expect pretty amazing things this year. Are you ready?
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