Hi.

I'm Jeff Rea, your host for Economic Outlook.

Welcome to our program.

We hope you enjoy the show.

Please make plans to join us each week as we discuss the region's most important economic development initiatives with a panel of experts.

The housing market has changed dramatically over the last few years as rising interest rates and the lack of available housing threatens to slow community growth.

We'll take a deep dive into the housing industry.

Coming up on Economic Outlook.

If you're shopping for a new home, you'll notice that the supply of homes is somewhat limited.

The costs have risen and the cost of borrowing has also increased.

But communities are feeling a real need for new housing opportunities.

We'll take a closer look at the housing industry and what you can expect if you're looking to by.

Joining me for that conversation are John De Souza, the president of Cressy & Everett Real Estate, and Shelli Alexander, the regional president of 1st Source Bank.

Guys, thanks for joining us today for a really important conversation.

Folks are talking about housing really all over the place and so love to dive in a little bit deeper.

Before we do that, though.

John, let me come your way.

If folks aren't familiar with Cressy and Everett real estate, I'd be surprised if they weren't.

But tell us a little bit about Cressy & Everett.

Sure.

Glad to be here.

Cressy & Everett has been in business for 76 years, the longest serving real estate company serving this whole region.

And I'm currently the president of it.

We have 175 agents that serve buyers and sellers with 12 offices.

So we have a long history and we've seen a lot of markets.

So we can talk about today's market.

Great.

Good.

John, thank you.

I look forward to diving into that conversation.

Shelli, similar I think people are familiar with 1st Source.

But just to help frame the conversation, they tell us a little bit about 1st Source.

Sure.

We're a locally owned, full service financial institution, been around since 1863.

We have branches across northern Indiana and southwest Michigan and just here to serve the community.

Great.

Sounds great.

So two great experts.

Thank you for diving a little bit deeper into this.

So John let me come your way a little bit.

Let's give us a little snapshot.

So I think of what what it is and my opener was that it's changed a lot in the last couple of years.

Let's go back a couple of years.

Just to start, tell us about what's happening in the in the housing market, kind of pandemic, maybe post-pandemic timeframe.

Absolutely.

And if I go back if I can go back one period real quickly in the early 2000s, we had this this market crash.

We have been building homes at a certain level and then we suddenly stopped because we should have stopped.

But the problem is that we have not been building up since then.

So builders will tell you that we are in a general shortage and new construction.

So what has happened is as the pandemic came through, it really made a lot of consumers reevaluate how they wanted to live, where they wanted to live.

So we had net migration to the area, people moving away from suburban centers, wanting to live here, be closer to family, and that we had some folks looking to buy a second home or maybe a third home.

So we sold a lot of beautiful lake homes in both Indiana and Michigan.

So all of a sudden we have a rising demand and we had a very low inventory.

We were also blessed by having really beneficial mortgage rates.

So it really heated the demand side of the market, not so much the supply side.

And so Shelli maybe weigh in maybe for a similar question because because you and John, both of your companies both play critical roles in this.

Talk about, from the bank perspective a little historical where things have been on the on the mortgage and financing side.

Sure from a financing perspective, we've been so busy just trying to keep up and keep up with the demand.

It's, we've seen lots of first time homebuyers, lots of people, again, buying second homes.

It's it's just been really good for our for our business.

Right.

So so, John, you know, as I've talked to homebuyers, I think, again, a couple in the past couple of years, you know, the houses went on the market really fast.

People were paying above asking prices.

We were getting a lot of offers.

People were paying cash for it.

And talk a little bit then about how things have changed then in the last couple of years since that?

Absolutely.

So, yeah, with the pandemic early days, we were not sure exactly it was going to happen, but the demand really showed up.

And what that meant was we had a lot of interest.

So yes, homes were selling very fast.

There's lots of competition, you know, having a dozen or two dozen offers on a single property and so on, so forth.

Buyers had to adapt how they were approaching buying at that time.

The good news perhaps is that we're seeing a different market from that.

So after a couple of years of the most unusual, very hot, very active market, we're beginning to return to a more balanced market, something that we may have seen in 2018 or 2019.

John, if I can stick with you for a quick second, so talk a little bit.

So you cover the broad region, but you're also plugged into what's happening in Indiana and around the country.

So so the trends that are happening here, not unique to us, happening everywhere, give us a, you know, kind of the regional, regional perspective.

Absolutely.

You know, Jeff, that's such an important point.

You know, the old adage about all real estate is local, right?

Well, seems like all real estate headlines are national or at least describing a really exciting kind of extreme markets.

So when buyers and sellers, you know, read headlines, it should remember that we're not Miami, we're not Austin, we're not Boise, Idaho.

Right.

So we are blessed that our market is way more stable than that.

So while we haven't seen some of the really, really high increases in appreciation that some of those markets have, we're also not seeing some of the depreciation of some of the lower values that those are seeing.

So they need to really talk to our local realtor who knows the numbers in this market and not be distracted.

So we're really blessed to have had a more moderate market, although appreciation has been great.

If you've been a homeowner for the last couple of years, you've seen anywhere from 7% to maybe 15% year over year appreciation.

And that's wonderful for an asset, you know, in, you know, my my retirement accounts are not doing that well.

Right.

So so so it's been a wonderful time to have been a homeowner during that period of time.

So Shelli let's talk a little about homeownership.

So so folks who are or maybe haven't been in homeownership, you know, first time homebuyers talk a little bit about from the the bank perspective, is the is the environment better or worse about the same for for folks who haven't been through this process.

Obviously, this is probably the biggest thing they'll ever purchase.

Could you give us a little of the banking perspective there?

Yeah, I think consumers aren't budgeting in their households like they used to.

I think budgeting is a thing of the past and we're counseling our clients to make sure they sit down and make a budget prior to going out and shopping for a home.

So figuring out what are all those expenses, maybe when they were renting the the landlord included some of the utilities or internet in their rent and those are things they're not thinking about.

So they've got to look at that.

They've got to look at the expenses that they might incur just to fix something, to put gas in the lawnmower, those kind of things before they figure out how much they really can afford.

So we're doing a lot of counseling and offering a lot of free resources to consumers on things, whether it's the Internet, financial wellness classes and such, that they can take just so they become a little bit more knowledgeable.

Stick with the bank piece for a second.

So as we're I pretend to understand everything about the economy, the way I try to play it on TV like I know it all.

So interest rates are rising.

They're almost double.

It's I thought I looked from where they were a couple years ago.

We talked about inventories are slowing down.

So, so and as I understand, the interest rates are rising to try to curb inflation a little bit.

How how is that impacting demand?

Are you still seeing is significant demand even though interest rates are so much higher?

Sure.

On the on the home purchases, we're still seeing that.

Obviously, our refinance market has pretty much died off.

People are either doing home equity loans versus trying to refinance that low rate that they currently have.

But demand is still there.

It's just that a year ago, if you pre-qualified yourself your house, the amount of a house that you could purchase is a lot lower today just due to the interest rates increasing.

So so John, let me come your way for perspective because you're you're 170 plus agents are out in the field with folks trying to help sell them on the inventory that's available and helping them navigate this process, give us some perspective from the realtors about just the financial chase and where we are now.

So so we talked about the last couple of years being an unusual market and the speed and the intensity of it.

So we're beginning to see less of that, but it's still a very dynamic market.

So for example, in October, Jeff in our region, we sold about 650 homes throughout the whole region.

So there's a lot of houses still being bought and sold.

People need to remember that.

And to the price point, especially to those first time homeowners, it's really important to know about 200 of those homes sold below 150,000.

So so there are affordable homes that can be found.

They will move very quickly.

It's a very competitive segment of the market.

But if you're renting and you do the math with your lender and you realize and you can find that you can afford a home in that price range, they're available.

Guys, we want to leave the studio for a quick second, we're going out to the field.

George Lepeniotis, my co-host, is out for some additional perspective about housing and what's happening here in the region.

George, let me toss it to you.

Thanks, Jeff.

I'm just south of Eddy Street Commons at the new Brennan's View condo complex.

I'm joined today by my guest, Steve Smith with Irish Realty.

Steve, thanks for being with me.

Hey, thanks for having me.

Hey, tell me a little bit about Irish Realty and that whole family of companies that is really involved in new construction in and around South Bend.

Yeah, we were founded by my father in law, Steve Corman, back in 1992.

We've been very committed to new construction and development in the South Bend area.

We do a lot around the university of Notre Dame.

We have a strong presence on the northwest side of town as well.

We're developers of both multifamily and single family homes and Irish Custom Homes is our home building entity.

And then Irish Realty marks it.

A lot of the new construction products that you've seen and of course we do the sale of existing homes as well.

So you plan them, you build them, you sell them and you take care of them.

In some instances, the goal is to be a one stop shop for everyone's residential real estate.

Nothing wrong with that.

Now, before we went on camera, I said to you colloquially, but it's true.

If I would have told you ten or 15 years ago that there'd be almost $1,000,000,000 of new construction in South Bend City proper, you would have laughed at me.

Oh, my gosh.

But yet, in the past 15 years, we've noticed this area commonly referred to as adding Street Commons, but go so far as the east race and that area of downtown South Bend has really seen a massive boom in where we stand today.

Brennan's view is part of that boom.

Yes, he does a little bit about this project.

Yeah, absolutely.

Brennan's view is a new construction condominium development.

We have one, two and three bedroom units.

There's 35 units in the complex of which 25 are already sold.

Even though we just said our first move ends in September.

It's been a very popular product and it's a mix of people who want to be close to work, whether it's at the University of Notre Dame or downtown.

Young professionals are snapping these up to be close and want to be able to take advantage of walking distance.

We got Trader Joe's across the street.

We have an awesome rooftop deck here, a workout facility.

And so really it's a chance to have maintenance free living right in the heart of it all, because this is where the East Bank neighborhood and the Notre Dame neighborhood kind of converge right here at Brennan's view.

Really a key area as far as that walking score that we talk about.

Right.

You can walk north to campus, you can walk south to downtown South Bend, you can walk directly west and you're going to hit the river walk and some of those trails and amenities.

So I get it.

And it's been successful.

It's been very successful.

And tell me, is this the totality of the project or are there more plans on this site now?

This is it for this project.

So we just have ten units left available and we expect to be sold out by the early part of 2023.

So if someone wants to learn more, now's the time.

Now is the time now.

Irish Realty and some of your other developments span beyond just this.

And yes, this is a popular development area, but there are other exciting things that you're doing, one of which is kind of near and dear to my heart.

You are developing a project out in Granger called The Hills, which has a unique perspective in that it's got municipal utilities available.

Yeah, in a residential site in Granger, which as many of our viewers know is an anomaly.

Yes, unheard of.

In fact, when we went to get the water and sewer permits downstate, they had to blow the dust off the books.

That had been decades since somebody had done something like this.

And Granger was sorely in need of municipal utilities.

We were able to work with the regional water sewer district, but then establish a private water utility to bring water and sewer to Granger.

And it's been wildly successful in part because of that infrastructure.

Oh, absolutely.

Yeah.

And then you also have some plans on the west side of South Bend.

You talked about Corman Realty and Irish Realty have long been Staples of both custom home construction out on the west side, northwest side, out towards the New Carlisle.

You told me before we went on an on air.

But what's going on downtown are on the west side of South Bend.

That is kind of, in my view, the next the next step here.

Yeah.

Well, we hear about this new battery plant that's going to be coming out here.

It's pretty exciting, going to bring a lot of jobs.

And so that that corridor from Lincoln Way from downtown out to the airport, you know, Mark Tarner's building, his dinosaur museum out there, it's kind of exciting.

We're talking about some improvements with the train, but we think there's a great opportunity there on that west side to begin doing some infill development.

The city has made some great strides.

They've made some preapproved plans that make it easy for people to build on these smaller infill lots they're offering up to a $20,000 credit for water and sewer connections.

Mayor Mueller and the economic development team, Kayla Bauer, Tim Corcoran.

They've been very, very instrumental in overcoming barriers that have prevented some of that infill redevelopment.

We've actually taken a large position, purchased about 200 lots over on the west side of town, specifically in Kennedy Park.

And we're just in the early phases of talking with the neighborhood associations and whatnot and making some plans to do something special.

How exciting is that the last time we were out on the West Side, we actually did an episode on Tiny Houses.

Yeah, this is actually going to be more traditional homes, a full neighborhood, helping continue the growth that we've seen here.

The success.

Now, as people look at these and I think a fairly common question is who's buying?

Yes.

You said something earlier about younger professionals, people looking maybe for that.

I don't want to say quasi urban feel, but that more urban environs.

Is that something that you foresee continuing the growth in and around South Bend?

Absolutely.

It's interesting.

We're seeing it from all demographics, the two largest demographics in the home buying market are kind of empty nesters, boomers, downsizing and or, you know, young professionals entering the market for the first time, whether it was the Great Recession or COVID.

You know, some of those millennials were slower to become homeowners.

And now we see both of those demographics, young and old, wanting to be in a place where they can be close to restaurants, close to amenities and recreation, close to employment and less dependance on cars.

Steve, thank you.

Thank you for showing us around this amazing facility.

Good luck on the next project and thank you for your commitment to South Bend and the Michiana region.

Jeff, back to you in the studio.

We're going to talk more about the places we live and the things that are being constructed to really redefine how we live in and around Michiana.

George thank you.

Appreciate the additional perspective to build on our conversation here.

So, guys, thanks for this continuing conversation about housing.

I'm sitting down with Jon De Souza.

He's the president of Cressy & Everett, Shelli Alexander regional president of 1st Source.

So appreciate this important topic.

John, let me come your way a little bit so I think the terms we hear sometimes buyer's market, seller's market, which is where are we at now?

Sure.

Well, what the Fed has done to increase mortgage rates has taken some buyers out.

So it's a little closer to balance, but it's still not in balance yet.

It is still a seller's market.

We have way more demand than the supply of those homes.

So sellers, if they're selling well marketed, properly priced home, can get an offer fairly quickly at a really great price.

So maybe just historically even so, if I'm a seller, what what should I expect?

If I if I've priced it right, have maintained my house and such is the stuff moving in a week, a month, a year.

Give us some perspective on what somebody's putting their house up for sale might expect.

Jeff perspective is such an important word in that because if we go back many years 30 days on the market was normal for a home.

We would listen today and we would have it under contract within 30 days.

Lately was 30 hours or something like that, right?

We're not in that market anymore.

So homes, we're seeing some of them going on the contract within a few days, some within a couple of weeks.

And that's okay.

It's enough time for us to properly market the house, expose it to as many folks as possible.

And also, on the other hand, for enough buyers to think it through right.

You don't want to have them, you know, have to make a decision such of such importance.

I mean, the great rush, right.

So they have a little bit of time, maybe even just sleep on it and be able to to make a solid offer.

So not as much of the bidding wars, not as much the sale happening, but they're reasonable bidding wars, maybe not quite as heated as they would have been a year ago.

And what do you think the what's the hottest point in the market is?

What's missing now?

Is it the luxury home?

Is it the workforce, housing, which which ones move in faster?

These days?

It's is definitely the workforce housing.

And we define that as the kind of home that somebody, you know, can a family can afford.

Right.

And for us, maybe something under 200,000 or so, that is the hottest segment of the market.

We just don't have very much inventory.

Very little is being built at that price point.

And so it's really it's concerning and Jeff something that I know you care about a great deal is is is our economic growth in the area.

And we are concerned that housing is potentially a downside of that because we want to be able to attract workers with some great projects coming to the area and we want to be able to house them.

And right now we're being, you know, limited a bit by the existing inventory.

Right.

Shelli coming back your way because as we talked in the first half of our show, like an average 30 year mortgage and you know, a couple of years ago was about, you know, let's call it 33.1%.

Today it's hovering near 7%.

So quite so.

So as people are thinking about like, oh, my gosh, I don't know about taking out a mortgage for 7%.

Take us talk to us a little bit about interest rates and what somebody should be thinking about.

Should they be looking to do a home loan right now?

Sure.

Even if you get into a mortgage for 7%, consumers believe and so do economists that rates will go down at some point.

The economists are saying sometime in later, 2023 that the rates will gradually start decreasing and consumers are expecting a decrease at some point as well.

Statistics show that nine that consumers have 9 to ten mortgages during their lifetime and that's new homes, that's refinances and such.

So even if you get into a mortgage for 7%, you've got an opportunity in your lifetime or even in a couple of years from now to refinance.

Or maybe you're not even in that house.

Maybe you've decided you want to move to a different house, you move to a different city.

So we tell people to fall in love with the house, but just date the rate.

All right.

I like I like that.

So.

So you're saying I'll be back at two and a half?

When?

I wish.

I just but no, but I think that's a great point because I think people don't think about that that and I know in my own case, that's exactly what I did.

We took advantage when we thought it was the right time to refinance.

And so, no, I appreciate that perspective.

But if I could jump in, though, it's it's that's really important for us in the industry.

But at the end of the day, it's really not about that, right?

None of us have a time machine to be able to go back and buy a house a few years ago or anything like that.

Folks who need housing today are have to deal with today's market.

And the good news is that many of them can our employment is strong in the area.

Wages have been rising.

People need to sit down and do the math, sit down with a lender and do the math and really understand what they can afford.

And they may discover that, you know, for their needs, for their shelter, for the safety, for the comfort of owning a home and being able to have a great place to raise a family.

For all those reasons, the rate may not be that big of a problem right now, but I think the hard part about the higher rates is the fact that you qualify for so much smaller of a home or lower priced home.

So you just have to really look at the numbers and figure out what you can afford.

Right?

Love the house, date the rate.

I like that.

So John, let me come back your way because you touched briefly on on economic growth and how housing impacts that.

And I know is I've been involved in conversation Berrien counties, St. Joe, Elkhart, all of them talking about housing Indiana to thinking the same thing.

You know, as we look at population growth, we didn't grow very well for six decades.

The last decade was good.

But as you mentioned, like supply sort of dwindled over at the same time that the population was growing for the first time.

So, so Indiana's like trying to address this.

The local communities are trying to address this, too.

Talk a little bit about sort of what's what's being done or some ideas about how to address housing shortage.

Yeah, absolutely.

We know that nationally we throw around a number of maybe three and a half to 4 million homes under built over the last few years.

Right.

So so we know it's a national issue as well as a local for the region.

There's a number of ideas being thrown around this great things happening locally.

I can tell you that the Indiana legislature had a workforce committee, this task force committee of the summer working on this issue and trying to come up with a number of ideas to help the availability of housing, especially the workforce housing.

And they have put together a report and it'll be read and hopefully we'll have some projects that can be tackled with this new legislative session starting at the beginning of the year.

Great.

And we're anxious to follow that.

And like I said, it's been a hot topic as I've sat around the table with leaders, community, government, everybody, leaders in and especially Elkhart, Saint Joe, Berrien County about, you know, what exactly to do.

Probably no magic formula there but but the thought that whoever figures out first is going to win this battle for for attracting talent.

Shelli may come your way, you know, maybe less of a bank, more of a community perspective and so on.

This attracting talent piece, you obviously are a big employer in the area, have to attract talent.

That talent needs to be able to to find housing.

We on the show have talked a lot about quality of place and how critical that is.

Give us maybe the employer perspective in terms of of of trying to attract talent here and how critical things like housing and quality plays play in that.

Sure.

And obviously, as we're interviewing candidates from outside the community, you want to be able to offer different options for them to look at for housing.

We've seen a lot more on the multifamily from our developers within the bank as well, because we've got to provide just options.

Not everybody wants to be a homeowner, but when they do, we want we want them to have that option too.

And Jeff, if I could follow up on that, our realtors work with a number of the larger employers in the area to help them exactly doing that, whether it's the university or the hospitals, helping them with the recruiting process and being able to really become ambassadors for the community, even even working with a prospect before they're an employee to make sure that we put our best foot forward and that we really come across as the associate exciting and inviting community that we are.

John in our last like 2 minutes here, so talk about how we stack up.

So let's say we have Shelli's got this prospect that she's trying to hire your realtors are trying to help them.

How do housing prices generally stand up versus other parts of Indiana, the Midwest, the rest of the country?

We are we are phenomenally affordable compared to pretty much any other market.

Even even with today's appreciation that we've seen, we still continue to be an incredibly affordable market, more than that, though, we're also very varied market.

We we offer homes in all sorts of price ranges, historic homes, new construction, farm homes, lake homes.

I mean, just that there's a real great variety to the stock that can be really attractive to those prospective employees.

That's one of the best things when you're trying to bring somebody from outside the area, when they see the price of housing here, they're so excited they can get much bigger or better house than what they had, maybe from where they're coming from.

Yeah.

And I like the the mix too, depending on what you like.

They're got a little bit of everything here in the area as well too.

So guys, thank you for for being with us today, for having some great conversation about housing, helping us better understand what's going on in this space.

Thanks for the good work that you do each day.

Appreciate be here.

That's it for our show today.

Thank you for watching on WNIT or listening to our podcast to watch this episode of again and of our past episodes, you can find Economic Outlook at WNIT.org or find our podcast on most major podcast platforms.

Like us on Facebook, follow us on Twitter.

Please join us next week as we continue to cover the region's most exciting and important topics that affect you.

I'm Jeff Rea.

I'll see you next week.

This WNIT local production has been made possible in part by viewers like you.

Thank you.