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

And I want to welcome you to our show.

Thank you for joining us each week as we discuss the people, the companies and the projects driving the region's economic growth, Communities across the country are talking about the shortage of housing and the effects those shortages are having on community growth.

The issues are complex.

So we've taking a deep dive into housing today with an eye on some of the solutions that could help spur economic growth.

Coming up on economic outlook, the housing shortage is a complex issue that's been building for decades, and the communities that figure out first how to combat that shortage will be the communities that thrive.

We're diving deeper into the issue of housing today with a couple of experts from industry.

Joining me for that conversation are John de Souza, the president of Cressy Everett Real Estate, and Andy Place, the president of Place Homes Inc. Guys, thanks.

Appreciate guys being here today.

Great to be here.

You know, this is a hot topic.

It feels like communities across the country are talking about this, you know, kind of trying to do we have a crisis, what's going on?

How do we solve this crisis?

And so we thought, boy, bring in two people with your expertise and to help just dive deeper into your brains would be great today.

John, we had you on last year for kind of a similar conversation.

But before we get started, John, if folks aren't familiar with Cressey Real estate, talk to us a little bit about what what that is.

Well, thanks, Jeff.

Thanks for having me on again, Chris.

Never a real estate is a locally owned real estate brokerage.

We've been around for just over 75 years, have about 175 agents covering counties across northern Indiana and southwest Michigan.

So we have a pretty good feel for for for Michiana or the South Bend region, however you want to call it.

Awesome.

Well, that's why we had you back, because we appreciate your insight last time.

So is any of you joining us for the first time?

So any place homes is a name people I think around here are very familiar with.

But if they're not, tell us a little bit about place.

Yeah.

So we basically I'm a fourth generation place builder, so to speak, and we've been building homes in the area for quite a while and pretty much in a 30 to 45 mile radius of our community.

Great, great, great.

Glad to have you both John let's come back your way first.

So let's just let's talk generally just about the residential real estate market a little bit.

You mentioned having 170 plus agents covering all these counties.

What what's the what's the market like out there today for homes?

If I was a home buyer, what would I find?

Well, what you'll probably find is not what you expect.

And I say that just because the headlines are crazy, right?

So if you just reading the newspapers or watching the news, you think it's up, it's down, you don't quite know.

Truth is that we are still selling a lot of homes all throughout the area.

At every price point.

We're not selling as many.

We don't have as many transactions, probably about 20% fewer transactions in the area.

But it's still happening a lot despite what is happened with interest rates coming up and the government deliberately trying to cool the market.

Some.

It's cooled some, but it's not stopped by any means.

There's a lot of buying and sellers coming together every day.

Right.

Andy let's come your way.

So you mentioned that the company has been building for a generation, many years in kind of the broad market.

What what's the the state of homebuilding right now?

Are you building lots of homes out there?

We're building less than we were.

We're typically accustomed to.

There's I've been doing this for quite a while.

So we've seen some of these cyclical movements that, you know, housing goes up, it goes down.

And right now we're we're down a little bit.

People know again what John touched on with interest rates.

It's just not as, you know, booming as it is a normal year.

Yeah.

And John, maybe stay with that for a second and tuck interest rates.

I think as we were here last year, they were just starting to edge up.

They're the highest they've been in my adult lifetime.

I think so.

So talk about that just a little deeper on how that impacts somebody's interest right now in either building or buying.

It's a little bit you know, it is it is a very deliberate process.

I mean, whether you like it or not, the Fed is doing what they think they need to be doing to controlling for inflation.

So interest rates have gone up.

Mortgages, the 30, the 30 year fixed, which is kind of the standard that we use, touched 8% here recently.

So it started you're right, it started back in August of last year.

And so it's had its effect.

It's a side effect that slowed down the housing economy, maybe not other aspects, but it certainly has done that.

However, despite those rates today being in the low sevens, we still see folks wanting to own a home and getting qualified and finding a way to make the expense of a mortgage at those prices and still coming home.

So as a matter of fact, we sold I was looking at my notes.

We sold 8300 houses in the kind of the seven counties that make our region in the last 12 months.

So there's a lot of transactions happening.

great.

So let's come away a little bit and sort of maybe build up on that, you know, So interest rates certainly impact people need to borrow to to pay for you to build them a house.

But but but over the last few years, we've watched supply chain large rising infrastructure costs talk about the things that are impacting your world in terms on the cost standpoint.

Well, the big one is probably the labor pool where if you want to, you know, say COVID affected this, where a lot of the tradespeople pretty much that were towards the end of their careers just said, I'm out.

So what that did is we had, I don't know, 8 to 10 years where we were not promoting the youth to get involved in the trades, whether it's carpentry, electric or what have you.

So there was a shortfall from that.

And currently the pool of labor is a little bit shorter.

They they know that.

So they're taking or adjusting their prices to to accommodate that shortage.

But that's just one of the other things that when John was talking about the interest rates at my first house was 7%.

So it's not that bad.

Yeah, it's just we were so used to three and four.

Yeah.

So you must be a lot older than me.

I remember.

I much lower.

I'm kidding.

I'm telling you, you know I am.

But every now and then I still hear folks talking about the rates and they said, well, I'll wait.

Yeah.

And I said, okay, wait til what?

Well, till they get down to two or three again.

I'm thinking, no, I don't think you're going to live that long.

Right.

Those those are we refer to those years as kind of unicorn years.

They came once.

We'll never see them again.

So we need to get realistic as to what rates are people talking in, the sixes, maybe in the high fives, you know, for the next couple of years.

So I think that that's what we going to be dealing with.

I don't think you'll see the two or three.

I think those once in a lifetime.

Yeah.

So John come your way because I feel like communities all across the country are sort of dealing with the same thing.

Right.

And I think we feel like when we talked before the the housing crisis of what, 2008 or 2009 really sort of slowed down new construction.

We're still trying to catch up, but so so speak to that.

Like whether we're unique in terms of these challenges, is this happening everywhere?

Talk about the the is there really a crisis out there is as the news I think it keeps reporting, yes.

But not so bad here, believe it or not.

And is right when when we went to the big crash of 708, a lot of things changed in the industry, including, you know, how many how many homes are being built.

But we are still incredibly affordable.

Well, by national standards, I know that that's that's going to seem so crazy to somebody who's trying to buy their first home here today.

But we really are.

If you go to any of of other states and other markets, they're much higher.

We constantly rank in about the top 25 most affordable markets in the country, which is really significant.

So so while it's not great and we would love to have more affordability here, it is worse in other places.

And that's a real draw for our corporate partners who want to bring talent to the area and in the press in the future that they know that we'll have, compared to other places, more affordable housing.

Right.

Andy let me come your way.

So, you know, when we started working together many, many years ago, hundreds of houses were being built in each community every year.

The numbers are pretty staggering today when you look.

But just walk through a little bit of your history and kind of what you've seen happen over the last ten or 15 years on the on the new home construction side.

Well, just to give you an example, and we were talking about this a little bit before the show.

Well, when you were Mayor Mitch Walker, we did that project in Mishawaka where we're essentially affordable housing.

If memory serves, we're the 110 115 for a nice 15 16000 square foot two story today, doing some of that similar similar house in South Bend.

We're in the two fifties, so in just a short time it's almost doubled.

Right.

And obviously a lot of factors go into that, you know, supply chain material costs, labor shortages.

But it it's really gone up quite a bit.

So maybe, David, a little deeper to that.

And we talked briefly that like there's a lot of costs that go into that to 50, right?

Because just because because you as the developer are acquiring the land building infrastructure, some of that kind of stuff, maybe speak to the puzzle that all comes together to get even that 280,000 our house.

Well, that was it really with land included.

That was that was just the house where we do developer land as well.

And what we're seeing today for a lot price for a third of an acre is double than what it was ten years ago.

And a lot of again has to do with land prices have skyrocketed, especially within and a closer proximity to you know, great road and, you know, some of those things.

But then you have your infrastructure with your, you know, your your curbs, your asphalt running, your water and sewer, all those of escalated.

So again, that goes back into why those lots are double what they were ten years ago for the same thing.

Right.

Guys want to take a quick break here in the studio.

We're going out into the field.

George Lepeniotis is out in the neighborhood.

George, we're going to toss it to you.

Thanks, Jeff.

I'm in Mishawaka and I'm joined today by Jim Williams of Habitat of Humanity for Saint Joseph County.

Jim, thanks for being with us.

Thank you for having me.

Thank you for showing us around this cool house.

I think a lot of our viewers probably have heard of Habitat for Humanity and and especially your chapter, the Saint Joseph County chapter, because you made a big splash a number of years ago when President Carter and his wife came to our community and helped with one of your projects.

As a matter of fact, it was this project we're standing in, isn't it?

It It is.

Let's start a little bit, though, going before that.

Tell us a little bit about Habitat for Humanity and what your mission is.

Well, Habitat for Humanity, we're helping people with modest income become homeowners for the first time.

And what we like to say is we help families build strength, stability and self-reliance through homeownership so that self-reliance piece has a lot to do with personal satisfaction and empowerment that they're able to do something maybe that they never thought was possible.

And your mission, like everyone's mission, evolves and changes with the times.

And right now the times are changing.

They are you know, building has become, as many of our viewers have experienced themselves, whether you're low income or you're not, building a home is much more expensive than it used to be.

So you've had to adapt and change.

Tell us a little bit about your new programs and how you're helping people overcome that hurdle, especially when it costs so much money to build a house.

Well, there's never been a greater need for affordable housing in our community and across the nation.

But if you talk about Saint Joseph County, Indiana, there's about 14,000 families that have modest income they're currently renting.

But their rent overburdened and they just see no way to become homeowners.

Those are the kind of families that Habitat is working with.

Now.

What we used to do is give a 0% interest mortgage for the full cost of the house.

The family joined our program, took about a year.

They did 250 hours of sweat equity.

We still require all of that.

But because of the cost of homes, we've had to adapt our model to help them afford a home.

So you're staying in a house that is about 1300 square feet, three bedroom, two bath, full basement, one stall garage.

As you can see, a very nice home, beautiful home.

But we're putting families in this home for $1,000 a month, and that includes taxes and insurance.

Wow.

So let's talk about how you're able to do that, because as I as we walk through the home before and some of our viewers, our viewers will see some of the video that we're taking.

But it's a beautiful home.

It is.

You're able to do that because of I know there's some public municipal grant dollars that you qualify for and you help your homeowners qualify for federal programs, state programs.

But there's also a lot of local support that goes into it, isn't there?

absolutely.

A whole host of things I could mention.

One is just volunteer labor.

That's a way that we keep costs down.

Also, goodwill from our subcontractors and vendors that give us discounts that helps us keep the cost of the house down.

But you mentioned changing our model, and I could say we only speak for Habitat of Saint Joe County because every affiliate does it a little bit different.

Sure.

But our families actually go to a bank and apply for a first mortgage and whatever they can afford.

So that really fits the philosophy of habitat.

You bring what you can to the table.

It's never been a handout.

It's always been a handout.

But that's what gets the process started.

And then we help them cover the gap between what the house actually costs and what they're able to finance themselves.

So when we talk about that hand up concept, not only are they putting in the sweat equity and is the equity into their own home, is that correct?

That's correct.

And other other other habitat families, they can work on their houses as well.

All right.

So in in some way, you're building a community within a community of habitat, homeowners who appreciate the value of what you've brought to the table.

absolutely.

In fact, this is not just a neighborhood.

This is a community.

These are families that care about one another, that are looking out for each other.

But one thing I forgot to mention, it's not just habitat families in this neighborhood.

It's 60% Habitat families, 40%, just general public buying houses.

So it's a very much just a a normal regular neighborhood.

Yeah.

And it felt that way as a matter of act.

It felt very idyllic as I drove in.

I mean, it's snowing today.

So that that didn't help it.

But it is it is a very, very, very well done neighborhood.

Very I want to say cute is the word I think of.

But, you know, it's more than that.

It's impressive as we talk about the affordable housing crisis.

And I'm not call it a crisis because I think it affects every one of our communities in our Michiana region equally, whether they're affluent communities or not.

Affluent communities are smaller communities or are larger Mishawaka, South Bend communities.

They all struggle with this low income housing.

And we talked about before we went on air kind of how you build these homes and and why they look like they do.

Back to that.

You really are providing these people with kind of a dream.

I mean something they've wanted for years.

Right.

And and mistakenly, some people think that, it's Habitat for Humanity.

You're a nonprofit, you build a low quality house.

Just the opposite.

When our subcontractors come and work for us and people that know home building come and look at our houses, they don't they're surprised at how quality of a house that we built, for example, the insulation in these walls is not just your standard batt insulation.

We spray and cellulose foam and it's a very energy efficient home.

You can see some of the cabinets, the countertop.

I see that solid wood and luxury vinyl flooring and a lot of this we get donated, we get discounts on.

We're very proud of, the kind of house that we've built.

That's awesome.

I think it's visible, it's apparent.

So before we leave, if somebody wanted to learn more about how they could participate in a habitat, we got a first homeowner, potential first homeowner.

Where can they learn more about habitat?

There's a perfect time because we have information meetings going on right now, but go to our website www.hfhsjc.org and all of the information that they would need would be right there.

Of course they can call our office as well.

We'd be glad to help them.

Thank you, Jim.

Jeff, back to you in the studio.

We've got more to talk about on how housing and affordable housing really does help shape our communities and create a much stronger and more vibrant economy.

George, thank you.

Appreciate it.

Great story there, guys, back in the studio here, kind of continuing our discussion.

John, let's talk about just you know, we talked a little about just the market as a whole, how many houses are out there.

Just give us that perspective in terms of the the number the amount of inventory for sale.

Now versus historically what that looks like?

Well, it's it's it's picking up here recently, this last few months, which is great.

It is still low by historical basis.

Half of what we used to normally carry for inventory.

Right now, Jeff, we'd like to think that we are about half the number of homes that we would think a balanced market would have.

So, you know, it's still very much a seller's market.

And what we would love to have is more folks consider selling.

Sometimes they're really surprised to see how much equity they have actually built.

If you've been in your house for over five years, you have a ton of equity and maybe we need to get another mortgage.

You may be surprised by how small that other mortgage would actually be.

So the rate doesn't matter as much.

So we want to encourage folks to really think about that and talk to the lenders, kind of see what's possible, and they may discover that it might be easier for them to sell and buy than they think it is.

That's a great point.

Well, go ahead.

I was going to say and John, you're exactly right, we are in the process of putting four specs out there right now that it will be ready in the spring.

We're not afraid of of the home sitting for too long.

We know that they're going to be sold just because there is some pent up demand.

And I had two calls last week from a family that has twins.

They're expecting twins.

You're going to have to move.

Right?

It's pretty simple.

So you know, there's there's a lot of scenarios that are going to lead to people, you know, building or buying existing.

And then if I'm one of those buyers who bought one of those homes, you were talking about, you know, in the in the mid hundreds the other day, I probably have significant equity in that house today.

So if I take that equity and I roll it into my down payment for one of your new homes, all of a sudden my mortgage is a lot smaller, right?

So so while it may be a 7% mortgage, it's it's still one when it really comes down to payments, it's really affordable.

And you could potentially have a larger home with more amenities for close to the same price of what you're getting out of it.

And the same thing happens Jeff we have a lot of family homes for folks who have become empty nesters.

We see this in a lot of our suburbs are going to own them for 5 to 10 years have done really well.

They would like to move to something else, maybe something a little smaller, more economical, easier to manage.

But they're just not seeing the process.

They're thinking about 7% mortgages and that's crazy.

And the stop there, they shouldn't stop.

They should talk to a realtor that should talk to a lender, figure out what it really could, could and could entail.

And they may be surprised just how easy it would be to sell, take equity out of it, and then get into another place that's more of their size.

Absolutely.

Andy talk for a second, you're building it at several different price points.

Is there a hot is one price point more popular than others?

Is the the luxury home, the starter home?

What's that look like?

The starter home has changed drastically over the last last several years, so you really can't call the starter home anymore.

But the, you know, the 350 to 500 range is doing very well as well as the the luxury.

Yeah.

Those those seem to be doing doing the best and that those sure brackets are.

Yeah.

Look let's let's let's talk affordable for a second because you you illustrate a little bit in the first half the cost of some of those houses that used to feel pretty affordable or not.

I think that most communities are struggling without that workforce housing that.

So talk a little bit you know I think we've established the cost is high already.

You know, how do we get our arms around this affordable and make them affordable, I guess, for folks who to buy that you should be able to but maybe aren't now because of where costs are?

Well, some of the things that we do is we try to to design some of our plans that are less expensive or easier to build, which in turn would bring that cost down.

But when you when you are building the home, there's so many factors that play into it, so many hands.

It touches so many suppliers, so many subcontractors that it's tough to manage and control all of those different aspects of it.

But there's there's some things that can be done today to bring some of those costs down.

Yeah.

And John, similar on the Affordable I feel like the states thinking about it everybody's thinking about a little bit any perspective on how to make housing more affordable.

Yeah two thoughts.

As I mentioned before, the realtors use our advocacy muscle this last couple of years to really get the state legislature to look at this problem very seriously.

And as such, they came up with a number of measures that I just meant to help and like I said before, de-risk and maybe create some funds to make the local communities a little bit more eligible to help builders like Andy and really develop those things.

But it's complicated.

The other thing is you may be surprised to see I was just looking at the stats in in Saint Joe County this last year, more than 60% of the transactions were at homes below 250.

Okay.

So again, everybody's definition of affordable is different, but below 250 could be one of those things.

So people may not think that those properties exist.

They're they're moving.

Yeah.

You know, fortunate to have a couple of homebuilders up on the legislature, Linda Rogers and Doug Miller, who both have been great partners.

I know, as we've talked about that in the last year, how do we get some tools, if you will, to help bring those costs down?

But getting back to the original question, I think a lot of it has to come from our local cities and your towns to to come together and figure out ways, whether it's subsidizing some running water and sewer to some of these neighborhoods to maybe at least bring some of the lot costs down a little bit.

But there's definitely some things that that can be done, whether it's City of Mishawaka, South Bend, that can be done to bring at least land costs down, which in turn brings new construction down.

Right.

More just a question because you know, a lot of the new construction in recent years has been sort of on the outskirts of this.

I think each of our urban areas and our viewing area, we'd love to have more people back in the city.

Is is our lots in this city is attractive or is the trend?

People still want to be in a subdivision.

You're seeing a little bit of both.

See a little bit of both in the last probably five years, there's been a hard drive back to somewhere close to Notre Dame.

So a lot of those lots or even houses were torn down and we've done several were tear down the house and build up a new one.

Once you get a little further south, you know, a lot of those were back to the city be a tax sale.

So a lot of these local groups are trying to improve different sectors of town to put in new product and they're getting some grants from the city, which is helping.

They're getting some state grants.

I think there is even some COVID relief funds that they got.

So they're we're putting product in that 250 range that John was talking about.

And, you know, the streets like the Bell and Dayton and really transforming the whole block, which is it's fantastic to see John speak a little just to the maybe the community.

I think people get myopic and think we just need affordable housing.

We just need high density speak, though, I think as you and I have talked many times, sort of the whole mix is really what's critical.

Talk a little bit about that.

Yeah, every price point matters a great deal and every price points could use more inventory, could use more product.

So every every builder has their sweet spot and they know how to do that really well.

But we need them at every point.

We could sell very high in homes around 30.

Those are selling.

Yeah, we can we can use affordable in any place.

We could use single family homes all over just you.

Jeff you and some of your colleagues have done such a great job bringing bringing new business to the area.

But we got the able to house those folks as well.

Right.

So so New Carlisle is a great example.

Yeah.

You know, we could use so much more housing in that part of the county, western part of the county and port as well.

So we'll get there.

But it's, but it's a real struggle now.

Yeah.

Andy in our last minute or so you touched briefly on this workforce piece the fact that needing laborers as we're talking about bringing new companies here, we need labor to build those, but we also need them to be doing the housing.

So make the pitch to to a youngster that's watching us today about the kind of living they could make, building homes for these homes or somewhere get in the trades because they it can be very lucrative where you are not spending $200,000 a year for college.

And when you're done, you're saddled with that 200,000, you're in the workforce, you're one and you're actually making money, you're one and you're not you don't have that debt.

And the Home Builders Association is doing a great job.

We reach out continually to, you know, the building trades of Penn, Mishawaka, South Bend to try and drive some of those kids to to get in the workforce.

And it's working is going to take time, but it's worth it.

All right.

He's Andy Place, the president of Place Homes and John de Souza, the president of Cressy and Everett real estate.

Thank you both for being here.

Appreciate the work that you're doing in the community to help drive housing and community growth.

We appreciate your expertise and we'll look forward to having you back.

Thanks for having us.

That's it for our show today.

On behalf of the entire team here at PBS Michiana, I thank you for watching or listening to our podcast to watch this episode again or any of our past episodes.

You can find economic outlook at wnit.org or find our podcast on most major podcast platforms.

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I'm Jeff Rea.

I'll see you next time.

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

Thank you.