Companies find housing opportunities as Region’s population grows

Northwest Indiana, growing in population and fresh, new commerce, is also framing the walls and pouring the foundations of a strong housing market.

Hundreds of contemporary, craftsman detached single-family ranches, cottages, patio homes, townhouses, villas, and paired villas are under construction.

Ready-to-move-in and existing homes are listed for sale throughout the Region.

Sellers received 96 percent of their asking price, said Peter Novak, CEO of the Northwest Indiana Realtors Association.

“The housing market has been on an amazing ride.”

Novak said the demand to live in this corner of the Hoosier state can be measured by how quickly the current supply of houses for sale would be exhausted if no new houses came on the market.

He said both the Chicago and national markets have accumulated more than a three-month inventory of houses to sell, while locally it’s only 2.1 months.

“That’s a seller’s market,” he said. “A lot of that definitely has to do with spillover of people coming from out of state, in particular from Illinois.”

The attractions are lower housing costs, lower real estate taxes, strong schools and easy access to Chicago.

He said the number of existing houses for sale is relatively low because many have put off plans to move. They locked in low mortgage rates — less than 3 percent in 2021 — and are disinclined to face today’s high rates environment.

But that didn’t stop population growth in six of the Region’s counties from 2022 to 2023, according to the U.S. Census Bureau ’s Vintage 2023 estimates.

“Domestic migration patterns are changing, and the impact on counties is especially evident,” said Lauren Bowers, chief of the Census Bureau’s Population Estimates Branch, in a press release.

The counties that grew include:

• Lake County: 499,657 to 500,598
• Newton County: 13,839 to 13,960
• Jasper County: 33,345 to 33,535
• Porter County: 174,848 to 175,335
• St. Joseph County: 272,282 to 272,848
• Starke County: 23,203 to 23,206

New construction

The growth of new construction has been even more dramatic. About 70 construction firms are on the job around the four-county area, according to homebuilders’ associations.

Olthof Homes of St. John, a family business since 1961, has become one of the largest, building about 500 homes annually.

“We are probably considered a production builder, but we like to call ourselves community builders,” owner Todd Olthof said.

Leading national builders like Texas-based D.R. Horton, Lennar Construction of Miami, and Century Communities of Colorado began taking interest in the local market in recent years.

To compete with these large-capacity builders, many local firms moved into custom-centered work, including Phillippe Builders, O’Donnell Homes, 1st Metropolitan Builders, Diamond Peak Homes, Ennis Builders, Majestic Builders, Steiner Homes, Bucher Construction and Coolman Builders.

More than 90 percent of their Lake County work happens south of U.S. 30 in the exurbs of Cedar Lake, Crown Point, Dyer, Schererville, St. John and Winfield. Crown Point alone approved construction of 111 new single-family homes in 2023.

“Developers like Olthof, Lennar and Horton like to own and develop large tracts of land,” said Bob Micunek, Home Builders Association of Northwest Indiana president. “That why they head to south county for large pieces of land.”

Custom design

Tyler Tadian, president of South Bend’s Irish Custom Homes, said he sees a similar trend in his area.

“The dynamics here are very similar to Lake County,” he said. “Demand is off the charts.”

However, he sees new residents coming from Michigan.

“We see a lot of people moving out of Chicago but less than Lake,” he said. “We see the same kind of thing out of southern Michigan.”

The University of Notre Dame helps, too.

“We get a lot of demand from clients associated with Notre Dame, who want a house near campus during the football season,” he said.

Housing prices reflect that demographic.

“For most local builders, our price points have gone up between the $500,000 and $800,000, and our clients can pay cash to build a luxury house,” he said. “The highest volume in our area’s new construction has been that $300,000 to $400,000 due to high interest rates.”

But the median price is a touch lower. The Elkhart-Goshen area landed the 12th spot on the winter 2024 Wall Street Journal/Realtor.com Emerging Housing Markets Index. Median home prices are listed at $260,000.

Those lower prices attract builders who want higher production, Tadian said.

“I bet in the next year or two, we’ll see a heavy presence from outside large national builders because local builders can’t compete with their economies of scale,” he said.

“It’s very systemized. They do that with Ikea-like schematics and instructions. If it’s done well, you can build a quality house.”

Drew Eenigenburg, owner of Dyer’s Eenigenburg Builders, said his company has constructed about 300 homes since 1989 and is currently busiest in Crown Point, Winfield and St. John where he said lots are thriftier.

“If you want to build a new house in Munster, lots can be very expensive,” Eenigenburg said. “There are only so many people who want to spend $1 million to move to Munster. You would have a hard time recapturing that out of the house.”

The town of St. John alone approved 254 residential building permits in 2023, including 215 single-family homes, 31 duplexes and eight townhomes.

When asked why so few rental properties were approved, Town Manager Bill Manousopoulos said it depends on what proposals are presented to town leaders.

“The town doesn’t develop any of the land, developers bring their plans and ideas to the town for approval,” he said. “The town deals with them on a case-by-case basis.”

He said future residential projects include three proposed subdivisions, which are under consideration by the town’s plan commission.

An open floorplan

The stress, time and expense of having a new home built is daunting — even for someone as close to the real estate market as Lydia Bowen. She is a Centier Bank vice president who deals in commercial real estate loans, and her husband works in construction.

Bowen, born and raised in La Porte, said she’s owned several homes over the years.

“I fixed them up and flipped them, moving my way up,” she said. “I recently got married and decided we would have a home together.”

But they were specific about where they wanted to live.

“We didn’t want a subdivision that popped up in the middle of an open field,” she said.

They found wooded acres that came on the market within the scenic lake communities north of downtown La Porte.

“I believe in researching your builder, so you are the one in control,” she said. “We interviewed several and met with Tyler (Tadian) who had an open floor plan very close to what we were looking for.”

The pandemic and its accompanying spike in building materials costs stalled their house project for several months.

“We were out there every day checking the progress to ensure we avoided concerns and got answers to our questions,” Bowen said. “(Tyler) was very good at working to keep it within our budget.

“We got a ranch with a walkout basement and customized to exactly what we wanted in our life. My husband even did our fireplace and the stonework. We want this to be our forever home.”

She said their total out-of-pocket cost for the house and the property and material and labor they provided was close to $600,000.

What’s affordable?

Housing prices in the Region are on the rise.

“The median price of existing homes sold in the area hit $240,000,” Novak said.

Mark Markovich has been in the business 32 years as owner of Chesterton-based Mark One Homes.

“If you want higher end cabinets, crown moldings, tile and better carpeting, you will pay a little more for a better-looking house,” he said. “That is my market. I hate to say it, but $370,000 to $400,000 is the entry-level range now.

Realtor Chuck Vander Stelt reported on Quadwalls that new construction homes for sale in early March had an average list price of $474,416 and a median list price of $432,555 in Northwest Indiana.

“Homebuilders introducing new inventory are doing really well in the market,” he said. “They are giving more options for homebuyers. They are filling a need in the (market).”

Some larger builders entice buyers with discounted mortgage rates and closing fees.

“It is easier to sell new home construction with mortgage rates being high,” Vander Stelt said. “Many builders are offering a lot of incentives.”

Those higher price points can be difficult for younger homebuyers.

Micah Pollak, associate professor of economics at Indiana University Northwest, said too many young and low-income families are only looking for a roof over their heads they can afford.

He said what’s missing are enough rental properties, according to an ongoing IUN housing survey. He said rental units have dropped from 27.3 percent of total housing in 2016 to less than 25 percent now — in comparison to the national average of 33 percent.

Pollak blames the overall cutback in rental property on a lack of new multi-family construction.

“There is a notion (that) Northwest Indiana cities should go for single-family homes and not apartments if they want to attract wealthier, high-income people,” he said.

“I think it’s a misunderstanding. Apartments aren’t necessarily equivalent to lower-income households, and you need a rich diversity of housing necessary to attract a wide range of workers.”

Pollak said a 2016 U.S. Housing and Urban Development survey suggests tens of thousands of renters and homeowners in Northwest Indiana, paying more than 30 percent of their income on housing, feel the deficit of affordable housing.

Attorney James Wieser, representing Northwest Indiana developers for many decades, said large apartment complexes like Griffith’s Mansards, once sustained rookie professionals, like himself, in the 1970s and are just as necessary today.

“But it’s challenging,” he said. “The apartment concept doesn’t seem to work very well.”

Wieser said developers are often met with objections that apartments would depress surrounding property values and attract transient tenants with no stake in the community’s preservation and maintenance.

An exception is The Linc, a 121-unit apartment complex under construction in downtown Valparaiso — a city where 44 percent of its housing market is rental, according to the U.S. Census Bureau.

“I’m aware of several projects being undertaken to provide some apartments, but it’s still pretty much single family,” he said.

Strong future market

As interest rates stabilize, Wieser sees Northwest Indiana continuing to expand both residential and commercial markets in the foreseeable future.

“I know what I’m working on as an attorney for developers right now include several large potential residential developments,” Wieser said.

Pollak said someday future developers will rediscover communities along the South Shore commuter line, which is completing its double track and West Lake expansion.

“I think growth will have to go where you have land and infrastructure,” Pollak said. “Gary and Michigan City are obvious places to look. Once you start to gain a critical mass, it will start snowballing.”

Clarence Hulse, executive director of the Michigan City Economic Development Corp., said the time is now for his community.

“We are having the first subdivision built in the city in over 50 years, over 113 homes,” he said. “Along with that, we are getting 220 apartments and luxury condos under construction at The Franklin. That is a big deal.”

SoLa (South of the Lake), a 14-story building, is under construction in Michigan City’s downtown. Plans feature a mixed residential setting with a view of the lakefront.

“It will be a homestead for people who are going to live and pay taxes there — taking advantage of the Indiana tax rate, a second home for residents in investor-owned units and units we will run as vacation houses,” developer Barry Schain said. “We have some corporate interest, executives who would prefer staying there to some highway motel.”

He also pointed to other amenities that will attract buyers.

“Michigan City has infrastructure, an increase in restaurants and hotel demand,” he said. “It is all going in the right direction, a national park, the south shore double tracking and a carefree lifestyle.”

Hulse added his city is looking into mixed housing and retail development on a lakefront tract NIPSCO’s coal-fired power plant will eventually vacate as well as the 100-acres becoming available when the Indiana State Prison is decommissioned.

“The wind is in our sails,” Hulse said.

Read more stories from the current issue of Northwest Indiana Business Magazine.