By MICHELE F. MIHALJEVICH
Indiana Correspondent BLUFFTON, Ind. — Unlike farmland values, which have risen significantly in the past several years, rural home prices are struggling to return to pre-recession levels, area Realtors said.
“It just blows me away. Rural housing has not kept up with (farmland values),” said Jody Holloway, co-owner of Coldwell Banker Holloway in Bluffton. “The prices haven’t escalated like farmland prices.”
Farmland values in Indiana increased 12 percent from 2009 to 2010, according to a Purdue University study. While the prices sellers are getting for rural homes have increased over the past year, they’re still far below the highs of 2006, Holloway noted.
“The absolute high-water mark was 2006 – it was the best year for prices,” he explained.
“We were getting some big dollars then. Prices started to taper off in 2007 and they tanked in 2008. For this year, prices are exceeding levels from 2009 and have almost hit 2008 levels.”
The average sale price of rural homes in parts of northeastern Indiana was up the first six months of this year over the same period last year, according to figures provided by the Upstate Alliance of REALTORS Multiple Listing Service. The service primarily covers Adams, Allen, DeKalb, Huntington, Noble, Wells and Whitley counties, though a few sales in nearby counties may be included.
From January to June, the average rural home sold for $141,913, up from $135,086 in the first half of 2010.
For both periods, the sale prices reflect slightly more than 93 percent of the list price.
During the second half of last year, the average sale price was $140,246.
“Rural areas have suffered with the downturn in the economy,” Holloway stated. “Nobody has been exempt. It’s affected everybody. But some areas have been affected much stronger than other areas. It just depends on where you are.”
The economy isn’t the only thing affecting rural home prices, he said, noting large confined feeding operations (CAFOs) are a concern for many people wanting to move to rural areas.
“A number of these have popped up in Wells County. That’s affected rural prices as much as anything. No one wants to be downwind of them,” he said.
Holloway works primarily in Adams, southern Allen and Wells counties, though he also lists properties in Blackford, Huntington and Jay counties. In addition to the real estate business, he and his wife, Jodi, also own Holloway Auction Co.
A property is generally considered rural if it’s an acre or more in size, on its own well and septic system and is outside the city limits, Holloway noted. Demand for rural properties is strong, he said.
“People want to get out of Dodge. They want to go where the air is clean, life is simple, where no one is looking over their fence and where they can have privacy.”
During the first half of this year, 256 rural homes were sold, two more than during the same period last year. While demand is strong, that demand diminishes the further away from a city hub, Holloway explained.
“They’re a little harder to sell the farther you get from town,” he added. “When you’re too far out, you’re not close to employment, not close to schools, not close to grocery stores or other conveniences.”
Gas prices have affected demand for rural homes, said Rex Schrader, president of Schrader Real Estate & Auction Co. in Columbia City, Ind. Homes closer to a town are more attractive because they’re closer to conveniences than those in more remote locations.
“Rural housing has definitely seen a significant decrease from five years ago,” he explained.
“Demand is significantly less than what it was. And for rural houses that might need a lot of work, it’s harder to get loans for home improvements. Second mortgages are pretty much extinct.”
When listing a rural property for sale, Schrader said his company offers houses separately if possible because the bulk of land buyers aren’t interested in houses. Some say they’re likely to tear down a house included on land they want to buy, he noted.
The USDA’s Rural Development program has a couple different ways for people with low or moderate incomes to purchase homes in rural areas.
The office offers a direct loan program with interest rates as low as 1 percent. It also offers a separate program in which bank loans are guaranteed by the government. Neither program requires a down payment.
This year, the average loan in the direct program has been in the $100,000-$110,000 range, up from fiscal year 2007, when the range was $86,000-$96,000, said Paul Neumann, housing programs director with USDA’s Rural Development in Indiana.
“In general, homes in rural areas are cheaper than those in urban areas, but rural prices are creeping up,” he said.
Demand is high for the housing, and the direct loan program always has more demand than the office is able to meet, Neumann noted. “It’s a life-changer for a lot of families. If a family had been living in a trailer and they can move into a brand new home, it’s definitely life-changing. But we explain to them that when they move to the country, they’re going to hear tractors and they’re going to smell smells.”
Holloway said he’s optimistic about the rural housing market.
“Property values in our region have stayed stable and I do see some signs of recovery,” he said.
“Fewer properties are for sale than were for sale a year ago and that’s good for sellers because they’re not competing against as many houses. The supply and demand shows confidence in the economy. People have money and they’re spending it.
“They’re buying because they’ve got confidence.” |
