Shortage of middle-income housing stymies Indiana home seekers


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Experts don’t see a way for Bloomington’s current infrastructure to provide the kind of housing middle-income residents need.

A Bloomington Economic Development Corp. discussion on Aug. 29 about the future of “workforce housing” brought different perspectives to the table regarding southwest central Indiana’s housing supply. Panelists talked about the need for affordable housing, from the lowest income levels to single-family, owner-occupied housing costing between $125,000 and $250,000.

“It’s not just a local problem, folks,” said BEDC president Lynn Coyne. “The first one to solve it wins, and there’s no reason we can’t be the first to solve it.”

Coyne said the first city to find a way to fill that missing middle will reap the benefits of an appropriately balanced housing stock: talent. He said workforce housing helps retain college graduates and attract skilled workers to town.

Residents seeking a starter home come with their own issues, though. Student loan debt is making it harder for many people to secure a home loan, Jerry Hays from Owen County State Bank said.

Other recent trends in the way single-family homes are used may have a negative impact on the housing supply as well. Owner-occupied homes are increasingly being used as rentals, listed on websites such as Airbnb and VRBO, Hays said.

Lisa Abbott is an adjunct instructor in Indiana University’s School of Public and Environmental Affairs and executive vice president of the Bloomington Board of Realtors. She said Bloomington’s home inventory in that “missing middle” has dropped more than 7% since July 2017.

“Households are moving farther out in order to buy property,” she said.

In urban centers such as Bloomington, Abbott said homes only spend about 18 days on the market before they’re snatched up.

“It seems unreal how quick they’re going,” she said. “We have to increase supply in order to ease demand in the market.”

And the supply of newly built homes has not kept pace with past years. Steve Smith of Smith, Brehob and Associates said Monroe County approved about 600 new building permits each year until 2008. Since then, he said, the county has not approved more than 300 single-family home building permits any year. In 2017, the county issued 266 new home permits.

“Everything is tight,” Smith said.

Land within and in close proximity to the city is limited. Smith said developers have picked over the few lots with the appropriate zoning and infrastructure needed to bring an infusion of middle-income housing.

Requirements such as rezoning and design review can add months and hundreds of thousands of dollars to a developer’s risk evaluation. Adding in construction and land costs may overextend new developers who may not see a return on investment for years, leaving established developers to take on new housing initiatives.

You’re getting several years before you get cash back out, so you’ve really got to want to do this,” Smith said.

As the city and county are evaluating zoning ordinances, Smith said people are finding and developing homes in the middle-income range in Ellettsville.

But he said the lack of public transportation and the large number of workers who commute from Ellettsville truly make it living “out of town.”

Pete Yonkman, president of Cook Group and Cook Medical, showed how a survey of about 1,000 Cook employees shows “out of town” may be just where middle-income families and hourly employees want to live.

More than half of the hourly employees said they will be looking for new housing in the next three years, and most don’t think they’ll be able to find it.

That’s because nearly three-fourths of employees surveyed can only afford a home priced below $125,000. At the same time, employees are looking for two- or three-bedroom homes on a couple of acres.

“We’ve been hearing from our employees for years now of what’s coming,” Yonkman said. “I think it’s a crisis. This problem is bigger than what Bloomington can solve alone.”

Bloomington is partnering with the Regional Opportunity Initiative on an 11-county housing study to further break down the housing situation.

“If we’re going to be the community we say we are and have the quality of life we say we’ve got,” Coyne said, “we have to be able to share that with everyone else.”

Tribune Content Agency

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