INDIANAPOLIS — New data from the Builders Association of Greater Indianapolis (BAGI) shows homebuilding permit numbers are down across several Central Indiana counties compared to this time last year.
Data from BAGI shows permits dropped during the 2008 recession and have been rebounding ever since. During COVID-19 in 2020 and 2021, permit numbers reached levels not seen since 2007.
Steve Lains, BAGI CEO, believes that right now the industry is experiencing a correction.
"The reduction in permits isn't really unprecedented [with] things going on in the marketplace ... this was expected as a correction and it needed to happen because of the unprecedented growth we had in the two years post COVID," Lains said.
Lains says that the growth in permit applications led to issues with the supply chain, labor constraints and getting homes completed.
In September, 500 permits were issued compared to 744 in September of 2021.
As interest rates hit the highest level since 2006, new data from The Mortgage Bankers Association (MBA) shows that the rate hike had caused mortgage application volume to sink to its slowest pace since the end of 1999.
RELATED: Indiana housing market continues to feel the rise of interest rates | BAGI State of the Industry Report - August 2022
Lains says there are still concerns about supply as well as pricing.
"Right now pricing for homes continues to escalate. If you look at past history in Indianapolis, even when we hit the downturn of the 2008 housing recession ... when we came out of that our housing prices leveled off, they did not decrease," Lains said. " Our concern and our headwinds that we feel moving forward for this marketplace is going to be based around affordability. We think there are significant groups of people ... who are going to be priced out of their ability to have that home."
Despite the challenges, Lains says now is still a good time to think about building a home.
"Don't be afraid to go out and look at your options relative to your financing," he said. "I think if somebody is thinking about building a home right now, they should not be afraid about getting into the market. Because of the interest rates going up, there are new and different ways to get into a mortgage."
As the housing market settles and more inventory is available, Lains predicts there will be more options and homes available for prospective buyers.
"I think if you've been on the fence, thinking about building a home, getting into a new home ... it's kind of like timing the stock market, you can't time the stock market," Lains said. "It's a great opportunity to go out because you are going to have more options than you had even six, eight months ago."
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