A recurring theme at a forum Tuesday to discuss the ongoing Twin City housing crisis is that homeowners with favorable interest rates and high property values are less willing to sell their property, or accept new housing — two things that could help address the situation.
Another complexity is the high cost of building homes and the lack of trained workers available to build them.
“I remember when there were 20 drywall companies in this town,” said John Armstrong, RE/MAX Rising designated managing broker. “I can think of two right now. I remember when there was a ton of framers. There’s just not enough skilled labor in this town to be competitive, to get prices down in order to hit that niche.”
Audience members suggested the recent tiny homes trend as a possible solution. The advantages are minimized by the current market, the panelists said.
“There’s already so much HVAC and so much that has to go into the home,” said Jeff Jurgens, Bloomington city manager. “What they were telling us was they’re just not saving that much money.”
Armstrong added another difficulty is how a much smaller home would fit into an existing neighborhood. And the concern about how it would affect property values.
“Most developers are trying to keep, you know, a certain minimum standard of either exterior surface or square footage minimums in their subdivision. It protects the integrity of the home values of everybody in the subdivision,” Armstrong said.
Braden Fogerson
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WGLT
Armstrong described Bloomington-Normal as a severe seller’s market.
“We don’t have near enough homes on the market,” Armstrong said at the forum hosted by the McLean County League of Women Voters at the Bloomington Public Library. “There’s only 57 existing homes on the market in Bloomington-Normal as we speak today — 57 in a community that has over 30,000 homes is not very many.”
The seller’s market also has led many buyers to be more aggressive with their bids.
“I’d never encourage a first-time home buyer to buy a home without having a home inspection,” said Armstrong. “But in order to win a competitive offer, you may have to say, ‘I’ll waive it in order to get the house’ versus being homeless. We’re seeing a lot of that from recent college graduates.”
“The return on investment is less of an incentive right now because interest rates are higher and construction costs are higher, there’s a labor shortage, so it’s a really high-level problem,” said Mark Adams, president of the Bloomington-Normal Community Land Trust.
“And then also a lot of lenders have not shaken the 2008 ‘scaries,’ like they have been traumatized in a sense, hesitant to lend at those margins again.”
Jurgens said offering tax credits to build affordable housing in downtown Bloomington is an option.
“That’s where people are going to be able to develop and create an apartment that’s affordable,” he said. “That’s how the developer is going to get over the hurdle of being able to build.”
“We need more housing. But if everybody says ‘Don’t put it by me,’ we’re going to have a problem,” said Jurgens.