Fort Wayne home sales suffer with GM plant worries

— -- The uncertainty over General Motors' future is causing uncertainty in the housing market in Fort Wayne, Ind.

The northeastern Indiana region is home to General Motors' Fort Wayne Assembly Plant, which employs 2,601. The plant was idled for five weeks at the start of the year and will be idle for two months this summer. And that's if GM doesn't declare bankruptcy.

"We worry about it closing," says Rena Black, president of the Fort Wayne Area Association of Realtors. "If it does, it would be devastating for Fort Wayne."

The precariousness is holding back home sales.

"Fort Wayne is not the sickest part of Indiana," says Michael Hicks, economics professor at Ball State University. "But it is feeling a great deal of uncertainty and distress."

Home sales were down 14% in March, compared with March last year. Sales started to decline in 2008, Black says. Fort Wayne's foreclosure rate has not skyrocketed, but it has increased.

Prior, Fort Wayne had been fortunate.

"We never experienced the kind of boom and bust that large cities in some states experienced," Black says.

From 2005 to 2007, Fort Wayne's housing market had modest growth in sales. And it was immune to the big run-up in home prices that affected many other cities, Hicks says.

The current decline in home sales is partly related to a slowdown in migration to Fort Wayne, Hicks says. And those who are moving there for a job may not be able to buy a home until they can sell their last home.

Recently, there has been an increase in first-time home buyers. They are taking advantage of low-priced properties that are in foreclosure but are in good condition.

"We're a somewhat urban city, and everything around us is rural," Black says of Fort Wayne's appeal. "But it's a very pleasant way of living. The pace is slow. And we have no traffic jams."

Fort Wayne also has a friendly economic environment. Because taxes are lower than in Michigan, businesses were relocating there until the economic crisis hit, Hicks says. "When the recession is over, Fort Wayne could be a lot more positive."