Diversified job base protects South Bend, Ind., home sales

— -- South Bend, Ind., has recently been in the shadow of nearby Elkhart. But the lack of attention has been good for the local housing market.

That's because Elkhart, known as the RV capital of the world due to the number of people employed in the recreational vehicle industry there, has become emblematic of the nation's financial meltdown (President Obama has visited the area twice). Although South Bend's unemployment rate is rising, it has not been as hard hit as Elkhart. Like Elkhart, South Bend has long been known as a manufacturing town. Formerly home to Studebaker, South Bend is now home to AM General, which manufactures military vehicles, such as the Humvee.

But South Bend, the county seat of St. Joseph County, is more diversified. It's home to the University of Notre Dame and Indiana University South Bend, and the education and health care industries are among its major employers. That's helped reduce and delay the recession's impact, says Grant Black, director of IU South Bend's Bureau of Business and Economic Research.

But that doesn't mean that the housing market isn't feeling the pinch. Unemployment and economic worries have slowed home sales, which were down 21.9% in June, compared with the same month in 2008.

"I think a lot of people are afraid about losing their job," says Linda Hall, president of the Greater South Bend-Mishawaka Association of Realtors.

The housing market also has been hurt by Elkhart's unemployment, as many people who work there live in South Bend.

At least South Bend avoided the bubble, and home prices have remained affordable, Hall says. A recent spate of foreclosures has dropped prices further.

Still, the housing market has shown improvement: In the past two months, sales are picking up. Local real estate agents have been showing homes to first-time home buyers who want to take advantage of a tax credit and low prices, Hall says. "In 2008, it was all gloom, and now, the market is in an upswing," she says.