Dream homes for the rest of us.

• Author: Murphy, Scott
• Position: Indiana's homebuilding industry - Includes article on Indiana top real-estate agent Barbara Ward - Residential Real Estate

Why are high-end builders building for less?

Indiana's homebuilding industry is pulling out all the stops. Expanding their target customer base, builders are aggressively adjusting to their leaner, meaner playing field. Hoosiers look to get more house for their money.

Granted, interest rates are at their lowest point in a quarter century, the country is in healthy recovery and homebuilding has shown signs of improvement: New single-family home sales increased 11.3 percent last December to the highest level since April 1986.

But the upper-end home market shows few signs of ever resembling prerecession times, even as indicators turn up. "All the signs in the economy are that it's moving up," says Phil Myers of Indianapolis' Phil Myers Custom Homes. "That's usually the best barometer for building. It's a long-term investment. If people think things look good for the future they'll buy. If they don't, they won't."

"Lifestyles are changing," says George Sweet of Brenwick Development, also in Indianapolis. "People are viewing themselves differently in terms of what their house says about how they're doing. Houses used to have a definite style element, much like a car. It's my personal opinion that over time, ostentatiousness is going to wane. Even high-income people are becoming less concerned with expressing themselves through their homes. I don't think we'll see times like the '80s again. The 1980s were like the 1890s and the 1920s. They were the Reagan years. People had more confidence and were spending money with more confidence."

Ernie Reno of Mansur Development agrees. His company is developing in Fishers, which outperformed Carmel in new-home sales for the first time in 1993. "People can't believe that with inflation as low as it is and interest rates the lowest they've been in 20 years, building is not booming like in the 1980s," he says. "People are not as secure in their employment as they were 10 years ago. People believe that no one's job is safe. It's realistic and pragmatic." Mansur recently entered phase II of its development in Hamilton Proper, a golf-course community arranged in home villages. Home prices range from $225,000 to more than $1 million.

Ken Wiles, sales manager at Precision Construction in Highland, says upper-end homebuyers are always a challenge to please, because of their education, experience and knowledge of the housing business.

"You've got a very astute home buyer out there," Wiles says. "They've bought two or three houses already and they know what they're doing. I think you have a two-person income and people want value for their money."

Aside from the economy, builders face another obstacle in selling upper-end homes. Sweet cites the Clinton administration's commitment to shifting more of the tax burden onto the wealthy as an additional damper on homebuyers' incentive.

"You're impinging on people in that income area in how much they can spend," Sweet says. "There's fear in the minds of people that with the policy of Clinton it's 'soak the rich.'"

R.J. Klein, president of R.J. Klein & Associates, sees sales waning as soon as this summer. "I see the market settling down, especially after April 15 when people see all these taxes they didn't know they'd have to pay," he says. "The high-end market is going to be...