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rate of 4.4% was the state’s highest. Onl y two other counties had tax rates averaging above 4%
and they were St. Joseph (South Bend area) and De laware (Muncie). It is also the case that each
of these three counties experienced less than average housing investment rates. However, with
the exception of Harrison County’s pro perty tax rate of 2.3% , the counties experiencing rapid
investment mentioned earlier – Hendricks, Hamilton, Hancock, Switzerland, Boone, and Johnson
did not have rates very different than the state mean. In fact, a simple correlation coefficient of ρ
= -0.13 between NEWINV and PROPTAX points to rather weak relationship b y m agnitude.
County income tax rates also differ in Indiana, b ut the rates average roughl y one-third
that of pro perty taxes. The INCTAX variable is provided t hrough STATSIn diana. The statewide
average count y i ncome tax rate is 1.03% with Lake Cou nty’s rate at an even 1. 0%.
The cost of building a new ho me wo uld be expected to be negatively relat ed to the
investment rate, ceteris par ibus. The mean unit cost of a new single fa mily home wa s available
from the Census by county for the year 2000. The mean unit cost (UNITCOST) was $122,789 in
2000. The average median value of an exis ting hom e (MEDVAL), perhaps a substitute to
building a new ho me, was $87,835. Ham ilton Co unty had bot h the highest median valu e at
$166,300 while new ho mes in Boone County were, on average, the most expensive to build at
$205,276. New ho mes in Lake County were also significantly more expensive than average to
build at a co st of $ 156,921. No attem pt has y et been made here to contro l for t he diff erent
attributes (square feet, lot size, rooms, etc) of new homes across counties.
A county with a high rate of homeownership (OWNRATE for 20 00) may imply that the
infrastructure (schools, utilities, etc) i s in pl ace to provide the services a new ho mebuilder is
likely to demand. However, OWNRATE is onl y weakly positively correlated with NEWINV ( ρ
= 0.15). An additional cost of building a ne w home is the i mplied commute to workplace. The
U.S. Census provides data as to the mean travel-to-work time in minutes per day (COMMUTE)
for the year 2000. COMMUTE has a low, positive correlation with NEWINV with ρ = 0.14. On
average Lak e Count y’s homeownership rate wa s below the state’s average at 69% and the
average commute time was a little longer at 27 minutes.
Balancing the building cost of a new home and other expenses may be the homebuilder’s
purchasing power, both present and future. Count y median household incom e (INCOME) and
the percentage of the county’ s population holding at least a bachelors degree ( EDUC) may both
represent purchasing power. Lake County’s median household income and education levels were
both slightly higher than the state averages. While the Census provides data for both variables for
the year 2000, the simple correlation coefficient between the two is somewhat high at 0.52, as one
would expect. The EDUC variable is also highly correlated with median home value (MEDVAL)
as the correlation coefficient is 0.71.
A county’s economic activity may either attract new residents or attract business which in
turn pushes h omeowners to neighb oring counties and to comm uting. POPGRWTH was defined
above as the count y’s po pulation growth for the 1990s. Li ke EDUC, POPGRWTH is highl y
correlated with other varia bles, principally m edian household i ncome (ρ = 0.72), m edian home
value (0.74), percent of population over 65 years of age (ρ = - 0.74). But POPGRWTH measured
for the 1 990s is also strongl y correlated w ith NEWINV in 20 03 likel y impl ying conti nued
momentum into the new decade (ρ = 0.72).
In addition to population growth, we examined the roles that county retail activit y, the
county unemployment rate and the cou nty poverty rate may play in encouraging or discouraging
ASBBS E-Journal, Volume 4, No.1, 2008 144