Last year was disappointing for Indiana’s real estate professionals and investors, but 2013 should offer a turnaround, said Kyle J. Anderson, Indiana University Kelley School of Business clinical assistant professor of business economics. “The Indianapolis-Carmel metropolitan area should expect to see a rebound in 2013 along with the rest of the country and state.”
Still, the Indianapolis real estate market hasn’t entirely turned the corner, said Anderson. “The percentage of mortgages that are in foreclosure or seriously delinquent remains at 10 percent. Home prices fell slightly for the third straight year, declining by 2.6 percent. The number of homes on the market also declined, with 22 percent fewer homes on the market than there were two years ago.”
However, several factors seem to point to Indianapolis housing prices increasing throughout 2013. For one thing, noted Anderson, “interest rates remain historically low, and home prices are recovering across the state and country. While the foreclosure rate is a problem, it doesn’t seem to be leading to an oversupply of houses on the market. In fact, the inventory of houses on the market is quite low, which should enable sellers to get value for their homes. Finally, positive economic growth will lead to household formation and new home purchases.”
New residential construction in Indiana’s metropolitan area is just beginning to pick up, said Anderson. Although construction is up 10 percent, it is still significantly below 2007 levels, he added. “Given growth projections for the Indianapolis area, construction spending should return to somewhere between $1 billion to $1.2 billion per year. This would indicate that construction will grow by around 25 percent from its current levels. However, it is not clear whether this growth will occur in 2013 or later.”
Anderson said a rebounding Indiana real estate market will also fuel general economic growth in the state this year. “The Indy housing market has hit bottom, and increasing activity in home sales and construction will provide a boost to the local economy. Job increases will come from the health care and construction industries. The unemployment rate will remain at or slightly below 7 percent, while incomes will increase by about 2 percent. Overall, we are finally putting the recession behind us, and growth will soon return.”
The Indiana Association of Realtors released a report in early 2013 showing that statewide the following occurred:
• The number of closed home sales increased 18.4 percent to 4,577.
• The median sale price of those homes increased 4.5 percent to $105,000.
• The average sale price increased 5.6 percent to $130,749.
• The percent or original list price received increased 0.9 percent to 89.6 percent.
• The number of pending home sales increased 11.8 percent to 5,523.
• The number of new listings decreased 2.5 percent to 8,743.
According to the report, February 2013 marked the following consecutive year-over-year gains in home prices and market activity:
• The number of closed home sales has increased year-over-year for 20 consecutive months.
• The median sale price of homes has increased for 15 consecutive months.
• The average sale price has increased for 14 consecutive months.
• Sellers received a greater share of their original list price for the 12th consecutive month.
• The number of pending home sales has increased for 17 consecutive months.
“Consumer confidence is up, interest rates are low and prices are rising, which has created great opportunity for sellers,” said Kevin Kirkpatrick, 2013 President of the Indiana Association of REALTORS and co-owner of Prudential Indiana Realty Group. “Members are genuinely optimistic for the year ahead, though we know real employment and wage growth, as well as access to credit, are key to the long-term success of housing markets across the state.”
Other indications that Indiana real estate professionals are seeing the light at the end of the tunnel are evident in a February article (“Professionals optimistic that local, state home markets are rebounding”) in the Herald Bulletin. “‘I’m pretty optimistic,’ said Tom Seal, of F.C. Tucker/O.C. Clark Realtors, who spoke on the local real estate market at a Madison County Builders’ Association luncheon last week at Anderson Country Club. ‘Madison County, like everywhere else, has its ups and downs over the years,’ he said. ‘But I don’t think things are as bad as people think they are.’”
The article continued, “For example, more local homeowners hung the ‘for sale’ sign for the first time in 2012 than the year before — 267 of them, in fact, a 13.9 percent gain on 2011.
“But does that mean people are leaving the county in search of greener pastures? Maybe not.
“While more locals put their homes up for sale in 2012, even more people bought them, he said.”
Meanwhile, “The number of homes sold in Southern Indiana in January jumped by nearly 30 percent,” wrote reporter Kevin Eigelbach in a Feb. 28 2013 article (“Southern Indiana home sales rise 30 percent”). “Agents in the region’s six counties reported selling 206 homes, 47 more than they sold during January 2011, according to an news release from Re/MAX. The six counties are Clark, Floyd, Harrison, Scott, Washington and Crawford.
“Sales in the counties closest to Louisville, Clark and Floyd, were up by 28 percent and 29 percent, respectively.
“‘The Southern Indiana real estate market is on fire,” said Bill Burns, broker/owner of Re/MAX First in Jeffersonville, in the news release.
“The average sale price for a home in the region was $120,166, which was 5 percent less than the average price in January a year ago. The average sale price fell the hardest in Floyd County, where it went from $143,891 to $114,622. Overall, homes in the region are staying on the market for more days than they did last year, but not by much. The average days on the market for January 2013 was 125, a nearly 4-percent increase over the 120 days average for January 2012.”