The local housing market showed signs of slowing in March. Numbers just released from MIBOR, the Metropolitan Indianapolis Board of Realtors, showed:
- The number of new houses with for sale signs were 5% fewer than a year ago.
- Closed sales were down 4%.
- The median sales price has been increasing at a slower pace.
However, there are 6,212 homes currently available for sale and nearly 37,000 homes have sold in the past 12 months. Interested in talking more on what the market is showing, give us a call at 317 625 0655
MIBOR posted activity numbers today, showing the market slowed slightly in February. Here’s the scoop:
- New listings and closed sales were down 3% from last February
- Causing inventory to remain very tight
- Sellers got 95% of their original asking price
- Median sales price was up 4%, to $173,900
And bottom line, there are 6,447 homes on the market to pick from!
The national media is starting to talk about the popping of Housing Bubble #2. Graphs of housing prices in various cities across the country are now suggesting that a top has been reached and that prices are beginning to trend down. The next step in this game is predicting just how low prices will go. Will they follow the pattern seen in the last recession or will they fully retrace the gains of the past 10 years (because the Fed no longer has as much ammunition to throw at the problem as it did the last time around). These scenarios would have house prices falling by 1/3 – 1/2 No matter how you cut it, that would be a BIG ouch.
Do we have the same to fear here on the home court? I don’t think so and here’s why. Central Indiana home prices have ramped up significantly since the depths of the last recession in 2009, from a median average price of $128,000 to $169,900 this past month. That’s a 33% increase in the past 10 years. While not as large as the nation as a whole, and certainly modest by comparison to some markets (NYC, DC, Boston, West Coast, and others), it is nevertheless significant. So, are we in Bubble territory? My bet is “No”. The median house price here is $169,900. Based on current interest rates, Indiana’s relatively low property taxes and homeowner’s insurance costs, that $169,900 price tag (with a 5% down payment) translates to a mortgage payment of $1,255, including taxes and insurance. The median household income is $59,566. Mortgage underwriters (ie risk analysts) work with a 28% debt ratio standard (comparing mortgage payment to monthly income). And if we take the $1,255 payment and divide it by the median monthly income ($59,566/12) of $4,964, we come up with a debt ratio of just 25%. That ratio tells us that Indy’s house prices make sense. We are not those cities where home prices are in nosebleed territory. And barring a major recession causing a large rise locally in unemployment, we probably are not facing a serious decline in housing prices.
US News ranked Indianapolis #5 on its list of 25 Best Affordable Places to Live in 2018. Our home prices are just one more reason for Hoosiers to feel #blessed about where we live. Give me a call (317) 625-0655 if you want to talk it over a good ol cup of Joe ☕