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Residential real estate around the state.

Homes in Indiana continue to appreciate at a moderate pace, and recession or not, many real-estate agents are quite upbeat about the state of residential real estate.

"Overall, we've got the best of both worlds," says Joyce Cook, president of the Indiana Association of Realtors. "The sellers are getting top dollar for their homes if they are listed correctly and if they are priced correctly, and the buyers are getting the best interest rates. So everybody's happy."

As of the third quarter of last year, the median home price in Indiana was $63,600, up from $60,900 a year before, according to the Indiana University Center for Real Estate Studies. Homes appreciated in 14 of the study's 19 regions. Indiana's homes continue to be a bargain compared with homes nationally; the national median-home figure was $102,200, up from $94,400.

Appreciation, obviously, is great for owners and sellers, and because it has been only slow appreciation, it's not too bad for buyers, either. "It may be that this turns out to be one of the best times to buy a house," says Jeffrey Fisher, director of the Center for Real Estate Studies, "given that home prices haven't gone up all that much over the past year and that mortgage interest rates are at a very attractive level."

The ability of Hoosiers to afford homes continues to grow, according to the center. Indiana's housing-affordability index rose to 162 in the third quarter, up from 153 the year before and well above the third-quarter national index of 111. That means an Indiana family with the median income can afford to purchase a house worth 62 percent more than the state's median home.

Judging from real-estate activity so far this year, Hoosiers truly believe in their ability to afford homes. "Beginning New Year's Eve, we have felt sales activity pick up due to low interest rates," says Larry D. Hitz, president of Century 21 Executive Group in Valparaiso. "The year started on a very strong note."

Ann Gishler, broker/owner of RE/Max Realty Plus in Muncie, shares Hitz's enthusiasm. "Three of our agents were showing property on New Year's Day--two agents even sold one. 1992 came in with a bang."

Adds Don Lee, broker/owner of Century 21 Don Lee Realty in Newburgh, "We have decided that if there is a recession taking place, we choose not to participate."

Not only are the residential markets in Indiana more active than those in many parts of the United States, sellers are doing better here than in some other regions in terms of getting most of what they're asking for their homes.

Two factors come into play here. First, home values in Indiana have not crashed like they have in some areas. And, says Kay Acheson, office manager at Cressy & Everett Better Homes and Gardens in Mishawaka, Hoosier sellers simply are more realistic in determining list prices.

As a result, in much of Indiana sellers are getting in the neighborhood of 95 percent of their list price--as high as 97 percent in some areas--and the figures have remained steady throughout the recession. The Hoosier practice of realistic pricing, Acheson says, comes as a surprise to some people moving in from out of state, who are accustomed to having sellers tack on an extra $10,000 or $20,000 to allow bargaining room. Here, bargaining is at a minimum.

Following are glimpses of the state of some of Indiana's major residential real-estate markets:


Hitz reports minimal recessionary impact in his area, noting that business in 1991 was similar to that in 1990. Seasonal changes in sales were not as predictable as usual, but sales were respectable for the year. In Porter County, he says, there is more activity in new-home sales than in the existing-home market, in part because of the area's large inventory of new homes. "This is particularly true in the upscale market."

According to IU's real-estate center, the median home price for Lake and Porter counties rose slightly between 1990 and 1991, from $65,000 to $65,700. But the housing-affordability index jumped significantly, from 168 to 184. In LaPorte County, the median price rose more noticeably--from $54,900 to $58,250--causing a smaller gain in the affordability index, which rose seven points to 179.


Acheson of Cressy & Everett says the usual winter slowdown never arrived. "There's been a lot of pent-up demand; people are tired of waiting to buy," she says.

The area's pricing trends were mixed: in St. Joseph County the median price dipped $1,250 to $55,000, while the median in Elkhart County rose from $62,250 to $63,175. Affordability improved markedly in both counties, jumping 21 points to 182 in St. Joseph County and rising 13 points to 153 in Elkhart County, according to IU.


The recession pretty much left Fort Wayne alone as well, says the president of the Fort Wayne Board of Realtors, David Smith of Coldwell Banker Banks Mallough. "It really didn't affect things one way or the other. It was down just a freckle," he says, referring to the overall number of sales closed in 1991. "And the activity has been really brisk so far this year."

As in most of Indiana, median prices and affordability both rose, according to the most recent figures. The Fort Wayne median of $65,000 is up from $62,500 the year before, and the affordability index rose from 156 to 165.


The Lafayette area recorded a much more dramatic increase in the median home price. Most recently, it registered $82,000, up from $70,250 the year before, according to the IU Center for Real Estate Studies. That's among the highest medians in the state.

Consequently, the area recorded one of Indiana's few drops in the housing-affordability index. The index fell a few points to 122, but even though that's the lowest index in the state, homes in the Lafayette area still are more affordable than in the nation as a whole.


Gishler of RE/Max Realty Plus in Muncie reports a strong interest among first-time buyers, bringing a demand for lower- and medium-priced homes. In spite of that, she notes, currently there are more high-priced homes under construction than starter homes. "Muncie has a large inventory of high-priced homes on the market at the present time. There is a great need for construction under $100,000--more of the 'zero-lot-line' concept--for young families and empty nesters."

The Muncie area has seen a small rise in the median home price--from $48,250 to $49,000--and a healthy jump in the affordability index--from 179 to 195. In nearby Anderson, the median price dropped from $50,100 to $43,950, while the affordability index skyrocketed from 181 to 229.


Terre Haute, Vincennes and other parts of Western Indiana continue to offer some of the most affordable homes in the state, with prices holding steady. The latest median home price of $39,900 is just $50 under the previous year's figure.

With a median that low, it comes as no surprise that the affordability index is quite impressive. It stands at 219, up from 198 the year before, indicating that the area has enjoyed a healthy increase in median income.


"Indianapolis' housing market continues to compete well with most other areas of the country," notes the recent market report from the F.C. Tucker Co., the area's largest real-estate agency. "Ernst & Young ranked Indianapolis as the sixth most affordable U.S. city in which to own a home, and Money magazine named Indianapolis as one of the 10 best places to live."

Tucker expects the hottest growth areas in the near term to be northeastern, northwestern and western Marion County, southern Hamilton County and northern Johnson County. To the west, Hendricks County is a potential longer-term hot spot, as new hires at the United Airlines maintenance facility buy homes near their work place.

According to the most recent IU figures, the median home price in metropolitan Indianapolis rose to $78,500 from $74,000 a year before. Within the area, the medians ranged from a high of $115,250 in Hamilton County to a low of $49,950 in Shelby County. Affordability in the metro area moved up six points to 138.


Though the first part of 1991 was marked by a "wait-and-see" attitude among both buyers and sellers, "in the fourth quarter there was a good spark of movement, and this continued strongly into January 1992," says John West, managing broker at F.C. Tucker Co.'s Bloomington office. Most current activity is in residential resale, he says, though a burst of new-home construction is expected this spring.

The most recent median home price in the Bloomington area was $72,500, up from $69,500 the year before. The affordability index rose slightly, from 119 to 126.


Mark A. Pratt, president of Breeden Inc. Realtors/Developers in Columbus, reports uncharacteristically brisk activity for this time of year, "sparked in part by low interest rates, pent-up demand as well as a positive attitude about the prospects for an improving economy." Most activity, he says, is in new construction worth $85,000 to $165,000, and in the existing-home market between $40,000 and $175,000. A couple of new subdivisions will have lots available this spring.

The most recent median price reported for Columbus was $72,500, up substantially from $60,000 the year before. Affordability dipped 13 points to a still-healthy 145. Pratt says prices are stabilizing, with no major increases expected soon.


There's plenty of new-home and existing-home sales activity in the Evansville market, reports Lee, whose Century 21 franchise is based in nearby Newburgh. Construction is taking place at a variety of new and existing subdivisions around the area.

The Evansville market, which includes four counties in Southwest Indiana, saw the median home price rise from $56,000 in third-quarter 1990 to $59,900 a year later, and at the same time the housing-affordability index rose from 162 to 168, according to IU figures.


Homes remain affordable in the four counties the IU Center for Real Estate Studies defines as Southern Indiana: Clark, Crawford, Floyd and Harrison. And that's after a dip in the affordability index and a healthy gain in the value of the median home.

The median price rose from $49,000 to $57,125, causing affordability to drop from 169 to 160. But that's still far ahead of the national average, and makes the so-called "Sunny Side" an attractive spot for Louisville-area living.
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Title Annotation:Indiana
Author:Kaelble, Steve
Publication:Indiana Business Magazine
Article Type:Industry Overview
Date:Mar 1, 1992
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