An Indianapolis Housing Market in Transition

As we publish the newest edition of Carpenter Reports, a quarterly review of local market activity, we see that the local real estate market is in transition in the first quarter of 2012. We continue to see very positive signs in the data, as year-over-year listing inventory continues to decline at double digit rates, pending sales have increased in the double-digits, and the average sale price increased slightly.

For listing inventory, every County and every Township within Marion County showed a year-over-year decline. This is needed in order for the market to get back into balance…to get healthy again. Johnson County leads the market for the second straight quarter with a decline of 18.4%, followed by Putnam County with a decline of 18.2%. Marion County, as the largest county for inventory, saw a nearly 18% decline in inventory.

The national and local economy continues to slowly make improvements. That continued improvement reflects on the housing market.  The trending numbers during the first quarter of 2012 are positive and showing some momentum.

 For example, pending sales during the first quarter were up over 13% year-over-year with Putnam, Montgomery and Madison Counties leading the way with over 30% improvement. Marion County experienced a solid 15.1% growth of pending sales.

The average residential sales price for closed sales in central Indiana showed slight improvement with a 1.2% increase year-over-year. Shelby County lead the recovery with a 13.9% increase. This is a strong turn-around as they experienced a 14.7% decline last quarter. Marion County, the largest of the reporting units experienced a healthy 2.2% increase.

The increases in average sales price for closed units is a strong indicator the market is transitioning from a depressed buyers market to a more healthy and balanced market. We continue to believe we will see a firming of prices and growth in the averages as the year progresses.

Consumer confidence continues to be one of the two critical elements in driving home sales; mortgage interest rates being the other. Mortgage rates continue at a near record low level; currently hovering at 4%. Consumer confidence, as measured by the Consumer Confidence Index (CCI), has continued to inch up over the past three months and has reached levels not seen since the spring of 2008. As consumer confidence continues to grow, the demand for housing will grow and average sales prices will move up with that increasing demand.

At Carpenter, our belief is we will see continued improvement in the local economy, in consumer confidence, and in housing going forward. In an election year, we do anticipate a few bumps in the road. The negative nature of the political discourse will undoubtably have a drag on the recovery. Time will tell how much it will impact home-buyers.

Posted by: David Caveness

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