The overall national picture still shows that the housing market has room to move, an overall increase of five percent from the average sale of a house in 2003, increasing to $255,500 from $243,800 the previous year. Though the greatest gain in appreciation has been in Florida and California with respective increases of 8.5 percent and 10.4 percent
Indiana, specifically Indianapolis reflected a more modest increase in sales activity for the housing market.
The average price per home took a dramatic 12.5 percent dip down to $162,000 down from $185,300 last year. It reflects the overall slowdown that Indianapolis, Marion County experienced last year and is continuing to experience this year. A noticeable decline still characterized the market in the second quarter of 2004 when sales increased by 5.3% with an average home price of $125,812.
Indianapolis is still a young market facing a variety of influences. The price for a home in Indianapolis in the first quarter of 2004 hovered around $111,350 and sold in an average of about 87 days. Variables influencing growth and interest rates can vary from market to market but the recent rise in interest rates as well as an influx of eligible buyers has led Indianapolis to a scenario "where slightly higher interest rates" led to a "five percent decline in housing starts," the same situation projected for 1.75 million homes nationally. It's already led to a substantial decrease in the average price of a home but most recent statistics indicate the demand remains the same or has increased while sales of homes priced at the lower end of the scale picked up speed.
In June 2,809 homes were sold at the average price of $159,446. "Homeowners waiting to build larger or more expensive homes have been put on hold." The average sale price is continuing to decline while less expensive homes are sold in "record numbers." Despite most of the activity that is limited to the lower end of the market most Realtors in Indianapolis don't see the market slowing down until interest rates reach 8 percent.
Contrary to current findings experts believe that home sales are quite "bullish on 2004." "No housing bubble will burst this year," says President of Great Lakes Division of Pulte Homes Peter Keanes. Slightly higher interest rates have already led to a national 3 percent drop in existing home sales, 6.98 million nationally. The greater metropolitan area of Indianapolis has experienced steady population growth by as much as twenty-five percent from transplanted buyers and until most recently has shown no signs of slowing down.
Indianapolis' population has been spurred on by industrial and urban development that satisfied the economy's needs and engendered a steady increase in home purchases and options. Only until this past year did housing sales and the average cost of a home not keep up a steady appreciation.
Most analysts predicted there would be "a slump or a slow down" in Indianapolis' housing market because of the "accelerating economy." As rates rise, still ever so slightly activity in the housing market will "cool" and that is what has slightly affected Indianapolis' growth. Sales and construction of homes at the higher end of the market have slowed down while sales of homes on the lower end have increased or remained as active as before. Would be homeowners are still rushing to take advantage of lower interest rates, rising family income, and expanding options.
Though the largest increases in sales and average prices for homes have occurred in "coastal states" like California and Florida activity in other cities like Phoenix and Las Vegas' have also shown comparable appreciation close to double digits. Indianapolis has had its share of growth and rising property values but with the slow down of sales of costlier properties there's been an increase of those on the lower end development of low-income housing. Low-income housing has become a reality too for down town Indianapolis with $140 million development by Market Square Builders that includes a segment amidst luxury condominiums and penthouses.
Undoubtedly the market will keep pace with demand and although Indianapolis still sits in a "very good market" recent changes have signaled growth in some areas with uncertainty of where future activity may be the strongest.