Defaults Don’t Signify Weak Indianapolis Housing Market

Despite reports of a slumping housing market nationwide, particularly in the Indianapolis area, Morgan County is still insulated from major swings in the industry, the Mooresville-Decatur Times reports.

A higher number of mortgage foreclosures isn’t necessarily a symptom of a slumping market, and some say it could be part of a housing market rebound.

According to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, last summer greater Indianapolis housing affordability was at 90 percent.

That means 9 of 10 homes in the area were affordable for a household making the national median income of $65,100.

First-quarter foreclosures seem to tell a different story, but housing affordability has been left unaffected.

• Indianapolis in the first two quarters of 2006 had the highest metro foreclosure rate in the United States, according to RealtyTrac.
• The overall rate of Indiana mortgage foreclosures in the second quarter was a 32 percent decline from the first quarter, however.

The housing affordability ranking remained intact, however, according to the February housing opportunity index, with the Indianapolis housing market still at the top.

Wayne Ready of FC Tucker-Wayne Ready & Associates said the Morgan County housing market is usually a few months behind the trends of the rest of the Indianapolis market.

The Midwest as a whole, however, is prone to lending problems that have fueled larger marketing trends, primarily subprime (or bad credit home loans).

Morgan County’s housing market often does not see dramatic changes because affordability is consistently high. Though winter weather has contributed to a slight downturn in the market, statistics gathered by the corporate offices of FC Tucker signal a turnaround on the horizon.

Market fluctuations have been exaggerated by applying apparent downturns in volatile areas like Florida and Colorado mortgage climates to the country as a whole.

The housing market indicators, like the stock market, are bound to correct themselves when problems like overlending lead to increased foreclosures.

“Certain people were getting loans then that they can’t get now,” Ready said of lending problems that are attributed to the national housing downturn. “Indiana is in the top five or six in repossessed homes.”

The Midwest’s industrial-based workforce is undeniably linked to the bad credit mortgage defaults. Midwestern states are among the worst-hit areas in the nation when the housing market has a slump.

Foreclosures, rather than being a sign of a weak market, actually encourage a slight upswing in market activity, Ready said.

Investors will buy properties at bargain prices from the banks before the market is on the rebound, so foreclosed properties don’t lead to any slowdown overall.

“What’s mostly selling now is those (foreclosures) and high-end homes right now,” he said.

A growing immigration to Morgan County from both the pricier Indianapolis market or out-of-state locales keeps the larger home market aloft, Ready said, because the affordability of the area is still the best nationwide.

SOURCE: Mooresville-Decatur Times