Yes. Fort Wayne, Indiana.
It isn’t just among the most affordable places to buy a house in the United States. A new study places it at the top of the list among major urban markets in Australia, Canada, Ireland and New Zealand, along with right here in America.
The 3rd Annual Demographia International Housing Survey by the Winnipeg-based Frontier Centre for Public Policy employs a “median multiple” formula to rate affordable housing. Fort Wayne, Regina (Canada) and Youngstown (Ohio) all tout median multiples of 2.0, with anything less than a 3.0 considered affordable.
It goes without saying that Indiana mortgage costs in the Fort Wayne area represent some of the best deals not just in the Hoosier State, but pretty much everywhere else.
The median multiple of a city arrived at by looking at the median housing prices divided by median household income, and, the study says, recommended by the United Nations and World Bank for assessing housing affordability.
Of the 159 markets in the study, 59 are rated “severely unaffordable,” 22 “seriously unaffordable,” 36 “moderately unaffordable” and 42 “affordable.”
The affordable list has a heavy dose of America’s Midwest region. On top of Fort Wayne and Youngstown, the list features Dayton and Indianapolis (tied for fourth), Akron, Ohio (eighth), Grand Rapids, Mich., and Toledo, Ohio, (tied for ninth) and Northwest Indiana (tied for 15th).
Not surprisingly, two of the three most expensive markets surveyed were in the Golden State. With California mortgage costs pushing half a million on average, Los Angeles leads the markets rated most unaffordable, followed by San Diego and Honolulu.
Chicago, with a median multiple of 4.5, was rated the most expensive city in the Midwest in which to house-hunt. A median multiple in the range of 4.1 to 5.0 is “seriously unaffordable,” according to the study.
The study says the supply of land largely drives home prices:
“Where there are significant constraints on the supply of land for residential real estate development, housing inflation has occurred. Where there are no such constraints, housing cost inflation has not occurred.”
Other factors include zoning regulations, the local mortgage rates, local economic performance, and other population demographics.
Posted by Richard Barber on Jan 24 2007 under Indiana
The Northwest Indiana Times reports that home sales stalled in December in that region of the Hoosier State, keeping year-end totals from matching a record number of sales in 2005.
Buyers came away with a total 558 new and existing homes in Lake and Porter counties for the month, a drop of 3.3 percent from December 2005, according to data from the Greater Northwest Indiana Realtors Association.
Home buyers typically have things besides Indiana mortgage costs on their minds in December, which contributes largely to the decline.
“Typically, the market slows down with the holidays,” said Pat Pullara of the local Realtors association. “The only people buying and selling were the ones who really needed to move.”
The sluggish month held 2006 sales to about 8,156, based on preliminary numbers from the association. A year earlier, buyers snapped up closer to a total 8,900 homes in the two Northwest Indiana counties.
December sales held steady in Lake County, hitting 445 compared to 443 a year ago. The median selling price for a home in Lake County fell to $100,000 for the month, a drop of 9 percent from last year.
In Porter County, buyers came away with 113 new and existing homes, down by 16 percent from December 2005 - the peak of mortgage loan activity in the area. The median selling price rose by 7 percent to $172,500.
Realtor Bufrod Eddy, whose Four Seasons Real Estate east of Crown Point nearly straddles the two counties, said sales there continue to be driven by buyers from Illinois and northern Lake County.
Illinois mortgage activity also fell off in 2006, with housing sales down by 16.3 percent for the first 11 months of 2006, according to the Illinois Association of Realtors. Positive gains are expected around spring time.
On the other side of Indiana, Ohio mortgage holders encountered their own share of problems as 2006 proved to be a difficult year for real estate in the entire midwest.
The country as a whole didn’t fare much better. National sales are expected to drop in 2007, according to the National Association of Realtors, with existing home sales falling to 6.42 million from 6.5 million in 2006, and new-home sales falling to 957,000 compared to 1.06 million.
The national association predicted a gradual rise in sales heading into 2008, with home prices expected to gain 3.4 percent, double the 2007 pace, as the economy improves. The forecast calls for the median price of a previously owned home to rise to $233,000 in 2008.
Posted by Richard Barber on Jan 12 2007 under Indiana
According to the Indianapolis Star, Donald Anthony used three different real estate agents in an attempt to sell his property. He has slashed the asking price on his four-bedroom, two-bathroom house by almost $80,000 - and added $40,000 worth of improvements, including a new kitchen and landscaping.
He’s listed the 1,800-square-foot home on for-sale-by-owner websites, in newspapers, on cable TV and Craigslist. He or his agents have spent at least 50 afternoons hosting open-house events. But the 74-year-old retired physicist cannot unload the house, now listed at $489,950.
“The buyers have vanished. If this doesn’t sell posthaste, I’m going to bite the bullet and pull it off the market,” Anthony said.
The Indiana housing market didn’t experience anywhere near the increase in home prices seen elsewhere in the U.S. from 2000-2005 and has fared better.
The median price in Indianapolis rose about 6 percent from 2001 to 2005, according to the National Association of Realtors. Nationally, the median home price rose 41 percent during the same period.
But the average sales price in Central Indiana through the first 10 months of the year was up about 1 percent from 2005 levels, as Indiana mortgage costs remain at historic lows.
The median price is down about 3 percent. Although a few economists predict home values will fall dramatically in 2007, many others say prices won’t improve for 12-18 months.
“The good news is that there are some signs of stabilization. The bad news is that a substantial backlog of unsold homes still exists,” said Diane Swonk, chief economist for Mesirow Financial, who forecasts a rebound in early 2008, as the costs of home mortgage loans remain within reach of first-time buyers.
Newer forecasts suggest the median sales price for an existing home will decline in 2007 by 3.6 percent - the first decline for an entire year in U.S. home prices since the 1930s.
Posted by Richard Barber on Jan 02 2007 under Indiana
In February 2005, a group of Tippecanoe County, Ind., residents gathered at a summit to hear experts talk about the myriad factors contributing to rising foreclosures, the Journal & Courier reports.
Mildred Wilkins, president of the consumer advocacy group called Home Ownership Matters, told the group C.P. Morgan’s Benjamin Crossing development on Lafayette’s south side was primed for foreclosures.
At the time, there were no foreclosures at the one-year-old development. Nearly two years later, there have been 24 foreclosure lawsuits filed.
Wilkins is not surprised. Prospective home buyers, young or inexperienced at home ownership in many cases, are told they can own a home for little more than the cost of renting.
Initially, it’s not far from the truth. But as property taxes kick in and mortgage rates go up, so do the costs.
“Change needs to be implemented so that borrowers are clearly informed in all transactions. We are harming neighborhoods, we are harming consumers, we are harming the city,” she said.
The experience of Juanita Arreguin, a homeowner in Benjamin Crossing who faced a foreclosure lawsuit after her monthly Indiana mortgage payments rose from $526 to $750, is a prime example.
She was distressed earlier this year when her mortgage lender informed her she had not paid enough into her escrow account to cover property taxes in 2005. Her escrow payments then went up to cover not only this year’s taxes, but part of the previous year’s.
Wilkins said home buyers can request that money be placed in escrow to cover actual taxes. But unless they request it, a minimum amount will be taken out. The option is not always explained, she added.
At the same time, Arreguin’s rate was going up because her loan was a “two-one buydown,” a two-step mortgage in which the rate was discounted the first two years.
She fell behind in her payments and was notified of the foreclosure suit in October. A friend advised her to go to Lafayette Neighborhood Housing Services for help. Brenda Post, director of home ownership programs for Lafayette Neighborhood Housing Services, said the agency has provided foreclosure counseling for nine homeowners in Benjamin Crossing.
“They’ve all had something happen that affected their income in one way or another. Half of the people we counsel for this situation do have loan products that are not what they need.”
With counseling, Arreguin was able to work out an arrangement with her home mortgage company to catch up on her payments. She also learned a few things about how she got into trouble in the first place.
Wilkins said mortgage companies are at little risk because many loans they make are guaranteed by the Federal Housing Administration (FHA).
In January 2005, for example, Republic signed an FHA mortgage of $99,996 to a 22-year-old Lafayette man to purchase a new Benjamin Crossing home. The loan later was purchased by Countrywide, a much larger mortgage company.
Nine months later, Countrywide filed to foreclose. The judge awarded a foreclosure judgment of $107,363 and set a sale date of July 11. Proceeds from the sale would be used to pay Countrywide back.
At the sale, Countrywide bought the house with a bid of $111,813. That same day, Countrywide Mortgage sold the home to the U.S. Secretary of Housing and Urban Development, the parent agency of FHA, for $111,813, or $4,450 more than it was owed.
Tony Albrecht, chief executive officer for Lafayette Bank & Trust, said another reason foreclosures have gone up is that companies are offering products not available 10 years ago for individuals with bad credit.
Such a home mortgage, called a sub-prime or bad credit home loan, carries a higher interest rate than prime loans, and thus, a higher risk of foreclosure.
A recent USA Today article highlights a region of the country where buyers are firmly in control of negotiations: Indianapolis.
Home prices in the area have been dampened by manufacturing layoffs in the late 1990s and early 2000s, along with a great deal of new home construction. This year, the median home price is down 1.6%.
Developers have put up 80,000 new homes since 2000 - one new home for every three existing households - says Greg Cooper, an agent with Century 21 Realty Group.
The good news for buyers: Homes in the area cost only about half the national median price. Now would be an ideal time to apply for an Indiana mortgage in the city.
Moreover, there are signs of both blue- and white-collar job growth as new employers move into the area, including a new Honda auto plant that’s being built south of Indianapolis.
It all adds up to a growing market, despite recent slow times. The chart below illustrates just where this region is at. We recommend speaking to a mortgage broker that can explain more about why now is a great time to find deals in the area.
Posted by Jed Moss on Dec 13 2006 under Indiana
It’s not a great time to be an Indiana mortgage company - or a seller in the area, hoping to find applicants for such loans.
After all, the Central Indiana housing market cooled further in October, as home sales and prices fell from their year-ago levels, according to the latest MLS statistics from the Metropolitan Indianapolis Board of Realtors.
Home sales in the nine-county region surrounding Indianapolis totaled 2,429 in October, down 8.4 percent from a year earlier when 2,651 homes were sold.
The average sales price of a home in October dipped to $150,621, a decline of 2.5 percent from $154,489 posted in October of last year. This fosters hope that home loan activity will return to the area as prices continue to fall.
Although there were 9 percent fewer listings added to the market in October compared to the same month last year, around 18,811 houses remained active on the Multiple Listing Service at month end, up 10.2 percent from the 2005 level.
This level of inventory suggests a continuation of the current buyer’s market, but the situation is likely to change if the slowdown in new listings continues to decline as it has for the last three months, MIBOR reported.
Posted by Jed Moss on Dec 11 2006 under Indiana
A number of area banks don’t score well on the number of mortgage loans made to minorities, the Northwest Indiana Times reports.
The Home Mortgage Disclosure Act requires banks to disclose their mortgage loan activity, said Jean Ishmon, president of the Northwest Indiana Community Reinvestment Alliance.
“The numbers are low,” she said. “It’s obvious that (minority) buyers are going to other sources for mortgage loans, opening themselves up to predatory lending.”
The HMDA analysis was designed to give a snapshot of mortgage lenders in minority markets to determine if it has been, in any way, discriminatory, said Cheryl Smith, who formerly worked for the Department of Housing and Urban Development (HUD) in Chicago and now does consulting work.
“The data is mind-numbing,” she said. “Even though banks will tell you and show data regarding their loans, every time the Federal Reserve Bank does a study of home loans every five years, they find discrimination. People say they are not prejudiced, but they tend to loan money to people who look like them.”
Unfortunately, HMDA doesn’t regulate mortgage companies or Indiana mortgage brokers, and there’s abuse in the system. Smith indicated there is a need in the banking industry to hire more professional minorities.
In October, the Justice Department alleged Centier Bank violated the Fair Housing Act and Equal Credit Opportunity Act by unlawfully failing to equally market and provide products and services to predominantly black and Hispanic neighborhoods in Gary, East Chicago and Hammond.
While Centier Bank admitted no wrongdoing, it came to terms with the government and stepped up its efforts to enhance services in those areas.
Centier agreed to open new offices and expand operations in excluded areas, invest $3.5 million in a special program and spend at least $875,000 for consumer protection, outreach and promotion in previously excluded areas.
Michael Schrage, Centier President and CEO, said the bank’s efforts already have resulted in an increased level of activity through programs, including participation in the Gary Centennial and hiring more minority staff.
“Those moves have proven to be very positive in generating additional contacts and opportunities to lend money to people who are underserved,” he said.
Nancy Norris, spokesperson for J.P. Morgan Chase, said the lender makes its home mortgage loans based on ability to repay.
“Race does not enter into the decision at all,” she said. “We reach out to consumers to make loans that they can afford and those decisions are based on the ability to repay. We offer a wide variety of loan types to appeal to more borrowers. We also work with aspiring buyers through seminars, credit counseling, debt consolidation and financial education.”
Pam Stalling, executive director of the Consumer Credit Counseling Service of Northwest Indiana, said the issue is not just about black, white or even green — it’s about credit scores.
“Credit is critical, along with financial literacy. Each community is different. But we have to reach out and customize the products. We have to continue providing education programs for prospective home buyers and financial literacy programs,” Stalling said.
Posted by Richard Barber on Dec 11 2006 under Indiana
The release of the latest Office of Federal Housing Enterprise Oversight (OFHEO) data shows the Midwest has been hardest hit by the decline in the nation’s housing market.
Indiana had two cities on the list of the cities that showed the biggest year-by-year drops in the numbers of homes sold, while Michigan had six cities on the list, reports yesterday’s edition of the Terre Haute Star-Tribune.
The top three on the list were Anderson, Ind., finishing with a decline of 6 percent; Ann Arbor, Mich., was in second with -3 percent; and Kokomo, Ind., recorded -2 percent tying for third with five other cities.
Dawn Jarvis, a local real estate agent, attributes the numbers to the impact the automotive industry has had on the local economy. He has observed the increases in the foreclosure market, due to job losses in the automotive sector as one of the main contributing factors.
“With people leaving Anderson with the General Motors transfers there has been an increase in the foreclosure market,” Jarvis said. “The foreclosure market has increased since I started over 10 years ago.”
Dennis Jackson is a licensed real estate auction director and real estate agent in Anderson. He specializes in more of the alternative method of selling real estate through a public auction style.
He said the reason Anderson is hurting is that people just aren’t moving into the local community. Jackson noticed an upswing for September 1-November 15 but the summer months have been the weakest months.
Bill Carter, broker and owner at RE/Max Real Estate Group in Anderson, pointed out the numbers shouldn’t be a big surprise due to the amount of bank-owned and foreclosed properties in Anderson.
Carter said Ohio, Indiana and Michigan have all been hard hit due to their dependence on the automotive industry - and therefore, getting (or keeping up payments on) an Indiana, Ohio or Michigan mortgage has become impossible for many hard-hit residents.
The hardest hit metro areas in real estate:
- Anderson, Ind., -6 percent
- Ann Arbor, Mich., -3 percent
- Springfield, Ohio, -2 percent
- Holland-Grand Haven, Mich., -2 percent
- Greeley, Colo., -2 percent
- Kokomo, Ind., -2 percent
- Detroit-Livonia-Dearborn, Mich., -2 percent
- Warren-Troy-Farmington Hills, Mich., -1.5 percent
- Muskegon-North Shores, Mich., -1 percent
- Flint, Mich., -0.9 percent
The lakes region of Steuben County, Ind., remains a stable housing market, but speculators are jumping out as the industry slowdown continues, the Fort Wayne Daily News reports.
The number of available houses around the lakes, a popular location in the region that has exploded during the last several years, has increased. And now that many investors are trying to take profits, the market is becoming crowded with sellers.
And sales are taking longer to complete.
The same problems are occurring around the country as a slow housing market lingers after several years of price increases and building. Housing sales in Indiana dropped 1 percent in the third quarter over the same period last year. Decreases were recorded in 37 other states; U.S. sales were down 12.7 percent.
Jerry Kohart, a real estate agent at Coldwell Banker Roth Wehrly Graber in Angola, Ind., said the region had a good run for several years and remains optimistic about the coming year.
“It was probably a slowdown that was needed even though we didn’t want to see it,” he said. “People still need to sell, (people) still need to buy. That’s why it’s only off 6 percent.”
The area market has been off about 6 percent in number of units and dollar volume, which he said is not so significant. Lower Indiana home mortgage rates and sewer system installations in the lakes region, including Steuben County, helped fuel a major building boom in the area. Cottages were demolished and replaced with single-family homes and mansions.
Indiana’s Lakes Region has become a destination for year-round residents, in addition to being a popular haven for summer recreation.
Average home values in Steuben County increased 111 percent between 1990 and 2005, as lake property grew more and more popular. Last year, the 302 building permits issued in the county were a slight decrease from 2004. But the new units cost $55 million, a 22 percent increase over 2004, the highest value since 1990.
The rate of housing starts along the lakes has slowed down, but rebuilding on existing lots continues to remain strong after four or five years.
Home prices also dropped nationally and in the region as home mortgage loan costs have grown too much for many would-be borrowers. The third-quarter median single-family home price in the Fort Wayne metro area was down 4.8 percent from last year. Nationally, the median single-family home price was down 1.2 percent.
Ginger Forbes, an appraiser based in Kendallville but who works in Steuben County, said she had a busy summer working in the lakes region this year and expects a busy spring next year. Forbes generally is called in for home appraisals after the home purchase contract has been accepted.
“You always have a good market in Steuben County,” Forbes said. “I guess maybe people are a little more optimistic, they’re looking to spend money. I think people are feeling better about the economy.”
Posted by Richard Barber on Nov 27 2006 under Indiana
The unemployment rate is the lowest it’s been in years.
The stock market is at an all-time high.
Corporate profits are up 17 percent.
As we look to 2007, the economy appears to be in great shape, right? Well, that depends who you ask.
Economists, a professionally gloomy bunch, are worried, and a few of them are even using the dreaded “r” word, calling for a recession in 2007. One expert puts the odds at 80 percent.
There is, of course, a reason for the gloominess and it can be summed up by the fact that the U.S. housing market is taking a beating. In October, housing prices were almost 10 percent lower on average than they were a year ago, the largest yearly decrease since 1970.
The prices of new homes have taken the worst beating, plunging 33 percent just since April. More people are having trouble making mortgage payments. As a result, foreclosures are up nationwide, 43 percent higher than at this time last year, in fact.
We should have seen it coming. The bust in the U.S. housing market is not surprising, according to the Indianapolis Star. In June 2005, communities’ housing prices had risen into the stratosphere across the nation. One does not need to be a glum economist to believe that at some point those prices have to retreat.
The only question was: As mortgage rates increase, would the market cause the economy as a whole to sink? The answer to that question has still not been answered fully, but there are reasons to be pessimistic.
The most ominous sign was the recent report of Gross Domestic Product, the most common gauge of economic performance. In Q3 of 2006, the economy grew by only 1.6 percent, the slowest rate in 3 1/2 years.
There are other troubling signs as well, as U.S. manufacturers are reporting a slowdown in new orders, and construction of non-residential buildings is also on the decline. Of course, the favorable unemployment numbers would seem to be an argument against gloom and doom, but analysts are cautious in that regard as well. Most recessions begin at the point where the unemployment rate hits its low point of the business cycle.
Still, there are plenty who see home sales bouncing back or leveling off at worst, and nothing like a recession on tap for 2007. On top of good employment numbers, they point to falling oil prices, high corporate profits and an increase in world demand for U.S.-made goods.
“The effects of the housing correction will be entirely contained within the housing sector,” claims one economist.
So who’s right? There’s no crystal ball or macroeconomic computer model to divine the future. But the pessimists make a compelling case. Housing has fueled consumer spending through home equity loans and represents the most important source of wealth for most Americans.
The estimated value of residential real estate is more than $20 trillion, and anything that puts a crimp in that value is going to make consumers more cautious in the future. Some cities like Indianapolis have not seen a housing bust, and Indiana home mortgage demand hasn’t fallen hard. But in much of the rest of country, signs point to a serious market correction.
Mixed signals probably mean we will avoid the worst-case scenarios and the economy will avoid recession but limp through 2007. If they’re proven wrong, it wouldn’t be the first, or the last time. But a dim real estate market makes it more likely that the pessimists will be proven right.
