Homebuyers are paying the highest prices since 2008 for local houses, and the number and type of homes available can’t keep up with demand.
Buyers should expect to find higher prices and fewer options, local agents said. And if you’re ready to leave that starter home and move into a larger home, building new might be your best bet, they said.
In March, the average selling price for houses in Johnson County rose to about $157,000. That’s 11 percent higher than last year and 20 percent higher than 2009, right after the recession set in.
The number of foreclosed homes for sale is down significantly, and the overall number of homes listed is low, both of which help drive up prices, Metropolitan Indianapolis Board of Realtors spokeswoman Claire Belby said.
Demand has been high enough that sellers who don’t price their homes too high often get multiple offers, including some that are thousands more than the list price, according to Susan McClain, managing broker for Century 21 Scheetz. She said those offers are coming in quickly too, so much so that a person might get an offer in less than a month.
Agents usually have about six or seven months’ worth of houses to sell, but that average has dropped to about four months or lower, Belby said.
While starter homes priced in the $75,000 to $150,000 range are selling fast, buyers looking for something in the $200,000 to $250,000 range are struggling to find a house to buy. There just aren’t a lot of homes available in that price range, McClain said.
Builders are responding to that shortage. New subdivisions are being developed for the first time since before the recession and are being filled with midrange and higher-end homes. A new subdivision in the Center Grove area, The Sanctuary at Harrison Crossing, will have homes ranging from $216,000 to $380,000, while Homesteads at Hillview in Franklin will range from $250,000 to $400,000 or more.
In April, the average price for new homes being built in the unincorporated parts of Johnson County, including the Center Grove area, was about $287,000, according to county building permits. Developers are focusing on that price range because residents who got established in smaller homes may have larger families or better jobs and want to move up, McClain said.
‘That’s not normal’
The economy has improved, so people have more money available to buy a house. Prices also are going up, so people are seeing homes as a good investment again, Belby said.
But she said one of the main
problems facing buyers right now is a low number of homes for sale.
In the first quarter of this year, 725 homes were listed for sale in Johnson County, compared with 965 in the same period in 2010. Foreclosures, which typically sell at lower prices, have gone from about 25 percent to 15 percent of all homes for sale across central Indiana, which helps to increase prices, Belby said.
Sellers are more likely to get close to their asking price, or in some cases more, McClain said.
“We are seeing quite a few multiple offers that go above list price. That’s not normal,” McClain said. “I’m going to say our norm is we’re still probably just under list price for average sale price, 97 or 98 percent of list price.”
Families often have no problem selling a $125,000 home. But the sales are happening so quick that some buyers are having to rent or move in with family for a short time while continuing to hunt for something new, she said.
‘Need that extra inventory’
David Brenton, owner and broker of David Brenton’s Team on the southside, sold more than 300 homes last year in the area, with an average price of $150,000. Those prices were up compared with 2012, but the average home price for the county typically stays in the $100,000 to $150,000 range, mainly because that’s the most widely available home, he said.
Pricier homes in the Center Grove area do pull the average up, but most of the homes are in less-expensive subdivisions that you can find in areas such as New Whiteland, Whiteland and Franklin.
Those communities also want to attract higher-end homes. Residents in Whiteland fought against a large subdivision that was proposed to have small lots and home prices around $160,000. Franklin officials also want developers to build more high-end subdivisions since the city lacks available homes that cost more than $300,000.
Lower-end subdivisions also aren’t being built because many of those companies that built and developed those types of homes are no longer in business, such as C.P. Morgan, Johnson County planning and zoning director David Hittle said. Many of the newer subdivisions also are building with higher-end materials such as brick, stone or composite siding that increase building costs, Hittle said.
Much of the new building is higher-end because that’s what in short supply, McClain said.
“We’re really just starting to see the building side take off, and they’ve done a lot of research and I completely agree with them. We really need that extra inventory in that midrange area,” McClain said.
The Builders Association of Greater Indianapolis expects people will want about 18 new homes costing $175,000 or more each month this year, chief executive officer Steve Lains said. That’s a little lower than the demand of 22 homes per month under $175,000, but those types of homes make up most of houses in the county, so demand is usually higher.
New subdivisions are needed with midrange and upper-end houses, while large subdivisions with starter homes may still have lots available for new houses, Lains said.
On the rebound
Home prices have hit the highest point since 2008. Fewer foreclosed houses for sale and a low number of homes listed have driven up prices. Here’s a look at the average home sale prices in Johnson County during March for the past seven years:
March 2014 $156,799
March 2013 $139,551
March 2012 $134,284
March 2011 $148,595
March 2010 $131,066
March 2009 $130,601
March 2008 $139,466
SOURCE: Metropolitan Indianapolis Board of Realtors
Value of new homebuilding permits filed in April:
Haywood Road, Greenwood, Wakefield West subdivision
Oval Place, Greenwood, Harrison Crossing subdivision
Shady Ridge Row, Greenwood, Shadow Ridge Village West subdivision
Raintree Boulevard, Greenwood, Raintree Village subdivision
Oakvista Drive, Greenwood, Brookhaven subdivision
Haywood Road, Greenwood, Wakefield West subdivision
SOURCE: Johnson County Planning and Zoning