Here is an except from the 2010 Annual Real Estate Report (the local residential observations and outlook). If you want a complete report, contact one of our agents. They will happy to send one your way.
Tippecanoe County Observations and 2011 Outlook
1. Observations
a. Tippecanoe County experienced almost identical patterns, successes and challenges associated with the Federal homebuyers’ tax credit as the nation, as a whole. All told, it had the effect Congress desired: to offer a fast and simple jump-start to the housing segment of the national economy. Did it, in and of itself, establish momentum upon which we still prosper? Probably not, but that is okay. I believe our current optimism is based more on small, but sustainable, improvements in core components of our economy (jobs, consumer confidence, business investment, etc.).
b. Mortgage loan underwriting standards continue to become more stringent. Documentation is required at every level of the approval process. Personal financial or credit activities outside of the norm do not unilaterally prevent a loan from being approved, but they make the process lengthy and stressful.
c. Appraising property is a challenge for both the appraisers and the users of the final document. Lenders are establishing tighter definitions of what qualifies a property to be a comparable sale; distressed sales, when used as comparable sales, drag down value; and the final appraisal is often underwritten/reviewed by an individual without the knowledge or experience of the local or regional appraiser who performed the assignment. We are seeing longer completion times and more appraisals below the sale price. Like many trends, this will pass and appraising standards will become more balanced.
d. There are bright lights on the local economic horizon. Many of our local employers are experiencing increased sales, creating demand for higher levels of production. They include, but are not limited to Wabash National, Caterpillar and SIA.
e. Both new hospitals are open, operating successfully, and receiving strong community and regional accolades.
f. We live in a state that leads the nation in strong fiscal control. The state will face large challenges as its legislators seek ways to create a balanced two-year budget, but we begin from a position of financial strength and respect. There are many states that would be happy to trade their financial positions with Indiana’s.
2. Projections
a. Economic progress will become more sustained and less sporadic.
b. Net job growth will equal the number of new workers entering the market. Unemployment will not decline significantly. However, the factors leading to job growth will continue to improve: GDP, the length of the average workweek and consumer confidence.
c. The state will find a way to balance our budget, but it will require cuts in dollars allocated to education and establishing new forms of tax revenue (i.e. sales tax on selected services, more user fees)
d. Existing home sales will increase by 2-4% with most of the growth coming in the $150,000 to $300,000 price range.
e. New housing starts will increase at the same pace, almost exclusively in existing developments
f. Home values will not increase in 2011, but on the other hand, they will not go down.
g. Buyer activity at the top end of the residential market will continue to be subdued in 2011. Confidence in this segment of the market will be the last to come back.
h. 2011 will be a year of moderate and mostly consistent improvement. The economy will need three to four years of gradual improvement to reach a new and sustainable healthy plateau.
