That’s right, one look at this graph and you just know that “somethin’ ain’t right.” The graph illustrates the growth in wealth (ie. Stocks, bonds, gold, silver, real estate, and cold hard cash) possessed by the top 1/10 of 1% of all U.S. citizens. Back in 1979, this group held 7% of the nation’s wealth. Today, they hold 22%. When the Fed prints money, they are the first in line. And when it’s time for elections, its money like this that finds its way into campaign funds on both sides of the aisle. 
About 19669247
2014— the Year in Review
When it comes to real estate, we live in two worlds. There is the national market which we hear about on the nightly news— and which is dominated by the boom/bust cycles of the outlandishly priced east and west coasts. The other market- the local market- is the one we buy, sell, and live in. The national effects us mostly in terms of what financing is made available (as those guidelines and prices are set in DC and on Wall Street), and “psychologically” (think of the constant message we hear).
PRICES across the country have risen for 33 straight months, but the amount of the increase is now running just half of what it was a year ago. Locally, we were up 5.4% year-over-year, for the 12 months ending in November. The local average now stands at $174,000. However, the median point (where half of all house sales are above or below) stands at $140,000. The median number is more important to most of us, as that is the market most people relate to. Local prices were growing more last summer and have cooled since (but that is consistent with previous years). Nationally, prices were pushed stronger a year ago when 43% of sales were cash. To be sure, it wasn’t the average guy in the street all of a sudden finding a wad of cash under the mattress and deciding to pay cash for a house. No, not hardly. It was wealthy investment funds, taking advantage of cheap money from the Fed, buying bank repo’s and turning them into rentals. When the Fed-induced bubble got too high, investors backed away and the real market took back over (and by this November only 25% of sales were cash). The investment firms largely skipped over Indianapolis in favor of places like Las Vegas and Phoenix— and we should be thankful they did!
CLOSED SALES in Central Indiana numbered 29,382 (down 2.7% from a year ago). Newscasters blamed this on last winter’s polar vortex. But I’m thinkin’ the job market probably had more to do with it. The official unemployment rate is down, however, if you read the fine print what you discover is that many people have either left the workforce (disability claims, early retirement, cash work, gone back to school) or taken a part-time job without benefits just to get by. Neither of those scenarios contributes much to increased home buying.
FINANCING- mortgage rates hovered in the 3-4% range (remarkably low by any historical measure). And now Fannie Mae & Freddie Mac are coming out with 3% down programs. That may help a few people to buy, however, what I see as the bigger issue is a large number of people waiting out short sales, foreclosures, and bankruptcies which occurred during the great recession.
First time homebuyers increased nationally to 29% of all buyers in November. However, this number is still hovering around the lowest reading ever. Why? The burden of student loan debt? Happy to live at home? Maybe, but a better bet might be job and income numbers among the 20 something set. Another unspoken factor just might be that many saw their parents get beat up in the housing market just a decade ago, and those wounds haven’t fully healed yet.
Locally, houses sold on average for 93% of their original asking price (the same as last year). Most houses sold after reducing their original price, and finally sold at around 98% of the final asking price. Some buyers got shut out because they didn’t pull the trigger soon enough or bring enough ammo to their bids.
All in all, those who wanted or needed to sell were able to do so reasonably close to their asking price. And buyers were generally able to find a good home at an affordable price (and even more affordable mortgage interest rates). I think most people will look back and say that the central Indiana market was rather healthy overall in 2015.
The Drive By
We’ve all done it… driven by the outside of a house to determine whether we like it or not. More often than not, we don’t (and we just know we wouldn’t like the inside, or the property as a whole, even if we did walk through it)— and we know that just by driving by! LOL
I’ve never kept tracked, but I’ll bet far more people talk themselves out of walking through a house, than get excited and say, “I can’t wait to see what the inside looks like!”
If you thinkaboutit, that makes little sense. You know, over the years I’ve developed a couple thoughts about the “drive by”…
First, don’t get me wrong, I think it’s a great house hunting tool- especially if you’re unfamiliar with a neighborhood, or not sure about the exact location. Although with the use of Google Maps and the Birds Eye View map function on the MIBOR.com website, you can pretty much determine if a house is located next to a factory or interstate (all in the comfort of your own home, with an adult beverage in hand, and in less time than it takes to back your car out of the driveway). Just sayin’! On the other hand, getting to know a new neighborhood is of great value, and for that reason alone I encourage people to drive by a house they think they might have interest in. If you pay attention while driving to and from, and maybe even drive around a few of the local streets, you can get a good feel for whether the houses and yards are taken care of, whether there is a large percentage of rental properties or foreclosures in the neighborhood, and how convenient it is to places like schools, church, the grocery store and transportation routes. Yes, for all of that, the drive by is a godsend!
On the other hand, driving by a particular house tells you very little beyond what you can learn from looking at Google Maps or driving around the neighborhood. (I’m assuming, of course, that the front yard is not overgrown with weeds or the front of the house doesn’t have paint peeling off in big globs.) I say that because if the neighborhood works for you, and the house is not next to a factory bellowing smoke, then irregardless of the front of the house, you owe it to yourself to take a look at the inside IF the inside has the stuff on your “must have list.” Thinkabout it… you spend over 90% of your time inside your home, and 90% of the rest of your time in the back yard (or more specifically on your back deck). I know this to be true. You see, I’m an outside guy. I grill out all the time- even in winter. I have a fire pit and use it. I come home from work, grab a cold one and head to the back deck (even when a sweat shirt is needed). And over the years, I’ve had that time largely to myself. I just haven’t seen many neighbors out doing the same. (And it hasn’t mattered what town or state I lived in, or what price home for that matter.) It’s a fact, most people spend almost all of their time inside their house. Most of the rest they spend on their back deck. About the only time 90+% of the people are in their front yard is to mow it. About the only time they spend looking at the front of the house, is when they drive into their garage. So, making a decision about a house’s worthiness as a home by driving by it just doesn’t make good sense.
You mostly live inside your home. PERIOD. So, do yourself a favor. Use the drive by only to rule out neighborhoods and houses in proximity to factories, interstates and the like. Make it a habit to find reasons to look inside of houses that are on the market. You’ll learn more about what you like and don’t, about how much house you can get for your dollar, what constitutes a good deal… and you’ll discover many more great home options to choose from!
STOP LOOKING & START FINDING!!!
Call me… “I work harder to make good things happen!”
