Central Indiana's housing market is on track to notch gains in the number of homes sold and the average sales price in 2010, according to a forecast from locally based F.C. Tucker Co.
Meanwhile, a drop in homes available for sale—from a peak of 20,000 last year down to about 14,000 in December 2009—should help kick-start new-home construction in 2010.
The area's largest residential real estate brokerage plans to present the report Wednesday afternoon as part of the annual State of Real Estate event at the Murat.
“I think you’ll see more stability in the residential housing market in 2010,” Jim Litten, Tucker's president of residential real estate, told IBJ. “The free fall we were in the first quarter last year, I believe we’re through that. I don’t think you’ll see the market roaring back. We expect stabilization; we don’t expect it to go crazy.”
Litten credits the federal government's stimulus efforts, including an $8,000 tax credit for first-time home buyers, for helping stabilize the residential market. He said the credit's extension through the end of April, along with a new $6,500 credit for move-up buyers, should continue to bolster the market.
Home prices in central Indiana fell 3 percent in 2009, far better than the national average of about 11 percent. And F.C. Tucker is predicting slight gains in 2010, "as inventory tightens, interest rates remain stable and the local economy builds more momentum."
The company predicts the average sales price for the nine-county region will rise about 1 percent, to $142,000, from $139,000. The company expects the number of existing homes sold in central Indiana will rise about 3 percent, to 25,500 this year, after falling 2 percent in 2009.
Tucker also is calling for the inventory of homes for sale to continue to fall. Some homeowners who were waiting for a better market to list their home for sale will jump in, but the increase likely will be offset by fewer foreclosed properties hitting the market.
The number of foreclosures in central Indiana fell sharply in 2009, to 31,876, Tucker reports.
"We predict even fewer foreclosures of single-family homes in 2010, as the economy improves and fewer home owners are forced to abandon their homes because of job loss or financial emergencies," the report predicts.
Fewer homes for sale will lead to a more balanced market and should spur an increase in new-home starts, which were down about 20 percent in 2009 and more than 75 percent from the 2005 peak. Tucker predicts builders will pull about about 5 percent more permits than the 3,600 permits they pulled in 2009.
Whether the housing market's improvements are sustainable comes down to employment, Litten said.
In the report, Litten predicts the state's unemployment rate will fall below the current reading of 9.6 percent, but he doesn't venture a guess by how much.