Local high-end home sales in deep slump

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Larry Rasmussen is a veteran real estate agent who has built his practice selling homes in the toniest neighborhoods of Carmel and Zionsville.

But a brutal housing market that has been particularly unkind to wealthy sellers is forcing Rasmussen to compensate by listing more modest-priced homes.

“It’s not something I would normally do,” said the broker/owner of Century 21 Rasmussen Co. Inc. in Carmel. “But it’s something I learned to go back to.”

He’s not alone. Sales of higher-priced homes nationally have slowed to a glacial pace. In the Indianapolis area, the supply of homes for sale above $1 million has risen from three year’s worth in 2007 to more than eight year’s worth, according to the Metropolitan Indianapolis Board of Realtors.

By contrast, the supply of all homes for sale in the region during the same time frame actually dipped slightly, from 9.3 months to 8.9 months.

The high-end market is just a tiny sliver of the overall housing market, representing less than 1 percent of all homes, analysts say. The average listing price for million-dollar-plus homes now on the market in the Indianapolis area is $1.75 million.

The average time a high-end home stays on the market has risen from 115 days in 2007 to 176 days during the first six months of this year, according to statistics compiled by F.C. Tucker Co. And through the first six months of this year, only 18 homes priced at more than $1 million have sold in the nine-county area, compared with 39 during the same time frame two years ago.
The glut of lavish homes on the market is leading some sellers to slash prices in hopes of attracting a buyer. Shelly Walters, an agent at Keller Williams’ metro north office, lists a home in the exclusive Oak Brook neighborhood in Carmel for $850,000. The price of the 8,200-square-foot house, on the market for two years, started at more than $1 million.

Another one of her homes, in Noblesville, lists for $1.1 million. The five-acre property features a 2,500-square-foot carriage house and 1,200-square-foot tree house, as well as an indoor basketball court. It’s been on the market since February 2007 and has drawn just one showing.

“In any other year, people would be clamoring to get into these neighborhoods,” Walters lamented.

So what’s the problem? One contributing factor is that financing for higher-price loans, known as jumbo loans, is harder to get. Banks often want 30 percent down and six months of mortgage payments in reserve.

Loans up to $417,000 are considered “conforming” and can be sold to mortgage-finance giants Fannie Mae and Freddie Mac, which also guarantee them when they resell the mortgages to investors.

Loans between $417,000 and $729,750 are “conforming jumbo” and loans above $729,750 are “super-jumbo.” Fannie and Freddie back only conforming jumbos.
Lenders are leery of making loans above the amount the two will guarantee, because if a jumbo loan borrower defaults, it’s harder for a bank to quickly sell a more expensive foreclosed property.

Making matters worse, the secondary market for super-jumbo loans once occupied by the likes of investment brokerages AIG and Bear Stearns has shriveled, causing interest rates to rise.

Rates for a 30-year jumbo mortgage are running between 6.5 percent and 7.5 percent, compared with the 5.12 percent to 5.35 percent interest rate conventional 30-year mortgages currently demand.

The steeper rates are contributing to the inactivity, and are hurting not only real estate agents but mortgage brokers as well.

Bill Clouse, president of Indianapolis-based W.R. Clouse & Associates Mortgage Co., has made a living brokering jumbo loans for homes on the north side of the city, and in Hamilton and Boone counties.

The dearth in activity has depreciated the value of his average loan from $325,000 to $265,000, he said.

“It’s bone dry,” he said of the jumbo loan market. “I have to do an awful lot more units than I had to do in the past.”

Karen French, a real estate agent at F.C. Tucker Co. Inc., attributed the sagging market to a lack of consumer confidence.

The population that can afford higher-end homes has either lost money in the stock market, or in the value of their own homes, and are choosing to stay put, she said.

“Our sellers can’t believe their houses are not worth what they were two years ago,” she said. “We’re having a hard time telling them only the very best-conditioned and well-priced house has a chance to sell.”

Even then, that may not be convincing enough. French typically might sell four or five million-dollar homes in a given year, but this year has yet to collect a commission on a single one, despite listing several. The highest-priced home she sold this year fetched $645,000.

For more on this topic and photos of high-end homes, check out the latest At Home Quarterly.


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  1. Why not take some time to do some research before traveling to that Indiana town or city, and find the ones that are no smoking either inside, or have a patio? People like yourself are just being selfish, and unnecessarily trying to take away all indoor venues that smokers can enjoy themselves at. Last time I checked, it is still a free country, and businesses do respond to market pressure and will ban smoking, if there's enough demand by customers for it(i.e. Linebacker Lounge in South Bend, and Rack and Helen's in New Haven, IN, outside of Fort Wayne). Indiana law already unnecessarily forced restaurants with a bar area to be no smoking, so why not support those restaurants that were forced to ban smoking against their will? Also, I'm always surprised at the number of bars that chose to ban smoking on their own, in non-ban parts of Indiana I'll sometimes travel into. Whiting, IN(just southeast of Chicago) has at least a few bars that went no smoking on their own accord, and despite no selfish government ban forcing those bars to make that move against their will! I'd much rather have a balance of both smoking and non-smoking bars, rather than a complete bar smoking ban that'll only force more bars to close their doors. And besides IMO, there are much worser things to worry about, than cigarette smoke inside a bar. If you feel a bar is too smoky, then simply walk out and take your business to a different bar!

  2. As other states are realizing the harm in jailing offenders of marijuana...Indiana steps backwards into the script of Reefer Madness. Well...you guys voted for your Gov...up to you to vote him out. Signed, Citizen of Florida...the next state to have medical marijuana.

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  4. Apparently the settlement over Angie's List "bundling" charges hasn't stopped the practice! My membership is up for renewal, and I'm on my third email trying to get a "basic" membership rather than the "bundled" version they're trying to charge me for. Frustrating!!

  5. Well....as a vendor to both of these builders I guess I have the right to comment. Davis closed his doors with integrity.He paid me every penny he owed me. Estridge,STILL owes me thousands and thousands of dollars. The last few years of my life have been spent working 2 jobs, paying off the suppliers I used to work on Estridge jobs and just struggling to survive. Shame on you Paul...and shame on you IBJ! Maybe you should have contacted the hundreds of vendors that Paul stiffed. I'm sure your "rises from the ashes" spin on reporting would have contained true stories of real people who have struggled to find work and pay of their debts (something that Paul didn't even attempt to do).