The housing bust has come to this

July 14, 2009
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For a peek into just how hard the housing bust has hit the Indianapolis area, look no further than a new study by the Indiana Business Research Center, an arm of Indiana Universityâ??s Kelley School of Business.

The region, long considered one of the stateâ??s bright spots, has lost much of its luster, at least temporarily. The reversal is so pronounced that, believe it or not, youâ??d have been better off buying a house in Madison County, home of Anderson, the once-teeming General Motors bastion, than next door in prosperous Hamilton County.

The study looked at median seasonally adjusted annual home sales prices from 1990 to 2008, and found that Hamilton and Marion counties showed some of the weakest gains. Each had average increases of just 1.5 percent.

A home in Hamilton County would have fetched a median price of $112,280 in 1990; by 2008 the figure had grown to only $145,920.

And gains were little better elsewhere in the Indianapolis area.

Why did Hamilton and Marion counties fall out of bed? They appear to have benefited more from the housing boom and then were hit harder when it fizzled. Hamilton County saw median prices climb to $173,100 when its peak occurred in 2005.

Keeping this in perspective, Hamilton County still has some of the highest sale prices in the state. And the county still is benchmarked among some of the wealthiest in the nation. The housing downturn doesnâ??t necessarily imply everyone in Carmel or Fishers is suddenly poor.

What do you forecast for the housing market in the Indianapolis area? How long will it take for prices to recover?
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  • Could the drop in home values in the Hamilton County area - and maybe a little in Marion be a result of a lot of the Tract-Subdivisions companies that are no longer in service and have abandonded a lot of their developments. I know in those of have exited the market, those homes were sold dirt cheap to investors, future homeowners, or other developers. Even if it is a sale to another developer, I'm sure they have had to greatly discount those houses because of the development not being complete and trying to sell off the large supply of these hideous flat-back, no tree, no sidewalk, siding falling off in 5 years developments.

    Prediction: Expect prices to drop even more in the suburbs in about 4 years, as these shoddy built starter homes start to crack, lose siding, and continue to be a drain on energy resources because they are built with the worst materials.
  • I'd guess there are a lot of lower income people in Indianapolis who bought houses and couldn't support them.
  • Mike,

    Having looked at a number of house packages delivered to home sites around the city from various production builders and comparing the material to the goods sent to custom home builders I have to disagree w/you specifically relative to the structural shell.
    ProBuild (Carter-Lee) as an example (I don't work for them) send the same studs and OSB as well as insulative sheetings. The same can be said for the paint grade trim. Andersen windows are Andersen windows.

    Most of these homes are engineered and built in factories and as such the design and fabriaction my be more consistant than a site built residence. I don't want to debate the custom builder vs. production builder issues but accepting a few production folks who are gone now the current builder community is not that much different than the car manufacurers. Tuesday thru Thursday they build pretty good stuff but the Monday and Friday stuff might not be so good.

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