High unemployment and rising job losses in construction, retail sales, agriculture and auto related industries are pressuring the Indiana economy, and slowing any sort of real recovery in the housing market. A lift in home sales with temporary government tax credits to motivate buyers is not yet producing a full recovery.
In Indianapolis lower home prices and the federal tax credit have produced a surge in sales. The expansion of the program is likely to increase the number of move-up buyers purchasing homes in the early half of the year. But when the government incentives are taken away the housing market in Indianapolis will have to stabilize on its own before achieving stabilization, the first step in the recovery process in real estate. That will translate to housing deflation forecast at 6.3% in 2010.
In Fort Wayne the housing market has also improved with more sales of single family homes, but prices are still falling. The rise in sales has been experienced in the lower price ranges. Another round of foreclosures is projected to slow the market in the early part of the year as more homeowners thrown out of work or down on their luck walk away from their homes due to foreclosure.
The average price, however, of a home in Fort Wayne is much cheaper than other areas of the state, which should act to bolster the market’s recovery in time. Before that develops banking guidelines to qualify for a mortgage will need to be loosened. Fort Wayne home prices are forecast to decline another 4.3% in 2010.
Bankers are selling foreclosures on the cheap in South Bend, the home of the Fighting Irish football team at Notre Dame. The foreclosure epidemic has hit South Bend hard as parents of college students laid-out the cash for down payments while their kids were attending college in efforts to make a wise investment. Many are now at risk of foreclosure. South Bend is forecast to average housing deflation of 7.3% by year’s end.
A waiting inventory of vacant homes sits in Gary, Indiana once a major hub of the steel industry. With one of the highest unemployment rates in the country, Gary is a shadow of its former self.
Light manufacturing factories have replaced much of the steel production in Gary producing paper products, plastic cups and food products. A growing tourism trade aided the economy for a while until the financial crisis struck. Home sales were lifted as a result of bargain prices, but are fairly sluggish these days. Gary is forecast to sustain average housing deflation of 8.8% in 2010.