Pushed by the federal home buyer tax credit, home sales increased in Indiana, but then nearly fell off the charts after the credit expired. A recessionary economy, anchored in high unemployment and debt has turned the housing market into a long lasting depression in Indiana as foreclosures mount and homeowners increasingly walk away from their homes. Joblessness halts many possible homeowners from purchasing homes.
In Indianapolis, the largest metropolitan area in the state, federal aid helped the market to temporarily push home values higher, but then declined as efforts failed to sustain any sort of meaningful recovery. High unemployment in construction, retail sales and auto related industries are pressuring the local economy, and halting any real sort of a recovery from developing in real estate.
Sluggish home sales are projected to be sustained through most of 2011 as upside down homeowners grow increasingly dissatisfied with government efforts to bring about change to improve market conditions. Indianapolis has more than a 10-month inventory of homes and condos on the market that will have to be reduced before the market begins to stabilize, the first step in the recovery process. As a result of the market weaknesses, Indianapolis home prices are forecast to decline an additional average of 5.9% in 2011.
Another wave of foreclosures is expected in Fort Wayne during the year, providing more discounted properties for investors and first time buyers, but damaging the housing market. The downturn could take a number of years before any long term improvement develops without major government intervention.
Fort Wayne homes are generally less expensive than many other areas of the state, providing a natural strength for the market, but that will offer little relief for those thrown out of work in the area having trouble making mortgage payments. Rigid lending guidelines will have to change before things are able to improve in Fort Wayne, which is forecast to sustain average housing deflation of 5.2% in 2011.
In South Bend high unemployment is only worsened by underemployment, which may be reaching into the 20% range in real terms as those who have been thrown out of work grow increasingly disillusioned. The foreclosure crisis that has hit South Bend is leaving some neighborhoods in ruin as homeowners give up on making mortgage payments. South Bend is forecast to average housing deflation of 6.1% by year’s end.
High unemployment and high crime rates make for formidable foes in Gary, once a powerhouse city in the days when the steel industry employed hundreds of thousands of workers in the U.S. Now neighborhoods are all but vacant with homes and Gary is a shadow of its former self. Light manufacturing factories dwarf the steel produced in Gary with paper and plastic. Home sales aren’t expected to return to any sort of healthy balance in Gary for a number of years with home values forecast to deflate an average of 9.8% in 2011.