What will happen to Hendricks County and Central Indiana real estate as 2020 progresses? Let me start off by saying this is not like 2008 where we had the housing and mortgage crisis that caused that recession. The last few years we have had a housing shortage, which has caused prices to increase quite a bit. At this time it's a little early to know the full impact the virus will cause, but we'll dive into many different aspects that will likely impact real estate prices in some way.
Current Market Trends:
- As expected, showings for active buyers went way down starting in mid March. However from April 12th onward showing activity has trended back up quite a bit.
- For appropriately priced houses under around the $200k range we are still seeing plenty of showing activity and multiple offers.
- New construction home sales have stalled. Buying new construction means paying top dollar, so that is usually the first to struggle during an economic decline.
- Many sellers who planned to sell are holding off listing because they are afraid of bad timing. But some sellers are moving up listing their home because they are afraid of future values later this year and into next.
- Many buyers have hit pause on their home search to let things play out. Other buyers have kept looking and enjoyed less buyer competition and nervous sellers more willing to negotiate.
- Lender requirement changes have started. Many lenders are increasing minimum lending requirements to protect themselves more. Pending transactions with preapproved buyers have fallen through because some lenders have tightened their requirements overnight, and those buyers no longer qualified. Yikes!
Future Negative Real Estate Market Trends:
- Job losses. This is a big one, and we really will not know the impact on this until much later. A lot of people are losing jobs now, but how quickly will they be rehired as we try to get back to normal?
- Foreclosures. These are all on hold right now due to executive orders, and many lenders are working with impacted homeowners. However, this can only go on for so long. Just prior to this, foreclosure rates in Hendricks County were very low. However, the amount of long term job loss or pay reductions will cause a large increase in foreclosures, mostly for 2021.
- Hendricks County has an abundance of new construction neighborhoods in Avon, Plainfield, and Brownsburg selling for similar price points ($275-375k). They will likely be battling for buyers moving forward, resulting in lower prices, and/or larger builder incentives.
- With almost no travel happening, short term rentals, and vacation rental owners have been hit really hard. Vacancy rates are nearly 100% for many. This is causing owners to shift into finding long term tenants, or listing them for sale, which adds more inventory to the market.
- Rental property owners are also taking a hit. Many tenants have lost their incomes, and the owner still has to pay the mortgage and expenses. Additionally, with the eviction freeze and soon to be bogged down court system when it opens back up many owners will lose many months of payments. Most of the mortgage forbearance benefits do not apply to many types of investor loans. This could cause an increase in new listings later this year. Generally these rentals are all under $200k houses, so this could be good for first time home buyers. But this could also cause an increase in rental prices, due to less supply.
Were you planning on buying or selling in 2020?
For buyers and sellers it's important to keep a close eye on the market before making a decision. Reach out to me, or your real estate agent to have a discussion about your situation and the current economic conditions. For many buyers and sellers it will be best to wait, while for others now is still the right time to buy or sell. One thing is for sure...wash those hands and stay healthy!