Citing 40-year low interest rates and prices depressed more so than at any time since the Great Depression, real estate is on the rise in a still somewhat vapid economy, one positive sign that it might change for the better.
Ed Petras, CEO of the Keller-Williams office in Avon, says that the housing market crash that helped send the economy into a tailspin has now reversed and Realtors are now seeing a positive climate that they’ve never witnessed before and may never see again.
“I don’t think we’ll see the same market dynamics in our lifetime,” he said. “I came out of the home building world (to be a Realtor) and right now, they’re all ecstatic. They’re all very happy with their inventory levels. We’re seeing here in Avon, they’re starting to turn dirt and develop lots again. That’s a very good sign that there’s not an over supply of lots and it makes financial sense to invest in raw ground. All of that creates jobs, and that makes a snowball effect.”
Petras said for his office alone in 2012, the volume of transactions made was more than $24 million. He said that drastic of an increase helped balance out the bottom of when things were a little more lean. With that, he said the office hopes to hire about 40 more full- and part-time agents within the calendar year.
“We’ve come off the bottom in terms of pricing and we’re starting to see price increases again,” he said. “Now that it’s rebounding, it’s a little easier to step onto their next home. If you look at the bottom that happened a couple of years ago, that improves equity position as well.”
Petras said Hendricks County falls in line with the remainder of the country. The website Credit.com notes that of the 361 metropolitan areas nationwide, so far in January, 242 of them are seeing growth, up from 201 in December.
“I think the fundamentals for Hendricks County are very good,” Petras said. “We have very good school systems and have a lot of people coming from inside the loop too. People cite the schools out here and the home prices as reasons for coming to this area.”
He said there is actually a lack of supply in some areas and with the federal government committing to keep interest rates at record lows, that will only continue. Still, he cautions that eventually there will be inflationary pressures out there that will force higher interest rates, so now would be the ideal time to buy.
“There’s no way rates will stay at this historic low,” Petras said. “The majority of the market is on the existing home side. The vast majority of homes that are sold are on the existing side, but with that inventory decreasing, the builder inventory will become more important. You’re well into 80 percent of the homes sold.”
Petras has been in the business for 18 years. The fallout from the housing market crash was that many real estate agents were forced to pick up second jobs or leave the industry all together. He says they’re coming back out of the woodwork and that shows signs of staying power in the industry, that it will come all the way back.
“I’m starting to hear well-established agents talking about bringing on assistants, bringing on buyer specialists,” he said. “Essentially, they’re adding staff and we haven’t heard that talk in a number of years. They had to cut their business to the point where now they want to add staff and leverage time into more dollar productive activities rather than behind the scenes office stuff.
“There were part-time agents that dropped out and we plan on recruiting some agents from other offices as well. We’ve got an aggressive growth plan and all of that is based on the market improving.”
All in all, however, Petras says to come all the way back, “we just need the credit pendulum to get more normal, so more people qualify.”
As far as the turnaround, he said he’s not surprised in the least.
“I think as we’ve gone on and gotten through the election, there’s a direction for the country and consumer confidence is starting to rebound,” he said. “People kind of have a comfort level on where things are headed, whether you agree (with the politics) or not.
“I still don’t think people’s job situations and the political climate have helped in any way, but people still get married, still have kids, and families grow. All those things have still been happening and you’ve had people sitting on the sidelines that have slowed a home purchase. You can’t sit on the sidelines forever.”
By the numbers
A one- and three-month review of local housing data reveals an increase in the number of closed sales in Hendricks County, according to a report from the Metropolitan Indianapolis Board of Realtors (MIBOR).
During October 2012 to December ‘12, the number of closed sales in Hendricks County increased by 34.5 percent when compared to the same months in ‘11. Closed sales increased by 31.9 percent in the December-only comparison within Hendricks County.
The median sales price in the county decreased to $137,700 in the October 2012 to December ‘12 comparison, a 1.3 percent decrease. During the one-month period of December 2012, the median sales price decreased by 3 percent to $142,000. The average sales price of homes in Hendricks County increased by 2.5 percent to $161,709 when compared to the same three-month period in 2011 and decreased by 0.5 percent in the one-month comparison to $156,826.
Additional key central Indiana findings for December 2012:
- Pending sales increased by 16.4 percent;
- Months of supply decreased by 26.9 percent to 5.6 months; and
- Closed sales increased by 13.4 percent.