Metro-area homes rise slightly in value [The Indianapolis Star 1/10/2007] Jan. 10--Home prices in the Indianapolis area rose an average 0.9 percent last year over 2005, with fast-growing Boone and Hamilton counties leading the way. However, the average price of existing homes sold in three of the nine metro counties -- Hancock, Madison and Shelby -- fell anywhere from 2.4 to 8.2 percent, according to a 2006 home sale report released Tuesday by F.C. Tucker Co., an Indianapolis real estate company. The modest uptick in the value of homes sold last year, to an overall average price of $156,612 in the metro area, was the result of a slight glut that developed in homes on the market, said H. James Litten, president of F.C. Tucker's residential division. "For the first time in many years, our (residential) real estate market became a buyer's market," he said. As a result, it took five days longer to sell the average house in the metro area last year. The average house sold in 82 days last year compared with 77 in 2005. Tucker's preliminary report on the area's residential market in 2006 also showed that sales of existing homes fell for the first time in six years, but the number of homes sold still was the second-highest ever. Home sales in the nine-county area slipped about 1.9 percent from 2005, according to Tucker's projections. The 30,449 homes sold in the metro area through the Metropolitan Indianapolis Board of Realtors last year compared with 31,032 in the record year of 2005, Tucker said. Another local real estate company, Landrigan & Co., projected similar residential sales numbers for the metro area last year. It put sales at 31,699 homes, down 1.7 percent from 2005. Final 2006 numbers from the realty association won't be available until the end of the month. Litten said the cooling of the housing market last year was almost a given, following a record-setting 2005, when interest rates dipped into the 5 percent range. "We dug so deep in the buyer well," Litten said. "A lot of people who were capable of buying jumped in" and bought a house, lured by the financial benefits, he said. The home-sales number is a key indicator of economic health, because home sales generate consumer spending on goods and services. The Indianapolis housing market looked healthier last year than in the nation as a whole, which was on track at the end of the third quarter to sell 12.7 percent fewer homes than in 2005, according to the National Association of Realtors. Compared with the nation, the Indianapolis area is more stable and less susceptible to the overheated demand and quick cooldowns in buying that occur in markets such as Florida, California and parts of the South and Southwest. "The Indianapolis area is often described as a 'savings account.' Home values almost always appreciate overall, but not at great rates," said the housing report put out by Landrigan. Area home sellers last year reaped the highest amounts in Boone County, where prices jumped 7.3 percent, and Hamilton County, where prices rose 3.3 percent. In Marion County, the average price for homes sold last year was the same as in 2005, although results varied by township. Single-family building permits in the metro area last year slid 26 percent from 2005, to 8,966 permits. The slowdown in home construction helped keep existing-home sales stronger than it would have been if builders had kept up their rapid pace of putting new product on the market. Litten said home sales in the metro area benefited from Indiana's relatively low unemployment rate last year that hovered around 5 percent. Job creation ranks with interest rates and consumer confidence as the main drivers of home sales, Litten said. Those factors also will largely determine the strength of the housing market in 2007, he said. To see more of The Indianapolis Star, or to subscribe to the newspaper, go to http://www.IndyStar.com. Copyright (c) 2007, The Indianapolis Star