You may be surprised to know that taking advantage of current favorable interest rates on the purchase of a $300K home (30 years) after the tax incentive program was actually a great business decision.  Compare the monthly payments of the available rates earlier in 2010 at the annual rate of 5.125% to the more recent rates now of 4.75%.  The difference in the total payment over the life of the 30 year loan is $22,320.  At this price range we’ll utilize the smaller of the two tax credits since this buyer was not likely a first time buyer.  Missing the $6,500 government tax credit was a blessing in disguise.  You would have made $15,820.  This is one case where procrastination paid dividends.

This activity is leading to more Fishers, Carmel, and Indianapolis home sales, which I expect to continue through April 30th at a minimum. We keep track of home inventory on a monthly basis breaking down homes for each price level for many areas around Indianapolis. What I am seeing is a very healthy inventory level (below 6 months) for sellers and buyers at median and below price points. As the price increases, the inventory levels jump and there is much more pressure on seller’s—buyer’s have the upper hand in negotiation and quality of product for their money. The price point where the homes are typically discounted depends on where the home is located. For example, Lawrence Township home inventory can vary greatly from Fishers, which will affect the price you can get for a property. That said, there are sporadic good deals in all price ranges due to distress sales. Email John@JohnPacilio.com with questions on your specific area.

Hamilton County Indiana Residential sales are going to pick up in the first quarter. 

Many people ask if they should wait until spring to list their homes in the Indianapolis area.  They have the perception that buyers wait until spring to go after properties.  Reasons that they feel this way range from the obvious—It looks better with green grass, flowers, or more leaves on the trees—to the feeling that “no one looks for a home January through March”.  Data over the last several years supports the fact that yes, homes do sell when there are snowflakes and shorter days.  In fact, historically approximately 20 percent of homes sell this time of year (excluding the plunge in selling activity early in 2009 due to unprecedented intensified fear from the banking industry meltdown).  Based upon the quantity and quality of the homebuyer phone calls that I have received over the past month, we are going to have an incredible amount of sales for the first quarter.  Due to the perception of the market, people will wait to list their homes until Spring.  There will be buyers ready the first part of the year with a lower home inventory to choose from and will select from those on the market.  

We have determined in our research of monthly residential inventory levels that there is a definite price point where the market is strong and another where competitively priced homes are forcing motivated sellers to negotiate more.  I find the line is approximately $450,000.  Below this price point, homes inventories are between 3 and 6 months, a very favorable level.  Above this line as we look at prices increased incrementally into higher and higher priced luxury homes, the buyers are offered extreme bargain prices.  The higher the price, the better value for the buyer.  Supply is high and demand relatively low so a motivated seller must be open to negotiate.  At lower prices, well-priced listings are selling at a good rate within 96% of the list price. 

Continued low interest rates, $6,500 for sellers who have been in their property for 5 years, and $8,000 for First Time Buyers will continue to provide the incentive to homebuyers in Carmel and Fishers.  List your home in the beginning of January to increase your chance to sell in 2010. 

Type:  Traditional

Age:   Built in 1995

Location:   Near 116^th  Street and Gray Road

Neighborhood:   Windpointe is an exclusive community featuring a freshwater lake surrounded by a 1.5 mile walking path, fully furnished clubhouse, four tennis courts, and three swimming pools.

Square footage:  7359 including 1386 in the finished basement. 

Rooms:   This six-bedroom home offers six-and-a-half-bathrooms, two-story great room, main floor master, main floor in-laws quarters with two bedrooms and bath, large bedrooms, loft, and second floor office.  The finished basement has a home theater, fireplace and wet bar. 

Strengths:  This luxury home is located on 1.1 acres and has a beautiful lake view including a dock.  The six-gar garage is perfect for car enthusiasts with a separate heating and cooling system, epoxy floors, wet bar and basement with a lift for storage.  Price pressure in the high end market is allowing bargain values like this compared to the recent past. 

Challenges:  The closets are compact for this size of home.  The walking path runs between the lake and the home.

WHAT’S IT WORTH?    $800,000

WHAT’S IT WORTH?

Type:  Traditional

Age:   Built in 2001

Location:   Near 146^th Street and Carey Road

Neighborhood:   Foster Estates offers a swimming pool, clubhouse and easy access to the Monon Trail and Clay Terrace.

Square footage:  4706 including 1358 in the finished basement

Rooms:   This five-bedroom four-bath home offers a bright open floor plan with two-story entry, formal living and dining rooms, great room with built-ins, main floor 5^th bedroom that is currently used as an office, and finished basement with full bath.

Strengths:  The main floor bedroom/office is something many buyers look for in this price range.  This home is set on nearly a half-an-acre lot with basketball court.  This is a great opportunity for the move-up buyer to take advantage of the $6500 tax break. 

Challenges:  There are currently four other homes in the same price range for sale in the neighborhood.    

WHAT’S IT WORTH?    480,000

There is now an opportunity to reach out to buyers anywhere in the world.  Our community borders have just opened.  Carmel and Fishers properties can be presented to qualified buyers through personal introduction in most places around the globe.  I utilize a new, structured real estate international marketing system linking the power and efficiency of worldwide professional agents who specialize in their respective areas to promote a property from our area.

The core of the concept is that your local professional has a common goal and business agreement with like-minded, United States and International agents to sell a Carmel or Fishers property.  This group of real estate agents is committed to introduce a Carmel property to their best clients.  There are more opportunities to sell a local property through a process that provides a personal introduction from a trusted advisor. 

We are able to package the city of Carmel along with the property showing our new cultural opportunities here such as the Performing Arts Center and Arts & Design District to promote the city along with the property.  There are not many places around that offer the quality of life at such a low price.  We have an incredibly inexpensive cost of living and unbelievably low property values compared to many other states and countries.   

One recent investor client from the Far East described to me that land values in her country as ten times higher than ours.  These, and many other investors are looking to purchase here for a great value.  A powerful package of the city along with the impact of relatively low property cost through a quality personal invitation opens more buyers to sell a luxury home, residential investment, or commercial property.  The process of linking outside buyers with local sellers generates increased activity in pockets where the market is soft.  More buyers is exactly what the sellers tell us we need right now.  This international system stimulates buyer activity and sales.

Right here in Carmel, The O’Connor House is non-profit organization put in place to protect pregnant, single women.  The many volunteers are proud of the 37 newborn babies and mothers that have been supported since the home opened.  Currently there are five women, three toddlers, and three babies that are supported in their current home.  These women are on their own with no where else to turn for help for themselves or their other children.  The demand for help is much larger than the home where they live.  Many women are on a list waiting for the opportunity during their time of need.  This charitable organization has been pushed to expand their capability to help more women and as a direct result, a larger facility is necessary.  Driven to help more, the board of directors is collaborating on a financial grant that would provide them with substantial resources for real estate.  If awarded, the grant will be available for purchasing, building, or expanding a home to support up to twice the women.  A specific property must be identified in the proposal.  The board is considering vacant land, existing homes, and multifamily homes.  Their preference is the property in close proximity to their volunteer base and convenient for public transportation, since most of these women are employed.  If you own or know of a property that may have potential for The O’Connor House, please contact me so that we review our specifics of the real estate to see if there is a match.    

As with many non-profit organizations, the operating capital to run the home is a constant effort as it is completely funded by gifts of charity.  Your tax deductible donation to help support operating costs may be provided at www.theoconnorhouse.org. 

The recession was led by housing and will be led out by housing, so it is wise to keep up to speed on where things are heading.  It is critical to know what is going on if you own and invest in real estate. 

The data is in and home sales are steady due primarily to the first-time buyers and investor market.  We did see some significant move-up business in price points below the luxury price range throughout the year due to our great cost of living in the Carmel and Indianapolis area.  The move-up buyer seems to be missing from many other markets in the country.  I know for a fact that the first time buyer incentive offering an $8,000 tax credit is sparking people to move forward who would have stayed on the sidelines especially in the $250,000 and under price points.  The investor buyers are also spurring activity, finding great values, and are able to find a larger pool of renters in this market.

According to new monthly data compiled by RE/MAX of Indiana, we see sales of homes in the Indianapolis market holding steady comparing the previous month.  The median home price in the Indy metro area was off slightly from the prior month at $123,900, meaning that half the homes sold for more, half for less.  However, the value was the second highest since July 2008.  Average price for the Indy metro area was $155,190.  Hamilton County continues to be one of the most stable locations in the area where just 6% of sales recorded were listed as foreclosures.  About 21 percent, or more than one in five sales in the entire Indy Metro market, were foreclosures.  Broker Listing Cooperative provided by MIBOR statistics show that the median price of foreclosures is very low, at $57,950 so this really pulls down the median data of all homes.  Median price in Hamilton County was down about 10% from the same month a year ago, to $184,475 from the same source.

For more information please visit the link on www.JohnPacilio.com of the INDY Channel 6 News report where I discuss the real estate market. 

High quality at a low price never seems to hold true, but this is reality for High End homes in Hamilton County.  If you have money to invest, have stability in your business, or provide a skill set that proves to be in high demand, I recommend that you buy a luxury home right now.  Nowhere is there better opportunity than the upper-tier homes.

Why?

Surplus Inventory.  This is found with a simple calculation determining rate of homes sold each month compared to homes active on the market.  A 6 month inventory is a great balance between seller and buyer.  Right now, depending upon location, luxury home inventory is measured in years.   In most areas there is at least 2 years and some up to 5 years of luxury home inventory.  There are great buys out there that cannot be replicated for the price.  I have never met a home builder that will start a project with a plan to lose money.  Additionally, the cost of building materials has proven to increase over time.

What will you need?

Ample cash or flexible seller financing.  Get a loan at 417K or below for the best interest rates.  Above this loan amount will require 20% down-payment and a higher interest rate.  Seller financing may be a viable option when the seller feels that you may be their only buying option or they gain a better price for the home.

How do you find a great deal?

Compare.  First, take a look at new construction properties on the market.  If the home has had a one year birthday, it is likely that the bank may be involved in the negotiations in a short sale.  There may be no further profit left for the builder, but there are many incentives for them to sell the property prior to foreclosure.  These homes are great investments since they provide modern floor plans and reduce hidden out-of-pocket expenses compared to older homes.

Be flexible in location.  There are certain areas starving for buyers and may be required to offer more land or higher amenities to compete with higher demand areas.

Work with a real estate professional educated and certified as a Luxury Home Specialist.  By working this market every day and understanding the inventory, financing alternatives, and negotiating points, a real estate broker with this experience could save you tens of thousands of dollars.  Call or email my office for target areas and more information on the luxury home market.

The recent trend of tight credit has presented opportunities for good real estate investments.  Fewer investment property buyers with less competition increases pressure on those who need to sell.  One of two ways to look at investment real estate is how much will it pay you on a monthly basis compared to your monthly expense of holding the property.  If a fixed loan requires an outlay of $1500 per month and you bring in $2000 per month in rent, you are well on your way to making a continuous solid profit.  The renter pays the full loan payment and provides some extra cash while you are building equity and depreciating the asset. 

A second way of profiting in real estate is by purchasing a property and speculating on a dramatic increase in value due to an unusually discounted price or future changes that will benefit the property.  One example of this is the HWY 31 Major Moves expansion project.  Some of the property near interchanges zoned for residential property or agriculture will undoubtedly be utilized and rezoned for commercial use due to the proximity and access to the highway.  Commercial zoning will drive a higher selling price.  Another example of improved value in Carmel would be properties near the incredible Monon Center, also known as Central Park.  With the ponds, indoor/outdoor pools, workout center, Skateboard Park, and many community events, this is an unbelievable asset that people would prefer to live by.  Higher demand in this case has improved selling prices since the announcement of the 2007 facility.

The key to a successful real estate investment is finding a good property candidate (or finding someone who can) and calculating to the best of your ability how you will profit from the risk that you are taking.  If the upside provides immediate cash flow or good potential future value, real estate can be the best investment available.  If you find a property with both, do yourself a favor and jump on it before someone else does.