Sunday, October 16, 2005

Poor Economy Makes Housing Future Uncertain

This story from Indianapolis shows the psychology at work in an area with high foreclosures. "Larry Taylor got a bitter surprise when he put his Plainfield house on the market last month. No one came to the open house in the Glen Haven subdivision. No one has asked for a tour. The few people who call immediately demand to know the price, which is $145,000, and then hang up."

"Taylor thinks he knows why. Stepping into the street from his manicured lawn, Taylor sweeps a hand toward several vacant, foreclosed houses and points to one right across the street, a brick-and-vinyl ranch similar to his, that brought $104,000 at a government auction recently."

"Now Taylor worries he won't even get the $121,000 he paid when his house was built four years ago, money he needs to move to an apartment. Taylor's frustration at watching his house shrink in value is shared by thousands of area homeowners. From 2000 to 2004, the median sale price for existing homes fell in 28 of 87 metro area townships."

Here is a problem for anyone interested in these properties. "Prices dived so far in one township that an assessor warns she has little choice but to reassess at lower values, raising the specter of higher taxes on homes that haven't declined."

"In the nine counties, values are rising slower than inflation, meaning that people's housing investment isn't even keeping up with the cost of living. Lenders, real estate brokers and other observers say housing prices here are being undermined by a soft economy, an explosion of new, inexpensive tract homes and a surge in foreclosures."

"When housing values fall in nearly a third of townships, it's hard to sugarcoat the harsh realities of the region's real estate market, said David Goodrich. 'These statistics don't lie,' Goodrich said. 'There are a lot of people who are going to be in trouble because they have banked on appreciation.'"

"Indiana is also No. 2 in the nation in the rate of house foreclosures. Last month, the national MBA reported 2.8 percent of Indiana mortgages were in foreclosure in the second quarter of 2005. Only Ohio had a higher rate."

"Until the economy generates better jobs and consumers learn to manage debt better, foreclosure rates could remain high, said Scott Bowers, spokesman for one of the area's largest builders. 'People don't want to talk about personal accountability of homeowners,' Bowers said."


At 9:49 AM, Blogger Ben Jones said...

High taxes will be a problem for anyone looking at foreclosed properties. When the Texas market went bust in the 80's, each appraisal district made it difficult to reduce the assessments. Basically, a homeowner had to file an appeal each year as the prices fell and make a case based on recent sales, which were few and far between.

I think states with high property taxes should be avoided.


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