Experts are reporting across the United States that the rate of decline in the real estate market is slowing down. An Indiana home sales report recently conducted by the Indiana Association of REALTORS® shows that this has been the case in the Indianapolis real estate market. The average of decline over the last year was approximately 7% across Indiana counties.
Even with this positive trend developing, popular opinion states that many Indianapolis homeowners will still struggle over the next few years with decreasing home values.
Deutsche Bank reported estimates in August that showed approximately 50% of our country’s 50 million mortgage holders will show negative equity in their home by 2011’s first quarter. This is a gain of about 11 million from the end of the first quarter this year. The concern over this many homeowners owing more than the value of their home is the risk of them going into foreclosure. Decreasing home values has certainly been a factor in the rise of foreclosures across our nation, along with the subprime mortgage crisis as well as other circumstances.
Decreasing home values will inevitably lead to negative equity. Reports show that since the summer of 2006 (considered the market peak), the average value of homes across the country has dropped over 20%. If you consider that a majority of homebuyers perhaps put down a down payment of 20% when buying a few years ago, this value will most likely have been lost. An inevitable consequence of this loss of value will most likely be homeowners defaulting on their loans.
There is no reason to panic yet, however. Those looking for Indianapolis homes for sale, or owning a home already, need to be most concerned when they go to sell their home. Therefore, consider how long you plan to be in your home before you get overly worried.
Experts are predicting that if you are likely to stay in your home for over five years, you will have a better chance to regain the value that might have been lost to this current crunch. Also, now is not the best time to think about taking out a home equity loan, in light of the likelihood of negative equity.
The Obama Administration seeks to help American homeowners by backing the Making Homes Affordable program. This initiative hopes to help mortage holders seek options regarding refinancing and other loan modifications.
While we all wait out the mortgage crisis, there are ways to determine if your neighborhood is currently in trouble. Not all areas are struggling right now, but if you’re wondering if your community is, look for the following indicators:
Check the number of foreclosures. You can work with an Indianapolis REALTOR® to check the number of bank-owned properties that are on your street and surrounding neighborhood. Being engulfed by homes that have gone under is one of the most significant factors to your home losing value as well. Experts say that your home’s value can decrease by 1% with just one foreclosure on your street.
Days on market. Another indicator of dropping home prices is how long a neighbor’s home stays on the market without a potential buyer. Again, your REALTOR® can look at these numbers and tell you if this is a problem in your community.
Keeping up with home maintenance. A simple visual indicator of a community’s decline is to look at how your neighbor’s are keeping up with home maintenance. This could be due to their being unwilling to make any more repairs to a home that holds no equity at this point anyway, or could be indicative of the fact they just can’t afford it.