STATE OF THE MARKET
In Elkhart County the 2015 market was great for sellers. The numbers of listings kept the overall inventory low, which created a sellers’ market for most of the year. At several times throughout the year the inventory was near record lows. Although it was generally a sellers’ market throughout Elkhart County it was still a good time to buy. The 30-year conventional mortgage rate peaked at just above 4%. Historically this is a very low interest and not much higher than the 3.3% low in 2012. So although sellers are getting more out their house buyers are still able to get more house for their dollar.
The northern townships in Kosciusko County are currently experiencing an overall neutral market. This area is unique because of the lake areas in Turkey Creek and Tippecanoe townships, specifically high end properties on Lake Wawasee, and the rural areas of Scott, Jefferson, and Van Buren townships. The 2015 market did show signs of greater movement. The number of expired house listings dropped from 45% in 2014 to 37% in 2015. In the high end market, eight houses sold for $1M or more in 2014 and that increased to 14 in 2015. Additionally, houses between $500K and $1M saw and increase from 18 in 2014 to 25 in 2015. Movement in the high-end market indicates increased confidence in the overall real estate market.
Kosciusko County (Select) Market
390 ⇧ 8%
Median Closing Price:
$151,00 ⇧ 13%
Average Days on Market:
105 ⇩ 20%
Sales / List Price:
266 ⇩ 18%
29 ⇩ 39%
32.5 ⇧ 8%
Elkhart County Market
2169 ⇧ 4%
Median Closing Price:
$125,000 ⇧ 10%
Average Days on Market:
67 ⇩ 17%
2703 ⇩ 4%
Sales / List Price:
534 ⇩ 23%
226 ⇩ 30%
23 ⇩ 44%
180.75 ⇧ 4%
Origin of Data
The information used here was gathered from the Indiana Regional Multiple Listing Service (IRLMS) but it is not warranted. The data is not all inclusive. It only includes sold residential property entered into the IRMLS. Properties sold as a “For Sale by Owner,” new construction sold directly from the builder and auctions are not included in the numbers. Additionally, there are some real estate agencies that do not participate in the IRMLS and, therefore, their numbers are not included. Properties that are included in the data are single family residential properties. The dwellings may be manufactured or site-built houses and the properties may have been foreclosure sales, short sales, or traditional sales.
Some of the categories show data in both median and averages. While the median is the middle number among a series of numbers and the average is the mean of numbers both are used in the report. Together they help build a better picture than just using one or the other alone. An average that is much higher or lower than the median suggests there are abnormal values that swing the average one way or the other.
Did You Know?
The White House has been valued at approximately $110 million.
The 2015 real estate market was the best it’s been in 10 years. In 2006, which was the last good year in this area before the housing market bubble burst, the median home price in Elkhart County was $117,000. The housing market started to crash nationally in late 2006 and into 2007. Locally, there was a marked decrease in the number of closed transactions starting in the fall of 2006 but large median home value fluctuations weren’t notable until the first of 2008. In 2014 the median home value was nearer the mark of 2006 but still lower. 2015, however, saw double digit sales price appreciation over 2014 with a median sales price of $125,000. The days a home was on the market decrease from 81 days in 2006 to only 67 in 2015. Although there were less units closed in 2015 than 2006 it may be explained with the difference in the amount of listings. There were many more new listings month to month in 2006 than 2015
Buyer’s or Seller’s Market?
A common question in real estate is: “is it a buyers’ or sellers’ market?” Although most REALTORS® have an intuitive feel for the market, IRMLS data is the best objective resource a REALTOR® has readily available. The data from the MLS is used to determine the market absorption rate. That along with inventory are key factors in determining if it is a buyer’s, seller’s, or neutral market.
The absorption rate in Elkhart County at the end of 2015 was 180.75 units per month. It is simply determined by finding the average number of houses sold in the previous 12 months; or, the rate the current market inventory is absorbed. Dividing the current inventory by the absorption rate of the previous 12 months produces the months of inventory, or the number of months it would take to sell out of a given inventory at the current sales rate. As of January 1 there was a 4-month inventory. The select townships in Kosciusko County had an absorption rate of 32.5 with an inventory of 180. Therefore, they have a 5.5-month inventory.
Generally, a sellers’ market exists if there is an inventory of 4 or less months. A normal market has a 5 to 6-month inventory and 7 or months is a buyers’ market. As of January 1, 2016 Elkhart County was a sellers’ market and the select townships of Kosciusko County were a neutral market. That is taking a look at the general health of the market. Market conditions can be different town to town or subdivision to subdivision. Even house types and price ranges can change the type of market into which a property falls.
The 2016 Market Outlook
The 2015 market status will continue through 2016. Traditionally, the spring listing surge doesn’t happen until mid-March. That will be true again this year and the inventory will remain lower than normal for some time. In 2015 the low inventories caused market values to rise 10%, a normal anticipated rise is about 3%. Additionally, the values at the end of 2015 were 6% higher than 2006, the highest sales price before the down-turn. This is the first time the median sales prices were higher than 2006. This may incentivize homeowners that purchased during 2006-2009 to sell. The average time in a home ranges between 7-9 years so those owners are naturally ready to sell and now they have equity in the house due to appreciation. Buyers continue to have good circumstances in which to buy. Lawrence Yun the economist for the National Association of REALTORS® predicts that mortgage rates will approach 4.5% by the end of 2016. That is only a moderate rise from the 4% rate in December 2015.
The low inventory has a second-order effect of causing potential sellers to be uncertain about selling because they are unable to find suitable housing into which to immediately move. Currently the Elkhart County market needs to have a net gain of nearly 200 houses to get to a neutral market which should relieve the pressure of current owners’ ability to find houses they like. On average in 2015 there was a net of 45 houses per month. All-in-all throughout 2016 there should be a 4 to 5-month inventory.
Besides home owners that have lived in their house for 7 to 9-years cashing in on their equity, there are a few other things that will bring more houses to the market in 2016. One is changing the traditional buying pattern. The Elkhart and Kosciusko County markets traditionally have buyers take possession of the home at closing. That may change, at least temporarily. In late 2015 negotiations were influenced by possession as well as price. Sellers that still occupied their home wanted to maintain possession for a couple of reasons. They did not want to surrender possession until they were certain the deal closed. Once the transaction was complete sellers were more comfortable seeking temporary housing until they were able to find a home of their own. Thankfully for them it was a sellers’ market and buyers were willing to make those concessions to get the home they wanted. Houses were also listed with the contingency that the seller was able to purchase a specific property. 2016 will continue to see unique buying and selling negotiations where price may not be the biggest concern. There will be times when possession is as valuable as the money offered. The timing of possession may have powerful leverage effects when discussing price and other conditions of the sale. Finally, an increase in new construction will help existing-home sales. The upcoming year will see an increase in new construction as many sellers haven’t been able to find a house to fit their needs and have decided to build their own home. Also builders are building spec houses fill the gap in inventory. Inventory will remain low until new construction can help relieve pressure on the existing housing market.
2016 will be another great year for real estate for both sellers and buyers. Sellers with equity can cash out, builders will be busy, and buyers will continue to get good interest rates. It’s a win, win, win.