Snap shot of the Indiana Real Estate Market

Rick Ripma  0:00  

Good afternoon, and welcome to Indy's real estate gurus. I'm Rick Ripma, your hard working mortgage guy with advisors Mortgage Group,

Ian Arnold  0:07  

And I'm in Arnold, also with advisors Mortgage Group. And we really do

Rick Ripma  0:11  

appreciate you joining us today. You know, again, we had talked about this off-air, but we wanted, I think, I think people would really enjoy understanding the market that we're in today, I'd like to go over this type of thing, at least every four weeks. I think that's when we talk about it. And I pulled some information from my board, that's the Metropolitan Indianapolis Board of Realtors. And this is a snapshot of the market. I think, you know, it's very interesting. Number one is the median sales price for March of 2022. Is 265,000. Now, that's up 5.2%. month over month, so from February to March. And I mean, that seems like a pretty decent increase. Yeah,

Ian Arnold  0:57  

it is quite a bit, especially in one month. I mean, think about that over if you start thinking over years. I mean, like you if you have a house worth roughly 262 50 add that 5.5 Each month, I mean, adds up pretty darn fast.

Rick Ripma  1:14  

Yeah, just over 10 months, that's a 50% increase. Yeah, right. Now, obviously, we're not getting I hope gonna happen would be nice. But actually, that's unsustainable, that can't, that can't have it, but everybody out of the market. That'd be a problem. So that would be a that'd be on. unsustainable. So, we don't expect that. In fact, what I'm seeing as we're looking at increases, anywhere, people are estimated anywhere from about 10% to 19%. We had 19% last year. That's what it's looking like, you know, to go along with that we had an increase in close sales also with close 2780 sales in March of 2022 in the metro area. And that is a month-over-month increase of 21.1%. That's probably just hitting our spring market. What do you think? Yeah,

Ian Arnold  2:09  

I mean, because now you got people starting to look people starting to get out there winters gone. So hopefully. But now that winter is gone, people are more apt to Alright, now we're gonna move. So, you're gonna see those numbers tick up, and then you're gonna see a bigger spike during the summer because you're gonna have those families with kids and they didn't want to move during the school year. So you're gonna see that uptick over that timeframe.

Rick Ripma  2:34  

Yeah, I agree. I've always I think that's why we have a good spring market because the market increases in the spring people want to close, I know in New Home Sales it was this way you know, people wanted to buy and have the build time so they their kids would be in the house before school started so they can meet the neighbors you know, get prepared if they're going to a different school just get more comfortable with it. I think that's obviously a big deal. Now along with that, we have the year over year sales. They were at 7276 year-to-date sales I'm sorry, year-to-date sales 7276 year-to-date residential listings now, this is interesting to me we have the listings. What about 14,000 less or 1400 lat 1300 Less Yeah, and the actual than the sales are more than the sales and currently we have 15 106 listings which still indicates to me that we still have a list you know we have a lack of inventory

Ian Arnold  3:38  

Yeah, I mean that's the biggest thing I mean, houses are selling so quickly there are so many people want to buy a house and there's not many out there I mean, they're just going to get bought up really fast. I mean, I just had a friend just list a house, and three-four days he already had his offers in our and now it's already pending. I go that's how fast it's moving.

Rick Ripma  4:00  

Yes, that's crazy. And on that day on the market that's all part of it. The other thing my bore can metropolitan Indianapolis Board of Realtors, their average days on markets this is for the metro area in March 20 days,

Ian Arnold  4:15  

yeah, that's crazy. And that's closing that's going through everything that's not just sitting

Rick Ripma  4:20  

that now that's the average days on market. That's putting the house on the market but it's including specs and builder stuff, which takes a lot because a lot are really old. So, the average days on market being 20 days is I mean that is a remarkable number. Normally you see that about 6065 70 days. So this is a remarkable number month over month that that dropped 13% That's that means it low, fewer days on market now than it was in February. So if you want to sell your house, this is a great time. If you want to sell your house, this is a great time if you want to buy a house. You know, I was talking to a real estate agent. Just a couple of days. days ago, and she was saying that the market is slowing down a little bit. So even though these numbers are looking really good, they are starting to see a little bit of slowdown. And especially in the list, you know, sale over list price, those types of things, and how much people are spending. So, you know, over what they're making offers over less, it's slowing down. So, I think that's a product of, I think in March, which we'll see probably, or in April, we'll see those numbers in May, late May, is when those numbers come out, or, you know, mid-May? Well, I think we'll start to see more listings. So there's, there are just a few more houses on the market. And then with the rate increases, we've seen a little fewer people aren't in there are not as many people in the market, it's still extremely hot, I don't want anybody think it's not hot, it's, it's hot. But it's, it's probably going to be a little different. Not quite as hot as it was, you know, again, you know, we're talking about, you know, in March, the month in the month inventory, it was point six for March, incredibly low, just incredibly low. Mortgage rates, of course, have gone up since then. Mortgage rates today, you know, you just, it just depends, it's the best thing to do, because there are so many variables in mortgage rates, credit scores, you know, loan to values, you know, whether if somebody wants to pay points, you know, just what type of product, there are just so many variables, the best thing to do for that is to get with us, you know, go to hard working mortgage guys.com That's hard working mortgage guys.com, you can contact us from there, and either Ian or I will get back with you. The price range, you know, just looking at this. I'm gonna have to have you read this because I, I My eyes can't read it. I can't. You just earlier said you're getting old? Well, yeah, I think I already am old. 

Ian Arnold  7:01  

Well, it just talks about the price range between the action in the sold, and the most mass majority, between where people are buying and selling is anywhere between 100,000 all the way up to about 400,000. Once you get about 4000 The numbers dropped quite a bit, but unfortunately. I mean, that's just where people can afford it. I mean, let's be honest, not all of us can afford a $26 million house I think what is it? Was the racecar driver just listed his house? So, Tony Stewart? Yes. Did like the log cabin everything. Not everybody can afford that 26 million or wherever you had it at? A lot more people can afford 150 200 or

Rick Ripma  7:46  

higher than that was, you know, an expensive place.

Ian Arnold  7:51  

But yeah, it just shows exactly where people are trying to buy and it just makes based off income where Indiana is. And we're not California. So. Right. Yeah,

Rick Ripma  8:01  

we still have some high-end houses. Yes. But our high our houses have gone up. And I'll tell you though, I've done this a long time. And the increases we're seeing the market that we see right now in the market I have seen, you know heard of in the past and other areas like California, where you know, these really hot, hot, hot markets. I was looking, I guess a couple of days ago again, I was reading something I met the I meant to bring it I forgot but it was the areas that we're seeing these huge increases the highest increase in values, like Utah, had some areas they were increasing that just ridiculous amounts. Well, you got an Arizona

Ian Arnold  8:44  

Yeah, you gotta realize though, is, for instance, my friend just sold his house, his wife, her job just moved here to North Carolina. So, I talked to him. He's like, I was like, oh, so you're gonna find a new one, or and he goes, no, I've been working from home. I'm gonna continue working from home. So, guess what, you don't have to live in the same area nowadays. I mean, so if you move from let's say California and moved to Utah have much more land have probably lower taxes and you're making the same amount. Why would you not do that?

Rick Ripma  9:15  

Well, you know, you're right. And that's what we're seeing in our market. It's one of the things we've seen is a big increase in the number of people buying paying cash for properties right now. I think the last number I saw it had been at like 20 to 23% have jumped to 32% or something like that on people paying cash. And we're getting a lot of people here in Indiana, they're coming in from those other areas that are really expensive. They sold their homes and they've sold them for a lot of money. They come in here and they can't believe the houses they can buy for the price. And so, they'll spend more than they have to have a house they gotta move and they want to move in right away. And so, they boom there they are, and they're over there bidding higher. They're paying cash. And it's helped me not I mean, it's hard for the other people trying to Buy, but he's really helping all our values. Because once a house closes, whether it closes with cash or whether it closes with the financing, it becomes a comp.

Ian Arnold  10:08  

Yep. And are all the houses were looking at him?

Rick Ripma  10:12  

Yes. And everybody's looking at him. And everybody wants to talk about it, you know, what it helps us all, it just increases our values for all of us. I think that's one of the reasons we're seeing such a great increase in value. Now, we also you wanted to talk about the spring market a little bit more, what's what we're looking at what's coming up. So can you kind of go over that a little bit, I know you had an article on that we were going to want to

Ian Arnold  10:39  

discuss. I mean, it's just especially I noticed a lot of people have been in their houses for a while. And if you're thinking about moving into this move in this spring, is certain things you got to look for. And for instance, just like we were just talking, I mean, if you're looking at a house that just went on the market, and you are looking at offering him a low value, you might want to reconsider that mean, it's this type of market is not the time to nitpick stuff, I will tell you that right now, what you want to do is just if you want you don't talk to your realtor and find out how this house is based off the market. But the next thing is they might be like, hey, you might want to offer a little bit more, maybe not as asking price, maybe $1,000 more or whatnot. And each area is going to be different. But I mean, that's the awesome thing is we do have these great realtors that will sit down and they will go through everything with you. So if you don't have one, definitely just let us know. And we'll hook you up with one.

Rick Ripma  11:41  

Right, I agree the best thing to do is go too hard working mortgage guys.com That's hard working mortgage guys.com. All the information is there. You can call you can email you can text. And we'll get back to you as quickly as we can. But if you're looking this is a market where you agree that you as much as it may seem you don't need an agent you buying a house you absolutely 100% Need an eight Yeah,

Ian Arnold  12:03  

by far. I mean, because you just don't know what to expect, especially like I said, if you have if you bought your last house in 2003 It's a totally different market. I mean, again, undercutting value is not it doesn't work that way right now. I mean, most people are getting always you're getting higher offers than what you're actually putting in or you're listening for

Rick Ripma  12:26  

the list price is used to be the list price was the starting price and everybody bid below the list price, right? Yep. Today, the list price is the starting price. That's that stayed the same. But it's how much over the list are you going to go? Correct. I heard you talk about North Carolina. My niece was in town. She's a real estate agent in North Carolina. And she was telling me that they have something a little different than we have here. You have the earnest money that you put up which is refundable if you don't go through, but there's another there's you have to put additional money up there to take them home off the market. Oh wow. And it's non-refundable, even if the inspection doesn't come in and all of that and she said some people were putting up $100,000 And that that's how they're getting it now goes against it goes against you know your it goes to your down payment. But you don't get it if you back out of the sale and buy into the house you don't get the money back. And what a crazy thing. I'm glad we don't have it here and she said it's just killing first-time homebuyers.

Ian Arnold  13:27  

Oh, definitely. I mean, not especially the first time, there's no way they have that much money put down.

Rick Ripma  13:33  

Right. They're getting you to know, if you think about you take a first-time homebuyer, even a lot of people who tell me to sell their home, they may have all the money but they would have had to sell their house first to be able to give that money sometimes. But a first-time homebuyer is probably a lot of them, not all of them a lot of them are going on 3% down or three and a half percent down products, where they're buying you buy a $200,000 house on a 3% down, you're putting $6,000 down, but you got to put to get the house you got to put $20,000 up, that's nonrefundable. And what happens if you have an inspection and the inspection comes back because it's non-refundable, even on inspection.

Ian Arnold  14:10  

Yeah, that's crazy. I don't know if I would ever do that.

Rick Ripma  14:14  

Well, you know, what do you do? Yeah, what's happened is there's I think there's a lot of people today buying houses that said they would never do what they're doing today. Because nobody ever expected the market to be like it is the reality is if you need a house and you need to move in quickly, or you need you to need to find something you have to do what the markets doing and this is what the market is now people like you and I we already have houses so yes, we could get a lot for our houses now but we choose not to do anything because we don't want to go through the hassle and trying to find a house because it's so hard right and which is good because you know that that means that we're not in competition with other people trying to buy the houses but the market You know, it's one of those things. I think we should we a little bit talked about the spring market; we'll go back to that. But I really do think we need to talk about the, you know, as we look at this, you know, appreciation and all the talk that we hear from the media. So after the break, we're going to talk, we're going to talk about the spring market. But we're going to talk a little bit about what we're looking at, you know, what the expectations are down the road? And are we going to hit a housing bubble, what's going on? We'll see you after the break. Welcome back. And thank you for joining us again, this is real India's real estate gurus with I'm Rick Ripma, your hard work and mortgage guy.

Ian Arnold  15:41  

And I'm Ian Arnold, also with advisors Mortgage Group.

Rick Ripma  15:44  

And today we're talking we've been talking about, you know, what's gone on in the market in the past, basically month over month, looked at the Bible or numbers, which is the Metropolitan Indianapolis Board of Realtors talked a little bit about the spring market coming up. But I also wanted to talk because there's so much out there in the media, about the appreciate well, really about the housing bubble, there's a lot of people talking about a housing bubble, and they think there's a housing bubble coming. But if you look at what's actually in the market, if you go back to 2008, 2008, there were almost 4 million homes on the market. First off, also remember, there were 16 million fewer people in the US in 2008 than there are today, we had 4 million homes and almost 4 million homes on the market back in 2008. Today, we have if you count the builder specs, yet we have 950,000. If you don't count the builder specs, we have about three just under 300,000. That's it, that's all the homes that are listed. So that piece in and of itself is saying that that's not happening days on market back then I know you weren't in the business back then. But days on market, we were at, we were at, you know, some of them were taking a year to sell some of them longer than that most of them were the 90 to 120 days, the days on market today is 20 days, including buildings backs, okay. It's a completely different market. We have very, you know, the appreciation, back then, one of the things that really hurt the market is you had a house that you owed, let's say $300,000 on. And because of the market back then and how everything had gone, the house was worth $280,000. So, you owe 300 houses worth 280. And you get transferred or you decide you need to move. So, you're moving out of them out of the area. You can sell your house for 280. After cost, you're probably going to net what you're going to net less than that, right? Yeah, so you may be 3030. Go ahead,

Ian Arnold  17:54  

just do it for even say you net out exact, so you're still 20 grand that you're going to owe,

Rick Ripma  18:00  

right? So, or you can get with the bank that has the mortgage, and either give it back to them. Or you can do what's called a short sale, a short sale as they agree to take less for the payoff. So, they agree to eat, eat that money. Either way, on your credit, you show a bankruptcy or you show a foreclosure, right short sale and foreclosure are the same thing. So those things, that's what would happen. It was just that was the only way to get out of the house. You couldn't sell it if you didn't have the $20,000 to pay when you closed or the 30 Grand that you needed. You couldn't close on the house. So, you had no those were the choices. Today, the equity in our houses. How many trillions of dollars is there in equity? Do you remember?

Ian Arnold  18:47  

Now it's on my head. But I mean, let's just put it in the small swing. I mean, if you had a $200,000 house last year, you gained 30 $38,000 in equity in the state of Indiana last year on average. That's crazy. So you're talking about equity, just a small frame. There you go right there. 19% is what Indiana increased last year.

Rick Ripma  19:10  

It's absolutely unbelievable. And it is part of the biggest reason. There is no way at this point in time. I'm not saying that is the that they can't that the feds can't make enough changes to ruin everything. Okay, I'm not saying that government doesn't ruin anything. Right now. We're not in that mode. Along with that now interest rates have gone up, but interest rates are tied to the federal funds rate. And the federal funds rate is what when you hear the Feds raise the raised interest rates that's what they raised now they raised it a quarter at their last meeting first raise they had had and over three years. The expectation for May is raising it again and half a percentage point five and then and then there's another meeting and to the end of June, and they're expecting to raise the expectations are another half a percent. And then there's another meeting in September, maybe August or September is right in that timeframe. And that one is still up in the air, it's either a quarter or a half a percent expectation. So, the feds are raising the federal funds rate by raising the federal funds rate, the biggest negative to interest to mortgage rates, long term rates, not these short-term rates that the feds are raising, but the long-term rates, the biggest negative is inflation. And by raising the federal funds rate, what happens? I mean, our rates are gonna go up? No, what happens is that inflation is going to come under control. Okay, I probably didn't state it, right, I apologize. Inflation is going to two by raising the federal funds rate, if you look back in the early 70s, middle, early 80s, early 90s 2019 99, to 2000, again, and 2008, when all these recessions that we hit again, in like 2016, all of these recessions that we hit, were due to inflation. And when the Feds if you look with it, they always say the inflation is transitory just like they did, that's the first thing they always say, the second then after they realize it's not then they start raising then they go, okay, it's not and they start raising the federal funds rate. If you look at when they raise the federal funds rate back in the late 70s, and early 80s, they raise the federal funds rate to like 17%. And then three or four years later, it went to 20%. But it got inflation under control of the interest rates, the federal funds rate went up. Now the actual mortgage rates weren't that high, because of their longer-term rates. So, when the Fed started rates, and after that, they don't raise them that high, they learned that it was too, they did too much. So they were that was new, and they were learning just like everybody, and they realized they were wrong. They did it too much. We so anyway. So, what's happened is, is as we look at that, that's going to get inflation under control when you get inflation under control, our interest rates should come down. But that's not going to happen until we get inflation under control. It just came out that inflation was up to point nine a year over year. So, our inflation rate just went up again. Now, it's that's going to it's for the next couple of months, and you'll hear a lot of people say it's going to come under, it's going to get better. Next couple of months, we're looking at it. And last year, the inflation rate was like point five, then it drops to point three, and then it goes to point four. So that's June, July, and August, then September, it's back up to point nine. So, we'll probably see inflation continue to increase until then, along with and then when, until September, probably October is when we'll start to see it, where it starts to come down. Because they're matching it to a much higher inflation rate a year ago, plus, they're gonna raise the federal funds rate when they do all that that should bring interest rates down. So that's the expectation. It's hard to say what they're going to come down to or how I mean, rates could still go

Ian Arnold  23:25  

up. You just never know what the future holds. So, I mean, if there's another war, if there's another, I mean, anything could change anything. That's its nature, working with the future, you never know.

Rick Ripma  23:36  

Yeah, that's absolutely true. We do not know. But we can look at what's happened in the past,

Ian Arnold  23:42  

right? And try to make an educated guess that’s right. And,

Rick Ripma  23:45  

and you know, you and I won’t listen to the same person, the same people that talk about the market all the time. So we've been pretty well educated on the market all in all. So, there and these guys seem to be I followed them for a long time. They, they, they're right, they really do know the market. And they called for a recession, which we are going to be going into recession probably late this year, early next year. Yeah, roughly. So and they've been calling for it long before. Well, why the Feds were saying inflation was transitory, they were calling for it. It's just one of those things that I think we're gonna see happen. And it's going to be it's so I think through the summer, the spring market into the summer market. What do you think that I mean, rates are probably gonna stay about the same maybe go up a little bit. I mean, what are your expectations for that market?

Ian Arnold  24:42  

I mean, it's still going to be busy. I mean, and here's the whole reason is, when we're talking about in my book, there were also a couple of other little things. And in February, they actually listed are they listed that the listings they put 2400 Great new listings, well guess in March. So, you gave a few one month to see if those things close. They close 2700 So it's gonna, it's gonna just keep staying busy. I mean, you just closed 300 Extra houses than what was listed, and it's not going to slow down. Yeah,

Rick Ripma  25:19  

I agree with you. Now we're running out of time. I'm sorry to interrupt. We're running out of time. But we do appreciate you joining us. This is Indy's real estate gurus. And I'm Rick Ripma, the hard work and mortgage guy

Ian Arnold  25:31  

and this is the in Arnold with Advisors Mortgage Group. And we

Rick Ripma  25:35  

truly appreciate you joining us. And you know, if you have any comments, you'd like to talk to us, please go to hard working mortgage guy.com That's hard working mortgage guy.com. From there, you can email us, you can text us, and you can call us. You can get that information and either Ian or I will get back to you. We will get you the information that you're looking for and answer any questions. If you know of anybody looking for a mortgage or you just want to talk about it, see how it looks, or you just want us to watch rates for you. We would love to do that. Again. Thank you so much. Have a great weekend.