Look for Steady Real Estate Sales, Price Increases in 2006
F.C. Tucker projects balanced housing inventory, moderate price increases

With 2005's slow, steady rise in interest rates and central Indiana's fifth consecutive year of increased home sales in the rearview mirror, F.C. Tucker Company's Jim Litten, president of the Residential Real Estate Services Division, said today he is optimistic about area real estate sales in 2006. Litten predicts another strong year with sales matching 2005.

The National Association of REALTORS ® (NAR) projects national existing-home sales in the new year to decrease by 3.7 percent. Litten expects the central Indiana market to temper slightly as well, but added a caveat: “Because this market has maintained a well balanced housing supply/demand ratio, we should continue to experience steady real estate sales and see modest price increases in 2006.”

What about “The Bubble?”
Expect existing-home prices in Indiana to continue to appreciate moderately, around 5 percent for 2006, according to Litten. This estimate is in line with NAR's national prediction for price appreciation levels of 6.1 percent. “Historically steady appreciation in central Indiana makes our region less vulnerable to the ‘bubble burst,' or price softening we are already seeing in some major states such as Florida and California,” Litten said. The Bernanke effect The appointment of new Federal Reserve Chairman Ben Bernanke to succeed Alan Greenspan raises some questions about the future of rate increases. Tucker Mortgage president Ron McGuire predicts local 30-year fixed-rate mortgages to increase modestly to about 6.5 percent during the second half of 2006. Despite the increases (December 2005's 30-year fixed stood at 6.125 percent), mortgage rates will continue to be low by historical standards and will help fuel home buying in 2006. “Much of the refinancing activity by existing home owners played out in 2003 and 2004,” said McGuire. “But, we expect a pickup in refinancing activity in 2006 due to people changing from interest only and adjustable rate mortgages to fixed-rate mortgages.”

Internet impact
“The Internet has dramatically altered the residential real estate landscape and will play an even more vital role in residential real estate for 2006,” Litten said. With the advent of Internet Data Exchange, brokers now share listing information, making it possible for viewers to search an entire MLS from a participating broker's Web site in the comfort of their own home. “Not only has the Web educated the consumer,” added Litten, “But it also has shortened the home buying process. From searchable databases of listings to new listing alerts to mapping software, the Internet is a must-have for today's tech-savvy consumers in their home-buying process.”

Healthy economy spells more relocation
Corporate relocation has been an important component of the residential real estate market in central Indiana, and 2006 will be no different, according to Litten. F.C. Tucker Company's relocation business continues to increase, and the healthy economy moving into the new year should prove to sustain this growth. What's more, the recent decision by the Base Realignment Commission (BRAC) to add nearly 800 jobs to the Defense Finance and Accounting Service center in Lawrence will likely play a significant role in the relocation business for in coming years.

Trade trampolines for alarm systems
Expect insurance companies in 2006 to continue looking at prior losses for buyers' previous homes, as well as the homes they are purchasing, according to Tucker Insurance. Insurance companies also are likely to continue checking customers' credit scores before writing new policies. At the same time, some insurance companies are beginning to decrease rates and many are offering larger credits for multiple insurance policies, alarm systems and newer homes. Three issues will remain sticking points for most insurance carriers: homes with fuses, homeowners with certain aggressive dog breeds and homeowners with trampolines.

Generation X moving in
Just as retiring baby boomers have had an important effect on the housing market, Generation X continues to fuel the overall economy. “Generation X's higher incomes, coupled with more flexible mortgage requirements, have enabled them to buy homes sooner than boomers did,” said Litten.

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