Thinking about buying your second or third (move up) home? Now is the time. Here is why.

Why now is the time to buy your second or third “move up” home in Indianapolis.

All summer long I have talked about how tight the housing market is in Indianapolis. Nothing has changed. Well it has changed some. People are starting to get the message and we are seeing more homes listed, but the buyers have just kept coming. The end result is that the MIBOR (Metropolitan Indianapolis Board of Realtors) service area is still sitting at about 11,000 homes on market. Balance in our market is more in the area of 15-20,000 homes listed… and on the high end of that with the number of active buyers there are out there. So this is still a very strong sellers market.

None of that is news to you though, because you came here to Realty With Robb regularly and you are well aware of the housing market conditions.

I have noticed a trend that I previously missed though, and it points directly to the single best home sales opportunity in the greater Indianapolis housing market today.

That trend has to do with which type of homes are more plentiful than others.

For starters I want to talk a bit about the different price ranges of homes. First there are investment homes. These are homes priced from $1000- $90,000. The vast majority of these are barely inhabitable, or at least need some need some degree of renovation. We aren’t going to talk much about them today. Next are what we refer to as first time buyer homes. These are mostly move in ready homes and tend to price from $90-150,000. Then we have the second and third move up homes which fill the price range between $151-$300,000. Finally we have luxury homes, which are homes priced above $300,000.

It should be noted that I am speaking very generally about these homes as you will find investment quality homes in all ranges and occasionally you can find a quality first home in the investment range. But we are talking about market trends as a whole, and quite frankly it would be really boring for you if I broke this down as far as we tend to when we are researching our market.

The two areas which are creating this great home buying opportunity are the first time homes and the second and third move up homes.

Basically what is going on right now, is the majority of home buyers are people looking for their first home. As a result these homes are selling quickly and the prices on them are being pushed up at a rapid pace. People who are just now ready to be looking for their move up to a nicer home have been biding their time though. They haven’t been aggressively selling the first home they bought, nor have they been buying that second or third move up.

The result of this is that these areas of the housing market have opposing pressures on them.

To understand this we have to dig into the numbers a little bit. In a balanced market I would expect about 45% of the homes on market to be what we would class as first time buyer homes, and the second to third time move up homes to represent about 25% of the market. So there should be roughly twice as many first time buyer homes as there are move up homes.

What we actually have is a large number of investment quality homes, about 1100 first time home buyer homes, and about 1500 move up homes. In a more balanced market, I would expect to see pretty close to 3000 available first time buyer homes when there are 1500 move ups on market.

This gives us a deficit of 1900 first time buyer homes, and an excess of move up homes. So what does that mean to you? Well if you are living in your first home and have been thinking about an upgrade, it means that you have a great opportunity in front of you. The reason for this is at the very core of economic theory. Supply and demand. The home you currently live in…there aren’t enough of them on market to satisfy the new home buyers that are out there. The home you are thinking you would like to upgrade to? There are more of them and they are sitting on market a little longer than first time homes and haven’t experienced quite as much upward pricing pressure.

This means that if you sell your first time home and buy an upgrade while this market condition exists you will more than likely be selling one home near its peak price and buying another while its price is still in the furrow. In other words you will make more when you sell and pay less when you buy…and who doesn’t want to be in that position?

The bad news is that this advantageous market condition wont last forever. As the builders start to ramp up production, they will fill the deficit of first time homes…and they have already started. The good news is it will likely be another 6 months to a year before they can get enough labor in place to have a significant effect on the market. So if you get started prepping your home for sale and your finances for a purchase, you should be able to take advantage of this fairly rare phenomenon.

There are also significant opportunities in both the investment level homes and in luxury. If you would like to know more about those…or want to know how you can get moving to take advantage of this great opportunity to upgrade your housing situation, call Robb at 317-657-8059 or email to schedule your FREE real estate consultation today!

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About Robb

A husband, Dad to 5, and Grandpa to 9. US Navy Vet. 18 Year Postal Employee turned full time Realtor. I enjoy a wide variety of things, but you will find that here I mostly write about Indianapolis, government/politics, recent news, and whatever book I am reading or have just finished at the moment.
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