by Christy Heitger-Ewing

Interest rates have stopped climbing, and while home inventory is still low, new builds are starting to bridge the gap. Gone are the days of buyers waiving home inspections and coming to the table with no contingencies in order to win that seller acceptance. But as we head into a new year, the interesting balance of today’s real estate market begs the perpetual question, is now a good time to buy?

Rob Bussell, Vice President of Marketing with The Marina Limited Partnership, notes that making predictions about the housing market is difficult, especially going into an election year. The unpredictable nature of the economic climate makes the housing market hard to read in advance. The hope is that interest rates will stay steady. Rates have been high for a while, but they might not stay that way. This past November, both the 30-year and 15-year rates ticked down a little bit, which hopefully is a sign of things to come, but it’s hard to say.

“Year over year, we’ve seen a 3.9% increase in home values, which is a good thing if you’re a seller,” says Bussell. “But the market has been stable as far as higher-end home prices.”

Laura Turner, Broker/Owner of Laura Turner Realty Group, says while we’re still in a deficit of housing inventory, builders in the Indy area jumped on the bandwagon and built a ton of spec homes to ramp up their inventory. Now, as a result, they’re competing at a price point of $400K and under, especially in Fortville and McCordsville. Practically speaking, this means that although inventory in general is low, new developments have created an influx of new homes in that price range of $400K and under.

Most of those builders are offering an interest rate buy-down, which helps first-time homebuyers get a lower mortgage with a lower initial interest rate. That interest rate will increase for the next year or so, but for now the option is boosting the market in the $300K to $500K price range for new construction homes. With a lower initial interest rate, more first-time buyers are able to purchase a property at that higher price point.

If you’re thinking about putting your home on the market, keep in mind that high interest rates are making many buyers lower their budget to compensate. Essentially, potential buyers for a $425K home might have been looking at up to $550K this time last year.

“You’re seeing buyers take longer to make decisions,” says Turner. “This means that even houses that seem perfect with new paint and carpet are taking longer to sell.”

While forecasting future interest rates is impossible, we can guess what will happen if rates fall or remain the same.

“If interest rates go down, it’ll open up the floodgates of buyers that had put their houses on hold. They will jump back in the market,” says Turner. “If, however, interest rates remain what they are, we’ll probably see more inventory, which means more choice for buyers. It could create a level playing field for both buyers and sellers.”

As for the types of houses people are buying, Turner notes that bigger is not better right now. Rather than more square footage, people are seeking higher-end finishes. Consumers are also more concerned with location. For example, new townhomes in downtown Fishers are a popular option because potential buyers appreciate walkability and the lack of maintenance. That demographic is less likely to buy elsewhere, because fewer options check the same boxes.

Bussell is seeing buyers who may have lived in a larger home but now that their kids have moved out, they’re looking to “right-size.” For these buyers, a new construction with lots of customization is a popular option. Turner maintains that life changes should dictate when you buy a house rather than interest rates. For instance, is your family growing? Would you prefer to no longer navigate stairs? Do you need to be closer to a particular school district?

“Buying a home is an investment,” says Turner. She compares it to a 401(k). “The difference is when you buy a home, you actually have a tangible product. When you put money in 401(k), you don’t see anything until you’re 65.”

Unfortunately, waiting to see what happens with the market means putting life on perpetual hold.

“I encourage buyers to purchase a home now if they really love it,” says Bussell. “As time goes by and [interest] rates fall, they can always refinance. In the meantime, they’re building equity.”

As we enter 2024, Turner is excited about the notion of entering a more balanced market between buyers and sellers. If you’re looking to buy or sell a property, consult with a seasoned real estate expert to determine your next step.