Foreclosures and the sale of real estate-owned properties have increased sharply in Grant County in the past two years.
According to statistics provided by the Marion Area Board of Realtors, the number of homes sold by a Realtor in Grant County has decreased by about 8.9 percent since 2005.
In that year, 787 Grant County home sales were facilitated by Realtors. The number decreased to 759 in 2006 and again to 717 in 2007.
However, in the same time period, the number of real estate-owned properties sold has increased by about 351 percent. Those home sales went from 75 in 2005 to 259 in 2006 and 263 in 2007.
"The last couple of years, business was good," said Richard Nichols, president of the board of Realtors. "That was before the foreclosures and REO properties coming onto the market."
Nichols has been a Realtor in Grant County since 1991 and thinks the slowing of the total number of homes sold has been caused by the highest interest rates since he undertook his profession.
"It's higher than it has been in the past," he said. "It's been higher, but you have to go back a long time."
Nichols was referring to the record-high interest rates in the late 1970s and early '80s that stunted the U.S. economy for several years.
Ed Merchant, community bank president of Regions Bank, 402 S. Washington St., said the foreclosure situation is neither wonderful nor as drastic as being painted by some in the national media.
"It has had an effect in Grant County as well as all over Indiana," he said. "But the misconception is that there's a credit crunch."
Merchant said despite the rise in foreclosures, a potential borrower with a good credit history shouldn't have a problem securing a loan to purchase a home.
"It's absolutely a misconception," he emphasized.
This is in line with what Morton J. Marcus has observed. Marcus is director emeritus of the Indiana Business Research Center at Indiana University's Kelley School of Business in Bloomington.
"I think it's having a very negative psychological effect in that people are having bad anticipations," Marcus said. "They assume what's happening nationwide is happening locally as well. When people anticipate bad things, they come true."
Marcus said the reality is that "most of the foreclosure situation is not in Indiana."
Whatever the situation, it does not appear to have had a major effect on sales prices in Grant County, which trended upward in November 2007 compared to the previous year.
Nichols, who is a Realtor at Goff Realty in addition to his board duties, said the price of the average Grant County home sold in November 2007 was about $73,400, an increase compared to the $65,800 average in November 2006. Fifty-four houses were sold in the November 2007 period, compared to 56 in the same month in 2006. The average house was on the market slightly longer in November 2007 compared to 2006: 144 days compared to 128.
Marcus said there are several reasons why average sale prices might have jumped while the total sales and days-on-market indicators weakened.
One factor he considered is that the weaker market might have convinced sellers of lower-priced homes to drop out of the sale and either keep the property or try to move it on their own.
"People who sell higher-priced homes stay listed," Marcus said.
Both Merchant and Marcus remain positive that the sharp increase in foreclosures will not be a major obstacle to overall growth in Grant County.
"It has certainly impacted residential value," Merchant said. "But it has not impacted business, business expansion and jobs, so folks can continue to buy houses."
Merchant also added that his bank only had one residential foreclosure in 2007 and that it was not an owner-occupied property.
Marcus said he "would stand with Franklin Roosevelt that the only thing we have to fear is fear itself," meaning trouble will come only if people believe that trouble is coming.
"People have an interest in the larger world, but they only have control of the world close to home," he said. "We can be most effective where we are."