Indianapolis foreclosure listings are leveling, but they may again grow as soon as major Indiana employer Eli Lilly implements its plan of cutting 5,500 jobs over the next 24 months.
According to Jim Litten, head of F.C. Tucker Co., the Indianapolis housing market is showing signs that it is recovering from years of battered home prices, although the higher-end of the market is still struggling.
Litten said that the inventory of homes in the $300,000 price range has fallen to 7 months, a significant drop from the eleven-month supply last year. A seven-month supply, according to Litten, is a good level for both sellers and buyers. He added though that the high-end of the market is still a buyer’s market.
Litten also explained that the federal tax credit has prompted a lot of first time home buyers to buy lower-priced homes and their purchases enabled many existing homeowners to move up and buy higher-priced homes.
The increase in move-up buyers however was tempered by foreclosure purchases, according to Litten. If foreclosed homes are purchased, there are no corresponding move-up buyers. Litten said that the city is still struggling with the market effects of short sales and properties in Indianapolis foreclosure listings.
It would take at least two years for the Indianapolis housing market to return to its normal level, according to Litten. During the years 2003 to 2004, there were around 29,000 homes sold in a year.
Another dark cloud hovering over Indianapolis is the plan of Eli Lilly, the city’s second largest private employer, to eliminate 5,500 jobs over the next two years. The planned job cuts represent 13.5 percent of the company’s overall work force.
John Lechleiter, chief executive of Eli Lilly, said that he does not yet have the exact number for planned job cuts in Indianapolis, but he admitted that the biggest portion of the cuts would likely occur in the city because Indianapolis has around 13,000 of the 40,500 people employed by Eli Lilly worldwide.
Eli Lilly said it will restructure the company into 5 business units to make it more competitive as it faces lower revenues because of the expiration of its Zyprexa patent in 2011 and four other blockbuster patents by 2014.
According to Lilly, the Zyprexa patent expiration will cause the firm to lose a big portion of Zyprexa’s $4.7 billion yearly sales to lower-priced generic versions. So it needed to streamline its operations and cut more jobs.
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