Indianapolis has experienced significant growth in housing over the last twenty years. In Indianapolis, like many other urban areas this growth in new construction home subdivisions has increased at a rapid rate. On one hand, this new home growth is applauded by the masses as a good thing because it does cost a lot less to build a new home than to buy an existing home. However, the effects of first time borrowers being qualified for homes above their income levels because of 2-1 buy down programs, fluctuating property taxes, and the lack of pre-home purchasing consumer education are factors that has turned the American dream of home ownership into a nightmare.

I began looking for a home in September 2000 by looking at existing homes in established neighborhoods. All of the existing homes in Washington Township were above a price range that was affordable. January 2001 I responded to an ad in the newspaper that stated, own a home for what you pay in rent, and I contacted the realtor. The realtor worked for the builder and showed me homes in the new Morningside Subdivision. I was shown several models of homes ranging in prices from $130,000-$150,000 and decided on the Capricorn model which was $131,000 because it was suitable for the needs of my family. I had saved money for a down payment anticipating the purchase of a home. In my first meeting with the builder, I was told about the Nehemiah program, HART program, FHA, VA and other federal loan programs that would assist first time borrowers in owning a home.

What I did not realize at the time was that the loan from the HART program, which was given to me to payoff previous debts, was rolled into the original price of my home, which made my home have an inflated price. Herein lies the problem for Morningside subdivision. Since I was qualified for a FHA loan with a 2-1 buy down to purchase my home, my down payment was lower and, my first year’s mortgage was the same as my rent payment $754. However, after the first year’s mortgage payment the assessment value of taxes increased my mortgage payment to over $1,000.

Morningside is a new construction subdivision that began building in late summer 1998. There are 168 homes in the subdivision. Since 1998, the foreclosure rate in our subdivision has increased to above 20%. The neighborhood is experiencing rapid changes such as high foreclosures rates, high home abandonment rates and fluctuating property taxes. This environment of rapid change and uncertainty is affecting our property values. A recent market analysis suggests that our home values per family have decreased by $8,000-10,000 per year for the past several years.

If it takes a village to raise a child, it certainly takes a village to keep a neighborhood together as a community. The family is the core unit of our society. All neighborhoods consist of families. It is the responsibility of the builders, lenders, legislators, and elected officials to take immediate action to correct Indiana being the number one state for home foreclosures. Building new communities does not correct the damage done to existing ones.

Consumer education and pre-home counseling is a first step in the right direction. Pre-home counseling must become mandatory. The truth about the cost of taxes, property upkeep, and homeowner’s association dues must be communicated. Builders and lenders have an obligation and responsibility to the consumers that they serve. Borrowers should be qualified for a mortgage that includes the full tax assessment of the home Indiana legislators must be willing to Develop programs like the Pennsylvania Housing Finance that work to help families to stay in their home. What happens to one family does affect the rest of us and immediate action must be taken to save our neighborhoods and new subdivision from the factors that are causing the core unit of the family to lose it’s value and place in Indianapolis society.