Indianapolis Foreclosures Bearing on Large-Scale Project

by on Foreclosures

Indianapolis foreclosures continue to pull down home values and cause defaults in housing projects, including Heartland Crossing, considered the biggest residential development in Indiana.

Short sales, defaults and foreclosures have been occurring in the 2,200-unit master-planned housing project by Cedar Run Limited since 2006 when an increasing number of homeowners took out second mortgages to pay off other debts or to buy fancy appliances and furniture. When the mortgage crisis worsened, borrowers could no longer pay their increased monthly payments and could no longer resell their homes at good prices to pay their home loans.

Heartland Crossing spans 675 acres of land in the counties of Hendricks, Morgan and Marion. In the 1990s, it was proposed to be an idyllic master-planned residential community of 3,100 homes, including 400 apartment units in Marion and Morgan counties.

Cedar Run was able to construct roads for 2,700 residential units, but failed to start any development on a 100-acre site adjacent to the Morgan golf course. According to Cedar Run co-founder Tim Shrout, the development firm finished all of the planned amenities, including the parks, walking trails, the pool and the golf course before Indianapolis foreclosures soared and put downward pressure on real estate values and on the housing sector.

Currently, Adams and Marshall Homes is completing the construction of low-maintenance duplexes and houses in the Morgan County portion of the project while Ryan Homes is completing the Northfield portion of the project in the Marion County side.

When the project began and was seen as a big-impact project in the Indianapolis area, the largest home builders in the region participated, including Gunstra, C.P. Morgan, Hansen & Dorn, KB Homes and Dura Builders. But when the foreclosure crisis clobbered Indianapolis, all of these builders collapsed or were saved by stronger homebuilding companies.

According to co-developer Shrout, the Heartland project pushed up real estate values in the area, causing total net value in Madison to shoot up by 230 percent to $199 million from $60 million after only one year.

But because Cedar Run purchased the Heartland site at a low price, it was able to price its homes very affordable to many, offering most of the homes at the price range of $110,000 through $170,000 and the higher-priced homes at less than $250,000. With aggressive lending, builders and borrowers took advantage of these prices during the boom.