Your summer guide to the Indiana housing market: Real estate will be as hot as the weather
The Central Indiana real estate market is hot, and analysts say it will continue heat up, short of a recession.
Even as interest rates tick up from the record-low pandemic levels of 2% to 3%, the Indianapolis housing market continues to see intense demand that far outpaces home supply.
With low inventory, homes are selling for unprecedented high prices. Bidding wars are commonplace. Homes sell within days of listing. Cash offers are ubiquitous.
In the confusion, first-time and lower-income homebuyers struggle to find a home they can afford in this competitive seller's market. Amid the historic real estate frenzy, IndyStar has chronicled the challenges and triumphs of the housing market over the past year.
Below you will find a list of stories of how people have been affected by the red-hot housing market, including real estate experts' predictions for the future, tips on how to buy a home, and prognoses of the ongoing housing affordability crisis.
This guide will be updated over the summer so be sure to check back.
Extreme sellers' market due to supply choke point
'It would take a recession' to cool Indiana's record-high home-buying market: A rule of thumb is that a balanced market is one with four to six month’s supply of homes for sale, said Jim Litten, the FC Tucker chief executive officer. Markets with less than a four-month supply of homes for sale favor the seller.
As of February, the central Indiana housing market had about a one-month supply.
Short of a recession, Litten said, the market is unlikely to cool down.
Metro Indy housing prices skyrocket, inventory remains low: Lack of housing inventory is pushing up the median sale price of homes, which was $275,000 in the Central Indiana region in April, according to MIBOR's latest data. It's a record high.
After frenzied summer of homebuying, Central Indiana home sales slow down: As is consistent with pre-pandemic years, homebuying slowed down in the fall. But this is not an indicator that the market would slow down anytime, Litten said last fall — a prediction that turned out to be true.
High demand for Indy homes continues to drive up sales, home values: Experts said the boom in home demand is driven partly by COVID-19 pandemic due to the Fed's slashing of interest rates and a worsened housing supply shortage when builders were unable to construct new homes.
Housing affordability crisis in Indianapolis
Indiana families struggle to buy homes in expensive housing market: The Indianapolis metro area is mired in a housing affordability crisis, home builders, affordable housing developers and housing policy analysts said. The reasons are complex but boil down to high demand, low supply, and rising interest rates.
A rule of thumb, according to the Indianapolis Neighborhood Housing Partnership, is that you can afford a home that costs 2.6 years of your household income.
But as of 2021, median home sale prices are 3.5 times that of the median household income in Marion County, an Indianapolis Neighborhood Housing Partnership report found.
The American Dream of home ownership is becoming increasingly unattainable to many, said home builder Corby Thompson, president of Fishers-based developer Boomerang Development.
Like so many other lower- and middle-income Hoosier households, single mother Jasmine Black found herself unable to secure a mortgage in 2017 due to massive student loans and medical debt from her pregnancy. Even when she finally was approved for a mortgage four years of hard work to improve her credit score later, she couldn’t find a decent home for sale within her price range in Indianapolis.
Residents worry about gentrification as new commercial and residential developments raise housing values in their neighborhoods: Renters and low-income residents have already started to be priced out of the historically low-income Riverside neighborhood, where the new 16 Tech Innovation District is attracting speculative real estate investment and driving housing prices up.
From Riverside to Norwood to West Indianapolis, where residents grapple with change as Elanco breaks ground on its new global headquarters, gentrification and displacement concerns abound in a changing Indianapolis.
Popular HGTV show 'Good Bones' was accused of gentrifying the Fountain Square neighborhood at a talk by Karen Laine, show co-star. Former longtime neighborhood resident John Harris Loflin said 'Good Bones' are "opportunists". The controversy raised the question of whether individual real estate developers like Laine should take responsibility for mitigating the harms of gentrification, or whether that onus falls upon neighbors, upon the community, or upon the government.
Indianapolis to invest nearly $56 million in affordable housing, anti-displacement efforts: Amid affordability concerns and the looming threat of displacement, the city is to invest some of its federal American Rescue Plan Act funding in affordable housing and other efforts to help residents remain in their homes.
Bold new solution is explored as a new way to keep homes affordable in Indianapolis: As rising housing prices threaten both prospective home buyers and renters, the city has come up with a proposal to spend $1.5 million establishing a new community land trust, a system of ownership where land is held on behalf of a community.
Community land trusts enable people who otherwise would not be able to afford to become a homeowner to do so by subsidizing the cost of buying a home. In return, homeowners in the community land trust promise that if they sell the house in the future, they will do so at an agreed-upon, below-market rate cost, to keep the homes in the trust permanently affordable to future homebuyers.
Race-based mortgage discrimination contributes to plummeting Black homeownership in Indianapolis: A report on mortgage lending by the Fair Housing Coalition of Central Indiana found that Black and Hispanic borrowers in Marion County are denied mortgage loans at significantly higher rates than average. Even when they do receive loans, their interest rates tend to be 30% to 40% higher than other borrowers, the report said.
Homebuying tips
4 programs that can help you afford to buy a home in Indiana: With Indiana's housing market facing historic high sale prices, first-time homebuyers may be at a loss as to how to afford buying a new home. These four programs are designed to make homebuying more affordable by providing down payment assistance or tax credit to eligible buyers.
What you should never compromise on when buying a home — and what you can: It may be tempting for homebuyers, desperate to close on their dream home, to make compromises in the process. Here are what real estate experts say you should never compromise on when buying a home, and what you can.
Indianapolis neighborhoods to watch
What kind of home $500,000 gets you in these Indiana counties: Even in a hot housing market, not all homebuying markets are heating up at the same pace. If you are a homebuyer, your dollar may go much further in some counties and neighborhoods than others. Here's what $500,000 would buy in these counties.
10 Indianapolis neighborhoods that saw the most homebuyer bidding wars in 2021: Bidding wars have become commonplace in a housing market where there are far more buyers than there are available homes. IndyStar analyzed Zillow data to find out which Indianapolis neighborhoods had the most homes that sold for more than 15% over their original list price, a key indicator of where the hottest bidding wars occurred.
Notable Indianapolis homes for sale
Hubler mansion on the market for $2.95 million: The palatial Hubler House, owned by Howard F. Hubler of the Hubler Automotive Group fame, is on sale. Hubler’s own 'Palace of Versailles', a 6-bedroom, 7.5 bathroom mansion, was designed by artist Ray Turner. A grand travertine staircase sweeping over the 2-story foyer greets guests as they arive. Classic European features of this home belie its modern construction — it was only built in 1995.
That Dolphin mansion on Kessler, one of the weirdest homes in Indiana, is on the market: The infamous 1953 mansion of the late Indiana pimp-turned-magnate, Jerry Hostetler, is once again on the market and this time, the long-suffering masterpiece might finally be sold.
Christel DeHaan's $14M home described as "a true sanctuary." It's on the market: The Indianapolis home of Christel DeHaan, the Hoosier businesswoman and philanthropist who died in June two years ago, has been put on the market for $14 million.
Contact IndyStar reporter Ko Lyn Cheang at kcheang@indystar.com or 317-903-7071. Follow her on Twitter: @kolyn_cheang.
This article originally appeared on Indianapolis Star: Indianapolis homes 2022: Real estate market summer guide
