Learn more about the housing market in Indiana

Every state is unique when it comes to the real estate market. That’s why it’s critical to understand the market you live or operate in. Whether you’re renting, buying or selling, it will impact many aspects of your life.  

Indiana Housing Market Overview 

The Indiana housing market has slowed considerably over the past few years. From 2022 to 2023, sales dropped 14%. As mortgage rates decline, though, it appears buyers and sellers will return to the market. Housing inventory remains a serious issue, though. Slow market conditions mean builders aren’t incentivized to build new homes, even with existing inventory low. Naturally, this is a factor in increasing median home prices. 

Homes across Indiana are becoming less affordable. For instance, cities like Chesterton and Fort Wayne experienced ballooning sales prices (32.1% and 21.2% year-over-year).  

There are some indications, however, that this trend may change in the coming years. The number of homes sold in March dropped 6.6%, which indicates a cooling-off period that may help buyers. 

Discouragement from buyers is an issue in Indiana. One real estate professional said most of her buyers must deal with at least five competing offers on any property they want. This elevated competition increases the time spent looking and is disheartening for many.  

Despite the concerns present, most experts look to the future with optimism. And the sales growth backs up this optimism. 

Indiana Housing Market Trends 

To understand the Indiana real estate market, it’s important to keep up with trends. Let’s look at some key ones in IN: 

Note: These statistics are based on Redfin’s monthly housing data from April 2024. 

Median Home Price 

Indiana’s median home price is $256,100, according to Redfin’s monthly housing market data from April 2024. This is a growth of about 3.6% since April of last year. Median prices are even higher in larger metropolitan areas like Fort Wayne. High market values and rents have made housing unaffordable for many Indiana residents. 

Number of Homes Sold in April 2024 

In April, there were 6,989 homes sold in Indiana, up 10.5% from last year according to the Redfin dataset. Thus, even though Indiana’s market has some issues, selling and buying are still occurring at a high rate. However, it’s important to keep in mind that this number might be inflated compared to other months since nationally speaking, sales usually peak during the spring and summer months and slow considerably in the winter. In fact, the National Association of Realtors (NAR) predicts that in February and March alone, sales activity increases by as much as 34% and prices by 3%. 

Median Days on Market (DOM) 

Days on market (DOM) is the average length of time a home remains listed on the market before being put under contract. A lower DOM signals an extremely competitive seller’s market with more pressure on buyers to come in with higher offers and remove contingencies. A higher DOM signals a buyer’s market with slower sales and less leverage for sellers. 

The current median DOM in Indiana housing market (2024) is 23 days. This is lower compared to many other states, and Indiana has been a market that typically favors sellers for the past few years. 

New Supply Statistics 

Housing supply continues to be an issue in Indiana. There is an extreme shortage of available housing for low-income households. Indiana has 209,710 extremely low-income households and only 70,932 available rental homes in their price range. As you can see, the math isn’t hopeful. The affordable and available rental housing for Extremely Low-Income households is below the national average and below New York’s average. This is a concerning statistic. 

While supply in general is up from last year, it’s not keeping up with demand. Experts hope this trend will course-correct a bit in 2024.  

Property Tax Rate 

The average property tax rate in Indiana is 0.75%, according to Rocket Mortgage. This places Indiana’s average property tax rate as the 22nd lowest in the U.S. It’s important to point out that property taxes vary widely depending on the specific county of Indiana and the value of the home, so this average rate may or may not be indicative of your situation. 

Foreclosure Rate in Q1 of 2024 

In the first quarter of 2024, 1 in every 1,042 homes experienced a foreclosure filing (according to recent data from ATTOM). Based on this data, Indiana’s foreclosure rate is higher than most other states. 

Hottest Local Markets in Indiana 

Indiana has several hot markets. Here are two of the most noteworthy: 

1. Indianapolis

Zillow named the capital one of the five hottest markets in the country in 2024. The most-populated place in IN is home to a very competitive market. The median sales price for homes is up 6.5% year-over-year and the number of homes sold is up 8.5% (April 2024 and April 2023, for reference).  

A solid economy, ample job opportunities, inventory, affordability, and demand. The city added 28,500 jobs in November 2023 compared to 2022. Indianapolis hosts the world’s second-largest FedEx express hub, in addition to pharma giants like Eli Lilly and Roche Diagnostics. The inventory situation is better than most places in the U.S., but it’s still low. 

Affordability is the main attraction of this city. It’s much better than the rest of the country, especially when you consider its size and opportunities. 

2. Fort Wayne

The second-largest city in Indiana is the hub of three rivers and a major metropolitan area. This somewhat competitive market has a $220,000 median home price (as of April 2024). 

Realtor.com chose Fort Wayne as the No. 2 emerging housing market in the U.S. The entertainment options and businesses make it a place people want to move to in the Midwest. 

Factors Impacting the Indiana Housing Market 

Indiana’s market is influenced by macroeconomic trends and more granular economic factors specific to the state. 

Mortgage Rates 

High mortgage rates are a continuing difficulty for would-be homeowners in the U.S. Indiana’s average rates for 30-year mortgages in June of 2024 are above the national average at 7.38%. Higher interest rates deter borrowing and discourage those who already own homes from putting their homes on the market. Many homeowners report feeling “tied” to their current homes, as it is unlikely they will secure a mortgage rate as low as their current if they move to a new property. Prospective buyers in Indiana would be wise to monitor mortgage rates in the coming months for a better understanding of how they impact the housing market. 

Inflation and Cost of Living 

Mortgage rates relate directly to inflation, another massive contributing factor to the affordability of housing and the status of housing markets in general. Inflation has increased the cost of living for many across the U.S., including in Indiana. This means fewer people can truly afford to limit housing costs to less than the recommended 30% of their monthly income.  

Population Changes and Demographics 

While Indiana has lad population growth in the Midwest since 2011, housing supply isn’t keeping pace. Per the IN Association of Realtors, Indiana needs about 30,000 additional housing units to keep up with demand.  

The increasing population is another factor in people staying in their homes longer. The lack of new houses means a lack of available housing. Additionally, home prices continue to rise faster than the average person’s salary.  

Government Policies 

Local legislation impacts housing markets profoundly. For instance, under the House Enrolled Act No. 1068, Indiana established new boundaries for real estate wholesalers and flippers, especially focusing on those without a real estate license. Transparency and accountability are the main goals of this legislation related specifically to marketing and advertising methodologies in the real estate sector. 

Indiana Housing Market Forecast 

The Indiana housing market is sensitive to a myriad of factors, which are being closely monitored by real estate analysts and homeowners across the country.  

In general, housing market predictions for Indiana are lukewarm, but many analysts believe the market will be better for buyers and sellers due to declining mortgage interest rates. Major cities and metropolitan areas like Indianapolis will likely see modest growth while the market continues to be tight as demand outpaces supply. The unemployment rate will still place a burden on the state and the housing market generally. Residents and prospective homeowners will continue to monitor high interest rates throughout the rest of the coming year. 

Likelihood of Indiana Housing Market Crash  

Given the factors illustrated above, many investors and analysts are concerned about Indiana’s housing market. However, a housing market crash is extremely unlikely. 

Indiana’s cost of living is still 8% below the national average. And housing is quite affordable in most areas compared to the rest of the nation. Seven out of nine private sectors in the state added jobs, so the availability of jobs also means a crash isn’t likely.  

Forecast for The U.S. Housing Market 

Now that we’ve looked at Indiana’s housing market, let’s zoom out a little bit. What about the U.S. housing market? What do you need to keep an eye on in the coming years? 

The United States’s current median existing-home sale price is around $384,500 per the National Association of Realtors. The inventory, though, remains low. A balanced market typically has a 5-to-6-month supply, but the current figure is 2.9. 

We’re currently in a seller’s market with buyers looking at continued rising house prices. The same trend can be seen with renters. Housing continues to appreciate, in general.  

Dr. Lawrence Yun, Chief Economist and Senior Vice President of Research, National Association of Realtors, believes the housing market will appreciate 15 to 25% over the next five years. He thinks that the seller’s market will continue because housing inventory will remain low. In five years, however, he predicts a more balanced market, in which neither party has a built-in advantage. Thus, the market will shift to a case-by-case basis to determine what kinds of deals people can get. 

Hybrid work also impacts the housing market. This shift in work culture means suburbia will continue to grow. States like Texas, the Carolinas, Tennessee, and Florida should see continual growth. 

The number of single-family homes built decreased over the past couple years while the number of multi-family homes increased due to lower prices and a demand for affordable housing. Higher mortgage rates and inflation (affecting price of materials) were the main causes.  

Indiana Rental Market 

The rental and buying market are obviously closely linked. When home prices fall, landlords are more likely to buy properties to rent out. Home prices and rental prices are correlated as well because a hot market means prices rise.  

Rents were more unaffordable than ever in 2021 and 2022. In 2022, 22.4 million households paying rent said it was unaffordable, which is the highest that figure has ever been, according to a January report from the Joint Center for Housing Studies at Harvard University. The study found that half of all renters in the United States spent over 30% of their income on rent and utilities.  

The markets cooled in 2023, though, due to new units and decelerating demand. But a serious problem persists: Rent increases are still outpacing income gains.  

Moreover, high interest rates are keeping borrowing and transaction activity down. Over half the banks surveyed by the Federal Reserve reported that demand for multifamily loans decreased year-over-year. 

The pandemic caused a housing disparity that isn’t going away anytime soon. Unaffordable housing is a serious issue across America. Whether high rents or low income is the main cause doesn’t change the fact that this problem is widespread.  

Indiana’s current rental market is influenced by these trends. Prices are going up somewhat, especially in major IN rental markets like Fort Wayne and Indianapolis. Below are just a few of the current trends for Indiana’s rental market based on data pulled from Zillow: 

Indiana Rental Market Key Trends 

• Median rent: $1,350 (note: This well below the national median) 

• Month-over-month rent change: +$0 

• Year-over-year rent change: -$33 

• Available rentals: 6,248 

The Indiana rental market is more affordable than a lot of other places in the U.S. It’s a growing market and a place that’s become more popular in the Midwest. 

Conclusion 

The Indiana housing market in 2024 is marked by a blend of stability and challenges, making it crucial for potential buyers and sellers to stay informed about market trends. Whether you’re looking to purchase a home soon or sell your property in IN, the macro- and micro- economic trends outlined above will impact your decision-making. Market dynamics like changes in home prices, inventory levels, and interest rates will continue to be critical for stakeholders in local real estate.