The dream of homeownership is becoming increasingly challenging for many in the United States, and right here in Indianapolis. A major factor contributing to this affordability crisis is the lack of available housing. While rising home prices and interest rates certainly play a role, the process of obtaining building permits can significantly impact the supply of new homes and, consequently, affordability. In Indiana, the current permitting trends paint a concerning picture, particularly when it comes to meeting the growing demand for housing.
Highlighting the Permitting Deficit
Recent data from the Common Sense Institute reveals a substantial deficit in the number of permitted housing units needed to keep pace with Indiana’s population growth and to erase the existing housing shortage. To meet the estimated demand by 2028, the Indianapolis metro area alone requires an additional 77,165 to 128,143 permitted units over the next five years. This translates to a yearly requirement of 15,433 to 25,629 houses, lofts, townhomes, or apartments. However, in 2024, only 6,507 permits were issued through July, which annualizes to approximately 11,155 permits – significantly below the needed rate to fix housing availability deficits.
“We need more housing. We need more supply.” – Trent Wood, Director of Attainability at Arbor Homes. He says that it is his main focus to work on a project called Arrival, which is specifically aimed at attainable housing – everything from permitting, conversations with cities and municipalities to selling and delivering to the client.
Wood is not the only one concerned with the current problem facing Indiana. The situation is even more alarming when looking at it on a statewide level. To eliminate the estimated housing deficit and meet demand by 2033, Indiana needs 118,103 to 167,974 permitted units on top of those already figured above. In total, that equates to 27,243 to 42,426 permits annually. While there has been progress since 2012, with the number of annual permitted units increasing by 148%, the current pace is still lagging well behind what’s needed to address the affordability crisis.
The Impact of Permitting Trends on Housing Availability
The permitting process plays a crucial role in determining the types of housing being built and the overall availability of affordable options. In Indiana, there has been a notable shift in the mix of housing permits issued in recent years. The share of permitted single-family units fell from 80% in 2012 to 57.4% in 2023 but then rebounded to 83.4% in 2024. Conversely, the share of permits for multi-family structures rose from 20% in 2012 to 42.6% in 2023, only to fall back to 16.6% in 2024. When reporting on exactly this problem elsewhere, The Salt Lake Tribune wrote “Of about 140,000 building permits issued in the past decade for typical housing styles, 87% have been for single-family, detached homes, according to the Ivory-Boyer Construction Database. Yet it’s the other kind of housing — duplexes, triplexes, fourplexes, condominiums, town homes and cottage clusters — that can help us improve housing affordability.”
This fluctuation in Indiana raises concerns about the ability of the current permitting system to support the development of diverse housing options, particularly those that cater to the people most in need of achievable housing at this time.
There are concerns at all levels of legislation that zoning laws are slowing and even preventing new construction. The Missouri Independent reported “The speaker of the Rhode Island House described how his state has tackled affordable housing and how it could be a model for local and state governments across the country in a Wednesday hearing before members of the U.S. Senate Budget Committee. ‘My mantra has been: production, production and more production,’ Shekarchi said. Shekarchi and housing experts urged the senators to take a multipronged government approach to tackling the lack of affordable housing, such as reforming zoning, expanding land for building and streamlining permits.”
Advocating for Achievable Housing
It’s not just government, however. Mr. Wood points out that there is a negative stigma around attainable housing and says that they often run into pushback from communities. He says, “we often hear things like we don’t want attainable housing. You know, we don’t want vinyl siding. We want we want all brick. We want wider lots. And so, ultimately, they end up putting enough restrictions to prevent the deal from going through.” On a happier note, though, he added, “There are communities that are excited to partner with us…They see the need and see this product and go, ‘This is a perfect fit for us.’”
It’s that latter sentiment that will push our communities forward and help promote housing availability. Build Indiana Roots recognizes the critical role that efficient and effective permitting processes play in ensuring an adequate supply of housing for all Hoosiers. We are committed to advocating for achievable housing and responsible housing policies that promote balanced growth and address the root causes of the affordability crisis. We recognize the need for a revamp of the current zoning legislation at the city, state, and national level.
Want to be part of the solution? Connect with us to learn more about how you can get involved in advocating for achievable housing in Indiana and make a difference in your community.