If you have a home in the Indianapolis metro area, you are one of the lucky ones. For the vast majority, the housing market is a tempest that shows few signs of letting up. Affordability and access are critical issues all over the country, and certainly here at home in one of the country’s hottest markets.

What do we – as owners, potential buyers, community members, policy makers, and leaders – need to know?

The Common Sense Institute

The Common Sense Institute (CSI), a nonpartisan research organization, examines the impacts that policies, proposed laws, and initiatives have on the economy. Crunching the data from Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Marion, Morgan, Putnam, and Shelby Counties, their comprehensive “Indianapolis Metropolitan Area Housing Affordability Report” seeks to educate and inform stakeholders so they can make solid, fact-based decisions.

Recently, CSI issued an update to the 2023 Report. While there is no shortage of news headlines and op-eds telling us what’s going on, CSI pulls timely, relevant data in order to provide a clear look into the evolution of prices, supply relative to demand, and – bottom line – affordability.

So, what did CSI senior economist Dr. Steven Byers discover?

Key Findings: The CSI Indianapolis Metro Area Housing Affordability Report

Here’s the crux of the matter:

Homebuyer Misery Index

The aptly named Misery Index, also known as the Economic Discomfort Index, measures overall hardship in an economy. In other words, how is the average person faring? It comes as little or no surprise that the Indianapolis Homebuyer Misery Index rose a staggering 61% from July 2020 to October 2022. After a 3.4% decrease from October 2022 through July 2023, it is creeping back up to a standardized score of 160.38.

To find out how CSI calculates the Indianapolis Homebuyer Misery Index, check out the original 2023 report.

How is the average person doing in this market? Misery might love company, but it seems to have a special place in its heart for homebuyers.

Homebuilder Confidence

The National Association of Home Builders (NAHB) and Wells Fargo conduct monthly surveys, gathering data on home builder perceptions of current single-family home sales and expectations for the next six months. The Housing Market Index (HMI) ranges from 0 (lowest confidence) to 100 (highest confidence). Where do we stand? The HMI for the midwest region is just 38 – which is lower than the northeast (48), south (49), and west (42). Generally, a score under 50 is associated with a negative outlook.

This is a clear indication that homebuilders have a relatively low level of confidence in terms of current and projected sales. While not necessarily correlated, this lack of assurance is most certainly shared by would-be homebuyers.

House Prices

Again, it’s no surprise, especially to those facing the arduous house-hunting process, that home prices are high. In fact, two of the metro area’s counties, Boone and Hamilton, have prices that exceed the national average (121% and 110% higher, respectively). While there has been some stabilization, prices in Indianapolis rose 0.7%, or $1750, from October 2022 to October 23.

To some, $1750 doesn’t seem like much – but consider that for every $1000 increase, almost 3,024 Hoosier households are priced out of the housing market.

Affordability Factors

The data shows that affordability is falling in stark detail. From 2015 to 2023, the cost of buying an average-price home has shot up between 72% – 105%. Take a second to think about that. If a house costs approximately twice as much, there is no way that even our area’s relatively advantageous wage growth can keep pace.

Yes, the average hourly wage is $30.22 (up 31.4% since 2015). But eight years ago, a wage-earner needed to work 30 hours to cover the monthly median mortgage payment. Today, that’s 61.5 hours. Essentially, we need to work twice as much to afford a house twice as costly. There isn’t enough time in the day, or money in the bank, for millions of Hoosier households.

The Why Behind CSI’s Study

Build Indiana Roots utilizes studies and reports, like CSI’s, to access authoritative, quantitative data on an issue that impacts millions of Hoosiers. We also leverage that information and education to advocate for the “missing middle” and to work towards substantive change. The more we know, the better we can attack the problem with more productive conversations and actions.

Join us.