You’ve heard the common, and usually inspirational, proverb: A journey of 1000 miles begins with a single step. But when it comes to the dream of homeownership for the average Hoosier household, it can feel as if our feet are encased in cement. Taking even a small step forward requires gargantuan effort, and it is all too easy to fall two… or four… or one hundred steps back.
The financial distance between affordable, attainable and current housing stock makes a journey of 1000 miles into one that is exponentially longer and more arduous.
What are the obstacles along the way – and is there a way to create a clearer path to achievable housing for our teachers, first responders, small business owners, tradespeople… for us?
The Good, The Bad, and the Ugly: Today’s Housing Market
The good? Central Indiana boasts a lower cost of living compared to the national average. The not so good? This does not mean that the area offers attainable housing for its residents. In fact, according to the Indianapolis Metropolitan Area Housing Affordability Report from the Common Sense Institute, “The cost of housing in the Indianapolis metro area has made it a more expensive place to live.”
In the past decade, housing prices have sailed past the national average while supplies have dwindled. The median price of a home in Indiana is now $370,500, meaning that to qualify for the home you must make at least $88,000 annually. Only 789,096 of 2,593,558 Indiana households are able to afford that median price- which is only about 34% of Hoosiers.
At the same time, rampant inflation has sent mortgage interest rates soaring. “Tight” doesn’t begin to describe this market.
Barriers to Attainable Housing
What if we scrimp and save? Work harder? Save more? Cut our budget even more? Then we can afford a house in the community we love, in the community where we work.
Who wants to be the one to tell hopeful homeowners that this isn’t how the American Dream works anymore?
In the past 8 years, the cost of buying an average-price home has increased 61% – 81% (with the last two years accounting for most of that jump). In late 2014, for example, the average house price in Marion County was just over $100,000. Today, it is $213,000 – $235,000. But wages have gone up, so….
Yes, it’s true. We have seen growth in this area, and Marion County’s average monthly income is higher than the average across the country (at just over $1,400). However, the number of hours you’d need to work to pay a median mortgage payment is 58 hours, compared to 30 hours just a few years ago. This obviously does not account for the cost of other necessities, such as food, gasoline, utilities, medical bills, etc. This statistic speaks to the fact that many of today’s homeowners must work themselves to the bone to make ends meet. Simply put, this is unrealistic and unachievable.
Housing affordability is at its lowest point in a decade and a half. While high prices and increasing interest rates have dampened demand… They keep millions of hard-working Hoosiers out of the market.
Building Indiana Roots
There is no one simple answer to bridging the financial gap between the current state of the market and attainable housing, nor is there one group or agency that can “fix” it on its own. In other words… There is no magic wand. Rather, it is a joint effort – a community effort, if you will – to discuss the issues, explore opportunities, and create solutions that lead to stronger, more sustainable communities in Indiana.
Join the conversation. Visit Build Indiana Roots to learn more.