We know. We all know – you cannot help but listen to, read about, or see the challenges of the current housing market. Many of us are experiencing it firsthand. To put it bluntly: it’s rough out there. A post-pandemic boom sent prices soaring, and they have not yet returned to Earth. At the same time, rampant inflation led to rising mortgage interest rates. It is more expensive to purchase a house, and it is more expensive to borrow money. 

The 2023 Common Sense Institute Housing Study digs into the why. But what’s the why behind the research itself? 

A Necessary Dose of Common Sense  

The Common Sense Institute is a nonpartisan research organization. Their goal is to look at the impacts that policies, initiatives, and proposed laws have on the economy. CSI seeks to ensure the public is educated and informed on the critical issues we face as a country – and as communities. CSI founders apply rigorous methodology and provide sound data to help combat the divisive partisanism that so often impedes progress. They wanted to ensure people have access to the information they need to make fact-based – and common sense – decisions.  

About CSI’s Housing Study  

CSI’s study – “Indianapolis Metropolitan Area Housing Affordability Report” — looks at data pulled from Boone, Hamilton, Hancock, Hendricks, Johnson, Madison, Marion, Morgan, Putnam, and Shelby Counties. Why?  

According to CSI senior economist and study author, Dr. Steven L. Byers, “CSI recognizes the importance of affordable housing to a robust economy. Decreases in affordability are a function of supply and demand. The demand side is a function of population growth and consumer preferences. The supply side is often discussed but not often quantified, so CSI chooses to estimate the supply/surplus. This study does that.” 

Key Findings  

Let’s take a brief look at some of Dr. Byers’s key findings, which as mentioned, focus on supply and surplus: 

  • In 2022, the Indianapolis Metro area had a housing deficit of between 18,852 – 61,238. That is between 18,852 – 61,238 individuals/households who are struggling to find appropriate housing. By 2028, the area will need to build between 66,000 – 115,000 new units to close the gap and account for projected population growth.  
  • To close the supply deficit and accommodate for population growth, the Indianapolis MSA will need 11,050 – 19,301 a year through 2028. While 2022 started off promising, high interest rates have put a damper on new permitting. Permit data indicates that counties are not expected to issue enough permits to meet these goals (-3065 units). 
  • Marion County has the highest deficit of housing unit permits. Hamilton has the largest surplus (+718 – 1920). 
  • We are seeing a shift away from permits for single-family houses towards multi-family structures.  
  • Homebuilders’ confidence has plunged 65% from a high in November 2020. This indicates that there will be a decrease in new house building going forward.  

On the income side of the equation:

  • Coming as a surprise to no one, household incomes have not kept up with rising inflation, including on home prices. The average hourly wage went from $23.00 to $29.34 (28%) between 2015 and 2022. But… and it’s a big but… the number of hours the average person must work to cover a median mortgage payment went from 30 hours to 58. 
  • The affordability of buying a house in the Indy MSA is coming close to its lowest point in 15 years. Since 2014 alone, the average-price home has shot up 61% – 88%. Most of that happened between 2020 and 2022, giving house hunters a serious case of sticker shock. Marion and Madison Counties posted the most significant decreases in affordability (88% and 86% respectively). 

Common Sense for Indianapolis  

We may think we know… But with nonpartisan studies like the “Indianapolis Metropolitan Area Housing Affordability Report” from the Common Sense Institute, we have the data, the information, and the insight we need to know. The next step is to do. Dr. Byers says the CSI report “is a useful tool for builders, zoning departments, city planners, etc., towards making informed decisions for the future of housing.” 

It can be a useful tool in our hands as well; when citizens are educated, and involved, we can affect the change we need. It starts with a conversation. Visit https://buildindianaroots.com/. 


Image by Scott Crone  |  visitindy.com