The Indiana housing market trends are shaped by various economic forces. Understanding these factors is crucial for advocating for housing affordability in Indiana, ensuring that every Hoosier can achieve their home-buying dreams.

Economic Growth and Housing Demand

Economic growth plays a pivotal role in the Indiana housing market trends. As incomes rise, people have more money to spend on houses, driving up demand and, consequently, prices. Housing is considered an income-elastic luxury good, meaning that with rising incomes, a larger percentage of income is spent on homes. Conversely, during economic downturns, falling incomes reduce demand, and those who lose their jobs may face the threat of home repossession.  Economic growth is strong in Indiana.  The Daily Journal reported the Indianapolis metro’s GDP grew by $12.1 billion, or 8.4% between 2019 and 2022.

Unemployment and Consumer Confidence

Unemployment significantly impacts the homes prices in Indiana. Higher unemployment rates mean fewer people can afford to buy homes. Even the fear of unemployment can deter potential buyers from entering the market. This ties closely to consumer confidence, which affects whether people are willing to take on the risk of a mortgage. If potential buyers fear a fall in home prices, they may delay purchasing.  Currently, according to The US Bureau of Labor Statistics, the Indiana’s unemployment rate is just a smidge below the national average of 3.5%, which is significantly lower than what we have seen in the past.  Generally speaking, the American population is comfortable in its employment and willing to buy.

Interest Rates

Interest rates directly influence the cost of monthly mortgage payments. High-interest rates make mortgages more expensive, reducing demand for home purchases and making renting more attractive. Forecast recently reported on Zillow’s change in home price forecast.  Initially, the industry powerhouse was calling for relatively no change to home price in 2024.  Since then, however, Zillow reported that external factors have caused them to alter their forecast.  They foresee home values rising by 3.7% this year, in large part due to the high interest rate deterring potential sellers from listing their properties, which brings us to the next concept: Supply and Demand.

Supply and Demand Dynamics

Supply shortages lead to higher prices, while excess supply causes prices to fall. According to an analysis by ResiClub of the Case-Shiller National Home Price Index, home prices have increased by 47.1% since the start of 2020. Experts attribute this rise to a shortage of available homes and homeowners’ reluctance to sell after securing historically low rates during the pandemic.

Positive Outlook for Indianapolis Housing

Advocating for affordable housing in Indiana remains critical. By addressing the supply-demand imbalance and supporting policies that promote achievable housing, we can help more Hoosiers put down roots. To learn more about the challenges to achievable housing, visit Build Indiana Roots and join our mission.