Indianapolis: Real Estate and Market Trends

Despite a mid-summer slowdown, the Indianapolis housing market has demonstrated an increased propensity towards recovery. At the moment, there are really good things happening in the Indianapolis housing market: resale inventory continues to tighten and prices have been on the rise in the existing home market. Perhaps the only thing that is missing in the region is sustained economic growth that would provide the local housing market with the fuel it needs to thrive. Fortunately, the economy in Indianapolis is expected to grow in association with the national economy. As the economy fortifies itself, the Indianapolis housing market could serve as a frontrunner for the entire housing recovery. Metro home values have declined -1.5% over the past year and Zillow predicts they will rise 2.9% within the next year.

The Indianapolis-area housing market appears to be leveling off after a year of decreasing sales and then a surprise bump in September.

The Indianapolis housing market’s current median home price is $148,700, not unlike Columbia, South Carolina. While prices in the region are up from this time last year, they are considerably below the national average ($212,267). Subsequently, like most markets in the U.S., Indianapolis homes are starting to appreciate at a slower rate. In the last year, homes in the area have appreciated 6.4%. However, over the course of three years, Indianapolis homes appreciated by as much as 16.9%. It is these gains that have helped to remove Indianapolis from the post-recession price weakness it had been experiencing.

Historically high appreciation rates have boosted equity in the city of Indianapolis. Moreover, Indianapolis real estate investing has benefited from the increases as well. The following highlights how much equity has been gained relative to the year of purchase:

  • Homes purchased in the Indianapolis housing market one year ago have appreciated by an average of $11,362, whereas the national average was $12,731 over the same period.
  • Homes purchased in the Indianapolis housing market three years ago have appreciated by an average of $27,235, whereas the national average was $51,204 over the same period.
  • Homes purchased in the Indianapolis housing market five years ago have appreciated by an average of $35,328, whereas the national average was $48,225 over the same period.
  • Homes purchased in the Indianapolis housing market seven years ago have depreciated by an average of $34,748, whereas the national average increased $1,750 over the same period.
  • Homes purchased in the Indianapolis housing market nine years ago have depreciated by an average of $41,023, whereas the national average increased $5,043 over the same period.

The city’s economic outlook is encouraging: unemployment is better than the national average and employment growth is strong compared to markets like Las Vegas. The current unemployment rate in Indianapolis is 5.6% – a half of a point below the rest of the country. Moreover, the 1-year job growth rate is 3.0%, nearly twice as much as the rest of the country. Wages have not grown as fast as employment, with average weekly wages increasing only 1.4 percent in the past year. However,pressure to increase wages should increase as unemployment declines and hiring expands. For the first time in years, employees will have more leverage and employers will need to give wage increases to keep valuable employees. All of this bodes well for the entire Indianapolis housing market.

Two counties in particular, Hendricks and Johnson, will likely continue to account for the majority of all new home demand. In addition, Hendricks and Johnson Counties will continue to generate increased new home construction activity as builders begin to open more communities there. Single-family housing permits have increased 4.4% over the last 12 months. In Marion County, the metro area’s busiest market, pending sales jumped 6.8 percent, from 909 homes to 971.

The city if Indianapolis saw a decrease in active listings as 2014 drew to an end.  However, those hoes that were listed lasted an average of 75 days on the market. This is significantly shorter than the national average.

Owner occupied properties in the city of Indianapolis are almost 16 percent below the national average, suggesting there is a lot of investor activity in the area. With that in mind, the percent of rental properties in Indianapolis is about 23 percent higher than the national average.

According to Trulia, Irvington and Devington are two of the most popular neighborhoods in the Indianapolis housing market, with average listing prices of $125,005 and $72,820 respectively.

In an annual forecast, Indiana University economists were more optimistic than they have been in recent years, suggesting that 2015 could be the best year of economic recovery since the Great Recession.

“During the past year, the United States economy has given clear signs that it is finally breaking out of the rut it had been stuck in during the first four years of the recovery,” said Bill Witte, associate professor emeritus of economics at IU and a member of the panel. “Looking ahead, we expect the coming year to produce a continuation of these positive trends.

Indianapolis Housing Market Summary:

  • Current Median Home Price: $148,700
  • 1-Year Appreciation Rate: 6.4%
  • 3-Year Appreciation Rate: 16.9%
  • Unemployment Rate: 5.6%
  • 1-Year Job Growth Rate: 3.0%
  • Population: 852,866
  • Percent Of Underwater Homes: 5.4%
  • Median Income: $51,087
  • Average Days On Market: 75

Indianapolis Housing Market Q1 Update:

Much like the rest of the country, the Indianapolis housing market was subjected to tempering appreciation rates. However, prices continue to grow relative to last year – just at a slightly lower rate. One-year appreciation for the city is now sitting strong at 4.8 percent, even though it was 6.4 percent at the end of last year. On the other hand, local employment fundamentals appear to have taken off. Unemployment for the area is now 5.3 percent and getting better. At 2.7 percent, the one year job growth rate is still vastly ahead of the national average.  Supply and demand should, therefore, remain in perfect balance. The Indianapolis housing market is in a strong position to thrive.

Indianapolis real estate investing is also in a great position to take advantage of the coming year. Distressed properties, in particular, will serve as a great source of deals for many investors in the area. According to RealtyTrac, Indianapolis has 3,488 foreclosures on the market – each of which are either in default, to be placed up for auction or have been repossessed by the bank. 43.5 percent of the distressed homes in Indianapolis are in default, or pre-foreclosure stages. Another 36.3 percent are to be placed up for auction. The remaining 20.1 percent were repossessed by the bank. Again, Indianapolis real estate investing should continue to get a majority of their deals from this pool.

For all intents and purposes, Indianapolis’s improving economy and vast inventory of new developments is going to attract buyers from all across the country. Indianapolis real estate investing and regular housing activity should see significant increases. Investors in Indianapolis are especially interested in projects located in the downtown and Hamilton County areas.

Indianapolis Housing Statistics:

Indianapolis housing market statistics

Indianapolis County Map:


*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.
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