There are many reasons why Indianapolis is a good place to live. The city is home to many tourist attractions and major sports and event venues. Also, it has a "big, small" atmosphere and a vibrant nightlife that many people love.
Unsurprisingly, Indianapolis attracts many homebuyers seeking the perfect place to move into and investors looking for destinations with thriving real estate markets.
However, like any other city, Indianapolis has been hit by a turbulent economic period, which also had a major impact on the local housing market, home prices, and demand for real estate properties. As a result, many are unsure if they should consider this destination for their next investment.
Fortunately, you can find key information on the latest housing market trends, the factors that could affect the real estate sector, experts' predictions, and more. Read on!
Indianapolis Housing Market Trends
The Indianapolis housing market has experienced a downward trend, with home prices falling compared to last year's figures. However, April 2023 reports show it's regaining competitiveness as demand for housing units rises.
Let's go over the main housing market trends reported in Indianapolis during this period:
Median Sale Price in Indianapolis
Redfin's latest reports showed that home prices in this city fell by 1.3% since April 2022. The median price for a housing unit in Indianapolis was $232,000.
While that's a drop compared to last year's figures, the April 2023 median sale price is the highest since September 2022, meaning the value of residential real estate properties has remained unchanged.
The latest data on real estate transactions in Indianapolis revealed that around 30.9% of housing units sold above the listing price in April. However, while the number is still high, it accounts for a 20.7% drop year over year.
Contrastingly, about 37.5% of homes in this city sold below the list price. That's an increase of 12.2% from April 2022.
According to Redfin, 1,042 Indianapolis housing units were sold in April 2023, which accounts for a 20.7% year-over-year drop.
Compared to March 2023 figures, it's also lower. Back then, 1,174 housing units were sold.
Plus, the number of single-family housing units sold fell by 23.8% to 911. However, around 22.9% more condos/co-ops were listed and purchased during the same period.
After a 3.5% year-over-year drop, the sale-to-list ratio in April 2023 was 98.7%, which means there is no major difference between the asking price for a property and the amount buyers pay to complete a transaction.
Realtor.com's reports revealed there are 3,527 homes for sale across Indianapolis neighborhoods.
Median Days on the Market
Redfin also showed that the average home in Indianapolis spent more time in the market before selling.
In April 2023, the median days on the market was 13 days, which accounts for an increase of 9 days from last year. However, compared to February's figures, it's taking less time to sell a housing unit in this city.
February 2023 figures revealed that houses spent at least 40 days on the market before going under contract.
Indianapolis is the capital and most populous city in Indiana, the state with the 9th spot on SoFi's list of the country's highest foreclosure rates.
In Indiana, there are 2,911,562 housing units and 821 foreclosures filings as of April. As a result, the state's foreclosure rate is one in every 3,546 residential properties.
According to SoFi, Starke, Jasper, Grant, Delaware, and Wayne were the counties with the most foreclosure filings.
Factors that May Affect the Indianapolis Real Estate Market
Did you know that different things can affect the Indianapolis housing market? Overall, real estate trends vary each month in response to other key factors, including the following:
The Economy in Indianapolis
In Indianapolis, the economy relies heavily on healthcare, finance, manufacturing, and logistics industries. There are also major contributions from education. That's why it's considered "diversified."
Additionally, the US Bureau of Labor Statistics showed that the unemployment rate remained unchanged in April 2023 at 3.1%, which is below the national average (3.4%).
In general, a low unemployment rate is a sign of a growing economy. Residents will be more willing to purchase assets if they have a job and robust incomes.
This trend also has a major impact on the Indianapolis housing market. People often buy properties when they feel confident about their finances.
In Indianapolis and other cities, local legislation can also cause fluctuations in the housing market.
Governments can use tax credits, subsidies, and deductions to boost housing demand temporarily, for example. These policies may also influence a city's home supply and prices.
Although typically overlooked, statistics describing population growth, residents' income, and migration patterns can also show how the local real estate market moves.
Demographics, which also includes people's age, race, and gender, can affect the demand for certain types of homes and reveal purchasing trends.
Redfin says that 0.55% of homebuyers expected to move from other cities to the Indianapolis metro area between February and April of this year, which means more people are looking at this destination to rent or buy a property.
Mortgage Interest Rate
Interest rates also have a major influence on the Indianapolis housing market. The higher they are, the lower home values are since residential properties lose affordability, for example.
However, when mortgage interest rates are low, getting a loan is easier for many people. As a result, there will be more potential buyers, and both demand and prices skyrocket.
According to Forbes, mortgage interest rates held steady in May of this year, averaging 6.39% for 30-year, fixed-rate loans.
What Do Experts Say About a Potential Real Estate Market Crash?
Many experts say the US will likely face a mild recession this year. In addition, the country is grappling with growing inflation and geopolitical tensions.
As a result, potential homebuyers and real estate investors believe the Indianapolis housing market could crash soon. Is this possible? What do experts say?
Analysts insist that the local real estate market will slow down this year, but many believe it will start to recover and perform better in 2024.
Additionally, experts say the following signs show that the Indianapolis real estate market is not likely to crash in the near future:
High Housing Demand
Demand for Indianapolis homes has increased in 2023, mostly driven by a growing economy, solid finances, and migration patterns.
As the city experiences population growth, more people are looking for properties to purchase or rent. Additionally, many feel more confident about their personal finances and are willing to invest in real estate.
Low Housing Inventory
Although there are over 1,000 properties listed on the Indianapolis real estate market, the city's housing inventory is still low.
Additionally, in Marion County, new listings have fallen by 20.3%, while closed sales have increased by 10.1% in March, according to data from the Indiana Association of Realtors.
Overall, a city's housing market crashes when inventory is excessively high, and the number of potential buyers is low.
Low Supply of Newly Built Homes
Home builders don't want to go through the tedious and time-consuming process of getting approval to buy land and build new properties.
As a result, the supply of newly built housing units is low, which also shows that inventory will remain unchanged or fall further this year.
Although Indiana is among the 20 states with the highest foreclosure rates, the number of foreclosure filings reported in its largest cities is not as high.
In fact, foreclosure filings have dropped across the country since people have an adequate amount of debt and ample cash, which gives them more confidence in their real estate purchases.
Indianapolis Housing Market Statistics
There are a few key statistics you should consider to know if Indianapolis is the right place to buy a home or a real estate property. Let's take a look!
- Redfin says multiple Indianapolis homes receive several offers, including some with waived contingencies, before selling.
- According to Redfin's reports, average housing units typically sell for around 2% below the listing price.
- Indianapolis homebuyers are willing to pay up to 1% above list price for hot homes, Redfin showed.
- In this city, average housing units go pending in 17 days, while hot properties need only four days.
- Redfin has given Indianapolis a compete score of 72, which means the city's real estate market is "very competitive."
- According to Realtor.com, the median listing home price in Indianapolis was $263,000, while the median sales price was $254,400.
- Realtor.com's reports also showed that the median home listing price per square foot was $140.
- In the most expensive Indianapolis neighborhoods, which also include Downtown Indianapolis, rents can reach $2,600 per month.
- According to Realtor.com, housing prices range from $1 to $6.9 million in Indianapolis.
- Real Wealth says that Indianapolis is one of the best real estate markets to buy properties for cash flow and appreciation.
Housing Market Predictions by Experts
If you plan to buy a home or real estate investment property in this city, there's something you should still consider to know if that's a good decision: experts' opinions.
What are analysts saying about the future of the Indianapolis real estate market? Will it remain competitive? Should homebuyers and investors consider other destinations? Find the answers below!
Higher Mortgage Interest Rates
As the Fed fights to combat inflation, mortgage interest rates will continue to rise, which always has a major impact on the real estate market.
Analysts believe that mortgage interest rates will increase to 8.5% for 30-year, fixed-rate loans. That's above the current record high.
Fewer Home Sales
Many experts believe that home sales will fall as mortgage interest rates rise since buying a housing unit will be much more expensive.
Overall, analysts predict home sales will fall by at least 10%. As a result, properties may spend more time on the market before going under contract.
Experts think the median days on the market could rise by 10 days in 2024.
Fall in Home Prices
When housing demand falls, so do real estate prices. Since many believe homes will stay on the market longer because they'll lose affordability, experts say home values could drop by at least 5%.
Indianapolis Housing Market Forecast
Despite many predicting that the country's real estate market will experience negative events, experts believe it'll be slightly different in Indianapolis.
The city's real estate market has experienced steady growth in recent years. Although there were significant fluctuations, April 2023 figures suggest that this trend continues. Therefore, analysts expect upward movements in the following months.
Optimistic experts believe that home prices in Indianapolis will grow by 6.2% in 2023-2024. This rise could result from the city's growing economy, changes in demographics, and low unemployment rate.
In addition, Indianapolis continues to be an attractive destination for workers seeking relocation, so demand is expected to remain high or rise further. In other words, analysts are confident that the local housing market will remain competitive.
The Final Verdict
Indianapolis is the perfect destination for those hoping to enjoy major sporting events, as the NBA Indiana Pacers and the NFL Indianapolis Colts are based in this vibrant city. Plus, there's a myriad of education and job opportunities for people of all ages.
The city also has a comfortable atmosphere with a friendly community that attracts many people from all over the country. That's why many homebuyers and real estate investors want to buy a property there.
As the previously explained data shows, the Indiana real estate market (including Indianapolis) is strong and competitive, so buying a house in this destination could be a good investment idea.
However, it's important to consider your budget, preferences, and investment strategy to make a sound decision.
Frequently Asked Questions
Is Indianapolis a Buyer's Market?
Since housing supply and demand are similar in this city, Indianapolis is a balanced market, which means it benefits both sellers and buyers.
A balanced market typically has a "total sales to total listings ratio" that doesn't favor either party. Instead, it sits between 0.12 and 0.2, bringing opportunities for those who want to sell their properties and those who want to buy one.
Is Indianapolis a Good Place for First-time Homebuyers?
In this city, homes are affordable. Additionally, Indianapolis offers many other benefits. Therefore, buying a property there may be a good idea.
However, both first-time homebuyers and experienced real estate investors should thoroughly analyze the market and other aspects before making a decision.