The State of Indiana’s Housing Market 2018
The information presented below was provided by the Indiana Association of Realtors
In May of this year, Shinwoo Lee and Matt Kinghorn of the Indiana Business Research Center at the IU Kelley School of Business prepared a report for the Indiana Association of Realtors outlining Indiana’s current Housing Market in 2018. Following are some of the key findings from that report:
Indiana recorded its largest number of existing-homes sales on record last year with nearly 88,566 sales in 2017. This mark represents a 2.4 percent increase over the previous year.
While homebuyer demand was strong in 2017, the inventory of homes on the market was exceptionally low. The average inventory of homes for sale in 2017 was down 14 percent from 2016 and 15 percent lower than in 2015. The state’s average months supply of inventory—a measure of how long it would take to exhaust the existing stock of homes on the markets at the current sales rate—was down to 3.8 months in 2017, which was lower than the U.S. mark of 4.4 months.
Indiana’s median price for existing-home sales rose to $146,900 in 2017—a nearly 6 percent increase over the previous year and 34 percent above the low point in 2009. The Federal Housing Finance Agency’s House Price Index shows that Indiana had the 24th-fastest rate of price appreciation among states in the last year.
Indiana’s foreclosure rate has declined dramatically of late, falling to its lowest point since 2000. The state’s foreclosure rate has dropped by more than 3.5 percentage points since the end of 2011 and now sits at 1.4 percent. Over this period, Indiana has improved from the nation’s ninth-highest foreclosure rate to 20th-highest.
One of the many positive effects of a lower foreclosure rate is that the state’s homeownership rate appears to be stabilizing. Between 2006 and 2013, Indiana’s homeownership rate dropped steadily from 72.1 percent to 68.5 percent. Between 2014 and 2016, however, the share of homeowners was essentially unchanged at around 68 percent. Indiana had the nation’s 15th-highest homeownership rate in 2016.
Rising prices and mortgage interest rates could begin to affect housing affordability conditions. In Indiana, however, housing remains quite affordable. According to the National Association of Realtors, each of the Indiana metro areas for which they report data ranked in the top one-third of all metros for housing affordability in 2016.
Indiana’s household formation rate hit 0.7 percent in 2016—that state’s highest level in three years. According to Census Bureau estimates, Indiana had a significant uptick in migration to the state in 2017 with a net inflow of 10,400 people, so look for another strong household formation rate for 2017 when the data are released later this year.
The number of new housing units permitted for construction in Indiana in 2017 increased by nearly 16 percent compared to the previous year. Looking only at single-family units in