The Indianapolis real estate market has become the beneficiary of several positive trends. Not unlike every other market in the country, Indianapolis has seen home values rise in the wake of three very specific indicators: positive sentiment in the real estate industry, a strong economy, and a distinct lack of available housing. While not unique to Indianapolis, these three factors have proven incredibly pivotal in shaping today’s market. It is worth noting, however, that while real estate in Indianapolis is firing on all cylinders, it has the added benefit of affordability. Despite seven consecutive years of price growth, Indianapolis remains relatively affordable. As a result, the city has seen demand grow in the face of recent appreciation, which bodes well for everyone, especially investors.
Indianapolis Real Estate Market Overview
Median Home Value: $148,200
1-Year Appreciation Rate: +10.8%
Median Home Value (1-Year Forecast): +4.9%
Median Rent Price: $1,125
Price-To-Rent Ratio: 10.97
Average Days On Market: 61
Unemployment Rate: 2.6% (latest estimate by the Bureau Of Labor Statistics)
Population: 867,125 (latest estimate by the U.S. Census Bureau)
Median Household Income: $44,709 (latest estimate by the U.S. Census Bureau)
Percentage Of Vacant Homes: 14.51%
Foreclosure Rate: 1 in every 2,159 (4.6%)
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Median Home Price In Indianapolis
Today’s median home price in Indianapolis is the direct result of nearly a decade’s worth of appreciation. Since March 2013 — when the Indianapolis market bottomed out during the last recession — local home values have managed to increase an average of 77.4%. At $148,200, today’s median home value has not only returned to pre-recession levels, but surpassed them. To put things into perspective, the median home value in the United States increased 86.4% over the same period of time, and now sits comfortably at about $289,000.
There is no doubt about it: The national real estate market has outpaced Indianapolis over the course of the latest recovery. However, Indianapolis has made up a lot of ground in as little as one year’s time. In fact, appreciation rates in Indianapolis have more than doubled that of the national average since September 2018. Since then, real estate in Indianapolis has appreciated 10.8%. The rest of the country, on the other hand, increased a slightly more modest 4.8% in the same time.
The latest bout of increases is likely the result of three prominent indicators: inventory, sentiment and the local economy. The residents of Indianapolis have seen their local economy improve year-over-year, increasing the number of people looking to actively participate in the housing market. With an unemployment rate of 2.6%, the city has a strong foundation to build off of. More people can afford to buy in Indianapolis than in years past, which has improved market sentiment. Consequently, there simply isn’t enough available housing to meet the demands of each new buyer. Listed homes are nothing less than a commodity targeted by more competition than in years past. As a result, supply and demand has driven prices high and higher.
The city’s lack of available inventory looks like it will continue to increase prices, at least for the foreseeable future. Until more homes are brought to the market, appreciation rates will increase, to the tune of about 4.9% over the next 12 months.
Indianapolis Foreclosure Statistics
According to RealtyTrac, a nationally recognized real estate information company that specializes in distressed properties, Indianapolis has a relatively high distribution of distressed properties. With approximately one out of every 2,159 homes in some stage of distress (default, auction or bank owned), Indianapolis boasts a foreclosure rate of 4.6%, which remains higher than the 3.9% bar set by the rest of the country.
While Indianapolis real estate trends have seen more foreclosures than the national average, it’s important to note that progress has been made. While the rate is currently higher, great lengths have been taken to reduce the city’s distribution of distressed homes. As a result, there has been a decline in year-over-year foreclosure activity. “In September, the number of properties that received a foreclosure filing in Indianapolis, IN was 41% lower than the previous month and 17% lower than the same time last year,” according to RealtyTrac.
While foreclosures are on the decline, there are still a few neighborhoods with higher distributions of distressed properties spread out across Indianapolis. The following zip codes represent the neighborhoods with the highest foreclosure rates in Indianapolis:
46231: 1 in every 611 homes is currently distressed
46228: 1 in every 787 homes is currently distressed
46235: 1 in every 993 homes is currently distressed
46221: 1 in every 1,196 homes is currently distressed
46229: 1 in every 1,201 homes is currently distressed
Indianapolis Real Estate Investing
Investors across the country tend to place an emphasis on marketing for distressed properties, and real estate investors in Indianapolis are no exception. Doing so awards them with the ability to implement a targeted marketing campaign. Perhaps even more importantly, however, are the higher profit margins that have become synonymous with motivated sellers. That said, there’s one type of distressed property Indianapolis real estate investors should pay special considerations to: auction homes. Representing 58.7% of Indianapolis’ distressed property market, auction homes are the largest distribution of foreclosed homes in the city.
As their names suggest, auction homes are assets that were seized from homeowners who were unable to keep up with mortgage obligations, only to be placed up for auction in an attempt to recoup losses for the loan originator. Auctions award investors the opportunity to secure deals with good profit margins. Therefore, today’s investors should visit local auctions to tip the scales in their favor. Pulling from the largest pool of distressed assets should increase their odds of landing a good deal.
Of course, knowing where to find real estate deals in Indianapolis is only part of the equation. Once investors secure deals, they need to know what to do with them, which begs the question: Which exit strategies are working the best for Indianapolis real estate investors?
With a price-to-rent ratio of 10.97, it is currently more affordable to buy a house in Indianapolis than to rent one, which speaks volumes to the local real estate market. Not only are more people financially prepared to become buyers in Indianapolis, but it’s actually cheaper to buy than rent. As a result, demand for housing has increased, and made rehabbing a more viable exit strategy than ever before. While it’s entirely possible to own rental property in Indianapolis, current market conditions give an edge to investors flipping homes. Not only is there incredible demand, but investors may find themselves with affordable acquisition costs and attractive profit margins.
Indianapolis Real Estate Market Summary
The Indianapolis real estate market has made up a lot of ground in the last year. In that time, home prices have appreciated at more than twice the rate of national trends. Perhaps even more importantly, demand has remained persistent in the face of increasing prices. If for nothing else, real estate in Indianapolis is still relatively affordable, which has helped maintain a constant level of healthy activity. As a result, the housing market has generated a lot of positive momentum, and should continue to do so for the foreseeable future.
Have you thought about investing in the Indianapolis real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Indianapolis in the comments below.
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