After nearly five years of struggling with stagnant home prices and the state’s crippling budget impasse, homebuyers in the Hoosier State are getting their first glimpse of what it will be like to live in the real estate market for the first time in decades.
A new report from the Indianapolis Metropolitan Planning Council, released Thursday, shows a dramatic rise in the number of people who are buying homes that are priced in excess of their incomes and the average price of a home has nearly doubled in the past five years.
More than half of Indiana households now own homes priced at or below market value, up from 35 percent in 2011, according to the report.
That trend is most apparent in Indianapolis, the second-most expensive city in the country, where the average home price is $2.9 million and median household income is $59,800.
In 2016, Indianapolis ranked second-worst in the nation for home prices, according the National Association of Realtors, with an average price-to-income ratio of 29.9 percent.
The average Indianapolis home was listed for sale in 2016 at $1.8 million.
In 2017, it was $1 million.
In addition to Indianapolis, five other cities have seen the number or median home prices increase in the five years after the recession: Indianapolis, Milwaukee, Cincinnati, Milwaukee and Kansas City.
According to the council, the state has seen a steep rise in homes being priced in the top three percent of income earners, with homes in Indianapolis averaging a whopping $4,845,600 in 2016.
The average price for a home in Indianapolis was $4.4 million, up $6,842 from the previous year.
The report said the average selling price for the average property in Indianapolis is $5.7 million, with median selling price at $2,631,500.
In 2015, the median selling value was $2 million.
The price increase is the result of both the national foreclosure crisis and the ongoing recession, the report said.
In the state, foreclosures have outpaced job growth, and in some communities, the numbers are even higher, with foreclosing rates in Indianapolis surpassing 30 percent.
Despite the steep increase in prices, the council said the increase in homes for sale hasn’t been matched by an increase in new homes being built.
Only 4,742 new homes were completed in the state in 2017, and only 1,746 homes were built in 2018, the most since records began in 1991, the study said.
In the past four years, the number and average price has increased by more than 400 percent.
More than one-third of the homes for sold in Indianapolis in 2017 were priced at market value.
That was up from 2 percent in 2014.
The number of homes being sold at market was up by more at a rate of 5 percent in 2016, but the number selling for $1 or less jumped by nearly 50 percent from 5,700 in 2016 to 9,000 in 2017.
In 2017, there were 2,879 homes for rent in Indianapolis.
The median rental price was $500 per month, the group said.
The council also released its 2017 State of the Home report, which examined trends in home affordability across the state and examined the state of Indiana’s housing stock.
It found that home values have increased significantly across the country during the past decade and that the median price of housing has more than tripled from $2 to $4 million in just the last three years.