4 Major Headlines In The Central Indiana Real Estate Market

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In a world where national headlines can dominate the news, it’s essential to remember that real estate is hyper-local.

Central Indiana is a prime example. We have been known to buck some trends in the national market, and 2023 is shaping up to be no different.

Interest rates are stabilizing. Home prices are rising. Housing market crisis? Not here. 

This, plus the soaring prices of construction and the uncertainty of the economy, is a lot to keep up with.

So let’s break it down. Here are 4 major Central Indiana Real Estate headlines you need to be paying attention to:

Headline 1: Home Prices in Central Indiana Have Rebounded

If you’ve been looking for a big dip in the market look no further. 

It is probably not coming. 

After experiencing a peak median sales price of $300,000 in June 2022, the market did see a slight dip. However, as of July 2023, prices are back at the $300,000 mark and appear to be stabilizing.

This is significant because, in the face of national and even state headlines suggesting a sluggish housing market, Central Indiana is bucking the trend, which is why we preach – Real Estate is hyper local.

The dynamics contributing to this price stability are complex. While the overall market activity has slowed down, with year-over-year closings and listings down by 20%, there’s an intriguing interplay between buyers and sellers.

Many potential first-time buyers, primarily in their late twenties and early thirties, are staying on the sidelines due to rising interest rates, which have made homeownership less affordable. Additionally, homeowners who are enjoying historically low interest rates are hesitant to sell their properties and face the prospect of higher mortgage rates.

What this means for investors: 

If you own rental properties in Central Indiana, the current market is favorable. Despite a recent dip, home values are back on the rise and expected to continue climbing. However, if you’re planning to buy, it’s essential to recognize that the expected dip may have already passed. Waiting for further price reductions might not be a viable strategy.

Headline 2: The Cost of Construction Is Higher Than Ever

Many property owners are experiencing sticker shock as they receive bids from contractors for renovation or construction work. Materials costs have surged, and labor rates have also increased substantially.

In late 2018, a builder quoted a T&H employee a price range of $100,000 to $150,000 for a carriage house. Fast forward to the present, and that same project was quoted between $275,000 and $330,000. This doubling or tripling of costs within just a few years is reason enough to show some caution. 

What this means for investors:

This trend isn’t limited to new construction or renovations; it’s also affecting inspection response items during property transactions. Sellers are increasingly reluctant to invest in addressing health and safety issues or other concerns raised during inspections, leading to negotiation challenges during the closing process.

High construction costs are here to stay, making it essential to adjust your financial models and expectations. Whether you’re renovating existing properties or considering new construction, understand that the current prices are the lowest you’re likely to see for a long time. Waiting for costs to decrease significantly may result in missed opportunities.

Headline 3: Rents Are Still High, but Appear to Be Stabilizing

Investors in Central Indiana have enjoyed a period of robust rent increases in recent years. However, there’s evidence to suggest that the rate of rental growth is slowing down. 

And in some cases (think specific neighborhoods and even specific streets) we’ve seen some rent contraction. 

But, while rents overall remain high, especially compared to previous years, they may not increase as dramatically as they have in the past.

As the market enters the colder months, it’s crucial for investors to pay attention to local market conditions. Central Indiana experiences seasonal fluctuations, and as activity slows, you may need to make data-driven adjustments to rental pricing. Stubbornly holding out for substantial annual rent increases might lead to longer vacancies and potentially lower returns on your investments.

What this means for investors:

While rents are still at historically high levels, the days of rapid growth may be behind us. To maximize your rental income and minimize vacancies, adapt to the evolving market conditions. Be prepared to adjust your rental rates to attract tenants and ensure your properties remain profitable.

Headline 4: Interest Rates Aren’t Going Anywhere Anytime Soon

Amid the many fluctuations in the real estate market, one aspect has remained remarkably stable: interest rates. Contrary to expectations that interest rates might decrease in 2023, they have, in fact, reached their highest levels in two decades. This stability in interest rates is a reflection of the slow-moving nature of the economy and the Federal Reserve’s cautious approach.

The consensus among experts is that interest rates are unlikely to return to the historic lows seen during the COVID-19 pandemic. Investors can expect to pay interest rates in the mid-7% range.

What this means for investors:

If you’re waiting for interest rates to drop significantly before making your move in the real estate market, it’s time to reevaluate. The current rates, while higher than in recent years, are the new norm. Waiting for a substantial rate decrease is not a prudent strategy. Instead, consider your investment options within this new interest rate environment.

Looking Ahead

Central Indiana’s real estate market is navigating through a period of change yet stability. Home prices have rebounded, construction costs are higher than ever, rents are stabilizing, and interest rates remain steady.

As an investor, it’s essential to adapt to these local trends and understand that today’s market conditions may be the most favorable you’ll encounter for some time. By staying informed and making data-driven decisions, you can continue to thrive in Central Indiana’s real estate market.

About the Author

Brooke Robinson

Brooke is our Digital Marketing Specialist. She is responsible for the marketing of T&H Realty on all of our main media channels including social media, podcasts, and our website.

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