Quarter 4 is typically the “slow season”, and anyone investing in Indianapolis quickly learns that our market is heavily influenced by seasonality. It’s common to see dips in rental rates and the number of homes rented, along with an increase in days on market (DOM).
This year, however, the market threw us a curveball. We expected two out of those three trends—but rental rates actually increased in Q4 2024. Meanwhile, the number of homes rented? It nosedived.
So, what’s happening here? Are landlords holding firm on pricing, or is this just a tougher-than-usual seasonal slump? Likely, it’s a mix of both. Let’s break down the numbers and uncover the story:
Days on Market
In Q4, the average Days on Market (DOM) increased to 41 days, up from 35 days just the previous quarter.
The holiday season and colder weather typically mean fewer prospective renters actively searching for properties, which naturally leads to longer DOM.
This year’s increase suggests the market slowdown aligns with traditional seasonal patterns. For property managers and landlords, this trend serves as a reminder of the importance of proactive marketing and pricing strategies during slower quarters.
Number of Homes Leased
The number of homes leased in Q4 2024 dropped to 348, marking a 39% decrease from 573 homes leased in Q4 2023.
To put this in context, Q3 2024 saw 798 homes leased—more than double Q4’s total. This sharp decline underscores the impact of seasonality on the Indianapolis rental market.
What does this mean, exactly?
It’s hard to say, exactly.
Clearly, fewer people move in the winter months. So naturally, the number of leased homes in December will almost always be much less than the homes leased in June, for example. But something more is at work here… likely that renewals are way up. So, if more people are renewing, fewer homes will be leased.
We’re curious if this trend continues into the Q1 of this year.
Average Rental Prices
One silver lining in Q4 2024 was the average rental price, which rose to $1,593. This represents a 5% increase from $1,518 in Q4 2023 and a slight rise from the $1,550 average in Q3 2024.
This increase suggests that, despite a drop in leasing activity, landlords are maintaining pricing power—likely due to the continued desirability of updated and well-located properties. Renters appear willing to pay a premium for the right product, even in a slower leasing quarter. However, landlords should monitor whether these prices are sustainable in 2025.
T&H Realty Service's Perspective
The trends observed in Q4 2024 highlight the seasonality of the Indianapolis rental market, but they also raise questions about broader market dynamics. Is reduced renter demand the culprit? Are inventory constraints at play? Or could larger economic factors—like inflation or shifting job markets—be influencing these trends?
For landlords, the decline in leased homes emphasizes the need to adapt quickly to changing market conditions. Properties that lack modern amenities or are priced above market value may struggle to find tenants. Conversely, renters may be taking their time to weigh options, negotiate more favorable terms or simply renew their current lease.
Looking ahead, our leasing department is already seeing renewed interest just a few weeks into 2025. We are hopeful that Q1 will bring stronger numbers, aligning more closely with investor and landlord expectations.