During this period, home prices in the Hoosier State surged, inventory became tight, and competition intensified.
This equates to about 10% average annual price growth since 2018, far above historical norms.
Even after the frenzied peak of 2021, prices remained elevated.
Shutterstock
Such rapid appreciation far outpaced income growth and general inflation, creating affordability concerns for many Hoosier buyers.
Market Drivers
Several factors fueled this price surge:
Household formation indeed surged during this period.
Between 2019 and 2022, Indiana gained over 93,000 additional households headed by adults under age 45.
This represents the fastest pace of new household formation in decades for the state.
Young adults entering their prime homebuying years flooded the housing market, intensifying competition for starter homes.
Whos Buying?
Millennials (roughly ages 2742 by 2023) made up a huge wave of potential buyers entering the market.
However, despite their numbers, first-time buyer participation fell to historic lows by the early 2020s.
By 2023, this figure slipped to just 24%.
Indiana likely mirrored this decline, as younger buyers struggled to compete.
By 2022, Baby Boomers actually surpassed Millennials as the largest generation of homebuyers nationwide.
Boomers were also a major presence on the selling side.
They made up about 45% of home sellers in recent years, the largest share of any generation.
However, downsizing wasnt a given.
Many Indiana boomers chose not to move at all, especially once interest rates spiked.
This contributed further to the inventory crunch, as fewer move-up homes were available for younger buyers to purchase.
Urban vs.
Rural: Where Are Indiana Buyers Purchasing?
Indianas homebuying trends played out differently across urban and rural areas.
Metropolitan Areas
Indianapolis and surrounding counties led the states price appreciation.
Budget-conscious buyers in metro Indy increasingly looked to farther-out suburbs or exurban communities where prices were lower.
However, rural buyers faced their own hurdles.
Housing in many rural counties is older, and quality inventory can be scarce.
Some rural buyers opted for manufactured homes (mobile or modular homes) as a cost-saving option.
By late 2023, every major Indiana metro area had become unaffordable by standard metrics for median-income buyers.
This was a stark change from 2018, when most of those areas were quite affordable.
What Are They Buying?
Starter homes (often modest 2-3 bedroom houses) were in extremely high demand and short supply.
Some budget-conscious buyers therefore turned to condos and townhouses as an alternative.
One noticeable trend by 20212022 was homeowners choosing to stay put rather than move.
This rate lock-in effect meant people stayed in their homes longer, leading to fewer listings hitting the market.
In Central Indiana, roughly 1 in 4 home sales went to institutional or corporate investors by 2021.
This investor activity ramped up over the period.
Not all investors were big corporations; plenty were smaller local investors or individuals.
But collectively, investor purchases heavily impacted the markets supply.
The Prevalence of Cash Buyers
One notable aspect of 20202022 was the rise of cash buyers.
Nationwide, roughly 1 in 4 home purchases in 20212022 were all-cash.
Comparison to 20082017: How Have Things Changed?
Buyers had the upper hand in the early-mid 2010s, with plenty of choices and even seller concessions common.
Housing Supply and Demographics
Post-2008, homebuilding in Indiana slowed to a crawl.
The buyer demographics also shifted dramatically.
Around 2010, the buyer pool skewed local and younger.
Financing and Buyer Behavior
The financing environment changed significantly too.
The late 2000s housing crash was triggered by loose lending, and in 2008, credit suddenly tightened drastically.
The psychological backdrop couldnt be more different.
By 20202021, buyers were frantic, experiencing FOMO (Fear Of Missing Out) as prices rose monthly.
Affordability and Homeownership
Around 2015, Indianas housing was extremely affordable.
By 2023, affordability had eroded dramatically.
Current homeowners built substantial equity during 20182023, but aspiring homeowners faced new barriers.
They saw home prices soar to new heights, squeezed by limited supply and heightened competition.
First-time buyers found it especially challenging, often deferred in favor of older or more cash-rich buyers.
Looking ahead, Indianas focus is now on improving housing affordability and supply.
