The 2013 Indiana housing market continued similar recovery trends experienced during the previous post-recession years. The state’s economy significantly slowed down the pace of its economic rebound last year. Many experts feel that the 2014 Indiana housing market (and beyond) will bring about less prosperity. We briefly outlined some of the main contributing factors influencing the evolution of the 2014 Indiana housing market below. The majority of these factors tie in with the historic evolution of the market following the peak of the economic recession of 2009. Other factors relate to the overall state of the economy and certain political conditions occurring in the U.S. at the moment.
- The Housing Market Rebound of 2013
Much to the relief of realtors, homeowners, and potential buyers, the overall 2013 housing market throughout the United States witnessed a significant rebound. In some places throughout the country, this rebound eventually evolved into a trickling flow. In other places, it increased dramatically. Indiana is no exception to this recovery trend of 2013. Home sales throughout Indian increased by more than 17 percent over the first 9 months of the year compared to the same time period throughout 2012. The median price of a home for sale in Indiana improved by 4.2 percent during the first three quarters of 2013.
- The Improvement in Indiana’s Housing Stock
This trend involves two very distinct elements. According to the Indiana Association of Realtors, the U.S. Census Bureau, and the Mortgage Bankers Association, the state awarded 27.8 percent more residential permits during the year’s first three quarters compared to 2012. These same sources point to lower numbers of distressed properties on the market. Foreclosures have all but vanished from most U.S. housing markets. This is also the case in Indiana.
- The Climate of the Indiana Economy
The recession took a heavy toll on Indiana in terms of the number of jobs lost and overall levels of unemployment. The state’s economy has made some progress since the peaks of the recession (2008-2009). In 2011, Indiana managed to add back roughly half of the jobs lost during the financial crisis. That half mark amounts to 57,000 new jobs. However, 2013 saw a significant slowdown of the recovery. Indiana only created 37,200 new jobs. The same can be said about the state’s GDP which took a heavier hit than the U.S. average. Up until 2013, the Hoosier state managed to increase its output at a faster pace than the average nationwide rate. However, this marker of economic recovery also slowed down in 2013. Indiana closed 2013 with no more than a 1.3 percent GDP growth rate. The figure sits far lower than the national average of 1.7 percent.
The two aforementioned factors affected the 2014 Indiana housing market. A lack of job prospects caused Hoosiers to search for employment elsewhere. In turn, market demand for housing dropped significantly. And, since economic output growth also slowed to a trickle, consumers began to lack confidence in terms of making major investments such as buying a house. Experts feel that this status quo will likely affect the 2014 Indiana housing market despite its seemingly relative stability.
All in all, despite the predictions, the 2014 Indiana housing market fared relatively well thus far. It experienced a bounce back of sorts in 2013. Experts begrudgingly label it as stable by most counts. Below, we provide a cursory overview of market conditions and forecasts for the remainder of this year:
- Buying a House is More Expensive
2013 brought about a welcome change in housing price increases. At this point, the 2014 Indiana housing market manages to hit a certain sweet spot of sorts in that it is both affordable and competitive. 2014 brought about on more of the same home price tags which threatens to put a damper on home ownership by devaluing property. Further complicating the situation is the likely increase in mortgage rates expected for the whole of 2014. The affordability index for Indiana in 2013 verged on 300 points. The end of the year saw housing loan rates increase again after steadily dropping since 2005.
- The 2014 Indiana Housing Market will Likely Improve on All Counts in 2014
Many real estate market analysts agree on this prediction: most of the main market indicators regarding the health of the Indiana home market segment will see slight improvements in 2014. Home prices should rise further. However, we believe this rise will continue in very small margins. We expect some residential construction activity given the important increase in the number of building permits awarded in 2013. Foreclosures should all but vanish from the Indiana market. All signs seem to indicate that the market is heading in the right direction. This positivity indicates that the 2014 Indiana housing market should remain relatively stable. However, unlike other state housing markets, we cannot predict in the Indiana market with absolute certainty and for a longer term. Certain unknown variables still loom in the market and cause doubt in the minds of buyers, sellers, and property experts.
- The Situation of Existing Home Sales Remains Unclear
Indiana experienced quite a lot of activity in 2013 concerning existing housing unit sales. Perhaps the most important move of all came from several groups of real estate investors who purchased property throughout certain Indiana counties. Although the report is still unconfirmed, rumors say that these investors intend to turn the homes into rental units. We predict that investor activities should continue at a similar pace throughout next year. That means individual buyers will have to be the main catalysts of a recovering housing market. Since consumer confidence, employment levels, and credit access conditions aren’t exactly optimal throughout present day Indiana, whether or not individuals can actually take on the brunt of this work remain to be seen.
As of the writing of this report (October 2014), the number of homes sold in Indiana gained 9 percentage points over the October 2013 time period. Median prices also increased by 4.1 percent on the year. Yet, the year-to-date comparisons likely don’t inspire much optimism. The market recorded a 2.4 percent decrease in overall number of sales for the past twelve months and a paltry 3.3 percent increase in median home prices for 2014. As the situation stands at the end of the third quarter of 2014, more than likely the market will stagnate for the remainder of this year. Without more determined trends toward economic recovery, the 2014 Indiana housing market quite literally doesn’t have much room left to grow. The future could be strong for the Hoosier state. But, things aren’t looking very positive at the moment.