Earlier this year, the COVID-19 pandemic delivered a significant blow to the US housing market, causing it to slow down. However, the market has been recovering since, with the number of sales rising rapidly. Thanks to record-low mortgage rates and limited listings available, the real estate market has become increasingly competitive since June 2020.
Read on as we provide you with a comprehensive real estate market analysis and how the Indianapolis real estate market is recovering.
1. High Demand for Residential Real Estate
Our real estate market analysis reveals that the market is dominated by sellers at the moment. As mentioned earlier, there is a shortage of supply in the residential real estate market. This is primarily due to incredibly low interest rates and a shortage of listings.
Thanks to statewide lockdowns preventing buyers from purchasing homes earlier, there has been a rapid surge in demand since June 2020. The millennial demand for homeownership has also been a driving factor in the recent increase in demand.
Buyers with sufficient buying power are taking advantage of the low interest rates. This has resulted in fast sales and high home prices. Consequently, those who are vying to purchase a home must struggle with a lot of competition.
2. Improvement in Recovery Index
The overall housing recovery index was 98.5 in July and showed a week-by-week improvement by 0.7 points. Given how the recovery index plummeted to 83.1 in May when economic concerns and lockdowns curtailed real estate activity across the country, this is a huge improvement.
As far as the states in the Midwest are concerned, the housing recovery index has stabilized at 95.3. This is good news for buyers and sellers interested in the Indianapolis real estate market.
3. Cash Buying Increases
With homes selling so quickly, cash buyers or those using conventional loans are at a significant advantage. Thanks to the intense competition, sellers are displaying a preference for buyers that can provide cash upfront as this enables a faster sale process.
As a result, buyers relying on Federal Housing Administration (FHA) loans or Veteran Affairs (VA) loans may need to wait until the market returns to equilibrium and the number of listing increases.
If you are cash-strapped at the moment, then don’t lose heart. Instead, I suggest you use this period to grow your savings to submit a deposit later. You can also try and improve your credit score to enjoy better rates on loans.
4. Median Listing Prices Increase in the Greater Indianapolis Area
As per market reports for August, there are 4,943 homes for sale in Indianapolis. These are valued up to $27.2 million. The median listing price for August is $184,900. This is 2.72 percent higher than the median listing price noted in July. Most properties in Indianapolis comprise of single-family homes having 3 bedrooms and 2 baths. The average price per square foot for these homes is $110.54. Price reduction is approximately 2 percent which once again confirms the high demand among buyers, allowing sellers to sell their property without negotiating too much.
Here’s a brief overview of the increase in average listing prices in the Greater Indianapolis area and surrounding counties.
|Name of County||Median Price for June 2020||MoM Change in Median Price||Closed Sales in June 2020|
*The MoM Change in Median Price indicates price changes between June 2019 and June 2020.
As our real estate market analysis reveals, nearly every county in the Greater Indianapolis area has shown positive trends for median listing prices. It is safe to assume that the Indianapolis real estate market has improved considerably compared to last year.
Marion County has recorded the highest number of sales in the Greater Indianapolis area. The median listing prices also increased by 9.1% on a month-on-month basis for this county.
Meanwhile, Hancock County enjoyed the largest increase in median listing prices with sale prices being nearly 16% higher than last year.
The real estate market in Hamilton County and Hendricks County also recorded an impressive number of house sales with 747 and 313 homes being sold respectively.
5. Home Prices Expected to Decline in the Fourth Quarter
As per Zillow, there is likely to be a 2 to 3 percent drop in prices toward the end of 2020. Market prices will then recover during 2021 with price levels returning to normal during the third quarter of 2021. This is good news for buyers who are unable to purchase homes at the moment due to a lack of cash.
As mentioned earlier, if you are currently unable to buy a home use an FHA or VA loan, then we suggest you wait till the end of the year for home prices to drop.
Wrapping It Up
Thanks to improved buying and selling activity, the Indianapolis real estate market has recovered significantly in the past month. While it is primarily a seller’s market at the moment, buyers that pay cash upfront can take advantage of current interest rates and buy homes quickly.
As per our real estate market analysis, investors can also take advantage of these trends to buy and hold properties in Indianapolis. Given the price appreciation from last year, they can expect to earn a profit in the future if they choose to invest now.