Indianapolis made Zillow’s top five hottest real estate markets for 2024, ranking behind two cities in Ohio and one in New York.
Zillow is a tech real-estate marketplace company and the most visited real-estate website in the United States. For rankings, it considered home value growth, recent housing market velocity, projected changes in the labor market, home construction activity, and the number of homeowner households.
Erica Edwards, a Realtor for Century 21 Scheetz in Indianapolis, said when interest rates fell under 3 percent in 2020, the market was incredibly busy. Since then, rates have climbed up past 7 percent.
"When that started to happen, the market started to balance out for that reason," she said. "But I still think that people who can afford to buy at the current interest rates are still out there buying, which makes for a more steady market."
Edwards said new construction is very prevalent in the Indianapolis area and there’s a shortage of homes available for interested buyers.
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Zillow’s report said the new starter home is a single-family rental, and Edwards said that's consistent with what she sees in the market.
“We have seen single-family communities that are just for rentals," Edwards said. "What I mean by that is brand-new constructed homes... for rent. And so we have seen that — particularly in Boone County — there are homes like that.”
In 2022, housing starts were up approximately 375 by unit for Marion County compared to the year before. But building starts were down by about 100.
Edwards said Zillow's report helps her inform her clients and let them know what they can expect from the housing market.
Sara Coers, the associate director of IU’s Center for Real Estate Studies, said Zillow's report is one piece of information. Her center draws data from the Metropolitan Indianapolis Board of Realtors and National Association of Realtors.
About 70 percent of major markets in the country are seeing homes price declines. Which Coers said is more of a correction.
“We've been in such a bull market for housing the last few years. Indianapolis and other Midwestern markets and Great Lakes markets tend to be more stable — we don't have the same highs, and we don't have the same lows.”
Coers said Indianapolis labor and wage growth are outperforming the U.S. and rest of the state, which Zillow considers in its rankings. Wage growth for the the state for November 2022 to November 2023 was 3 percent. For Indianapolis it was 3.4 percent.
"So it's natural for a city like Indianapolis to rise to the top because we have a better labor situation in a supply-constrained home market, which is keeping prices high despite interest rate conditions."
Coers said Indianapolis is the only metropolitan area in Indiana large enough to qualify for Zillow’s report. But places like Fort Wayne in northeastern Indiana also are experiencing strong and stable markets.
