Why Indianapolis millennials can't afford to buy homes
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Illustration: Brendan Lynch/Axios
It's getting harder to buy your first home in Indianapolis.
Why it matters: While Indianapolis' relative housing affordability makes it a hot market for young people, those who haven't bought yet face higher mortgage rates and low supply.
The big picture: Among U.S. millennials who don't own a home, 44% say income is the top barrier to buying, per a Bankrate study. And 43% say they can't afford the down payment and closing costs.
Zoom in: Too many buyers are chasing too few starter homes. The average first-timer in the Indy metro area will probably purchase a home that's around $200,000, according to Lynn Wheeler, president of the Indiana Association of Realtors.
- That price tier's inventory "has been cut in half since 2018," she tells Axios.
What's happening: In order to afford their down payment, 38% of recent U.S. homebuyers under age 30 received family money, according to a Redfin report.
Reality check: You don't need to put 20% down to win, Wheeler says. The Indiana Housing and Community Development Authority offers first-timers 6% of the price of the home in down payment assistance.
Be smart: Millennials still make up nearly 52% of mortgage requests in Indianapolis, per figures LendingTree shared with Axios.
Between the lines: Some buyers are considering new construction as homebuilders dangle mortgage buydowns and "golden handcuffs" lock Indiana homeowners in place.
Yes, but: Waiting to buy isn't a bad thing. "You can build wealth just fine by renting," says Bankrate chief financial analyst Greg McBride.
- Taking time to save, invest, build your credit and advance in your career can meaningfully grow your bank account, he says.
- Homeownership "sucks the cash right out of you," at least at first, McBride says. You need to save beyond the initial down payment to weather unexpected additional expenses — the top reason millennial homeowners have buyers' remorse, per Bankrate.
The latest: Housing industry groups are urging the Fed to stop raising interest rates.