How COVID-19 transformed Indy's housing market
Add Axios as your preferred source to
see more of our stories on Google.
Five years later, the effects of the pandemic are still reverberating throughout Central Indiana's housing market.
Why it matters: Sky-high home prices, elevated mortgage rates and a shortage of houses for sale are pushing homeownership out of reach for many across the nation, and the market shifts hit Indy and the rest of the state particularly hard.
Here are five ways our housing market has transformed:
1. Home prices skyrocketed
Cheap borrowing costs and remote work unleashed a homebuying frenzy early in the pandemic — and sent prices soaring.
By the numbers: The median Indianapolis home price in February was $235,000, up about 49% from $157,750 five years ago, according to Redfin.
- Statewide, the median price of a home in Indiana exploded by 59% from about $160,000 in January 2020 to $255,000 this January.
- That is the largest five-year increase of any state in the Midwest, followed by Wisconsin (55%), South Dakota (53%) and Ohio (52%).
Zoom out: The median U.S. home price climbed around 45% in that timeframe, going from $289,000 to $418,000.
2. Builders ramped up, then pulled back
Buyers flocked to newly built homes in search of options and deals.
- Indianapolis went from one of the slowest homebuilding markets in the nation before the pandemic to one of the hottest by spring 2023.
Reality check: Homebuilding has slowed locally since then, partly due to elevated interest rates and steep construction costs.
What we're watching: Builders have warned that President Trump's pledged tariffs could make construction more expensive and drive up home prices.
Meanwhile, mayors across the country are sounding the alarm about the housing crunch and several have pushed to loosen construction restrictions.
3. Inventory dried up
Those who scored ultra-low mortgage rates during the pandemic are hesitant to sell, locking up supply.
Yes, but: That's starting to change as homebuyers adjust to higher rates.
- Roughly 83% of U.S. homeowners with mortgages have a rate below 6%, down from around 88% a year ago, according to a recent Redfin analysis.
- And in 15 of the 50 largest metro areas, inventory in February topped pre-pandemic norms, per Realtor.com. Indy was not among those metros, which are located in the South and West.
4. Rates surged, buyers stalled
Mortgage rates surged after falling to the lowest levels on record in 2021.
- Higher monthly payments are sidelining many home shoppers, especially first-timers.
Between the lines: Rates are now hovering near 7% and are unlikely to drop much soon, experts say.
5. Cash-rich people jumped in
Cash buyers, many of them investors, snapped up homes at record speeds during the pandemic.
The latest: They've taken a step back, though the share of purchases made in cash remains historically high.
- It fell to just under one-third in 2024, the lowest since 2021, Redfin research shows.
The bottom line: Indy's housing market will never be the same, but experts expect it to be one of the nation's hottest markets of 2025.