Indiana’s housing market experienced unprecedented growth from 2018 to 2023, with median sale prices jumping from roughly $157,000 to about $242,000—an increase of more than 50%. This remarkable pace, averaging nearly 10% annual growth, was driven by a persistent housing shortage, an influx of new residents, and pandemic-era demand for homes.
Despite higher costs, Hoosiers continued buying homes in record numbers. New household formation surged, especially among young adults. From 2019 to 2022, Indiana added over 93,000 households led by adults under 45—the fastest growth in young households in decades. This wave of Millennials entering prime homebuying years created intense competition for starter homes.
Meanwhile, Indiana’s population kept rising, reaching about 6.83 million in 2022. The state enjoyed net in-migration each year, bolstering housing demand. For example, 2018 saw a net inflow of around 12,800 people, Indiana’s largest migration gain since 2006.
Urban to Suburban Migration
Population changes in Indiana since 2018 reveal a pattern of urban core slowdowns and suburban growth. Many of the state’s fastest-growing counties are suburbs surrounding Indianapolis. Hamilton County led with a 2.1% population increase in 2022, followed by other Indianapolis suburbs like Hendricks County (+1.7%) and Boone County (+1.6%). The 11-county Indianapolis metro area added over 13,000 residents in 2022 alone.
Meanwhile, Marion County (Indianapolis proper) experienced a slight population decline. In both 2021 and 2022, Marion County lost residents (about -2,180 people in 2022, a 0.2% drop). Experts attribute this urban outflow partly to the pandemic, as city dwellers chose to move to less crowded areas or larger homes thanks to remote work flexibility.
Rural Renaissance
Rural communities in Indiana, which had been losing population for years, saw subtle improvements. Between 2010 and 2020, the combined population of Indiana’s 23 fully rural counties fell by 2.2%. However, in 2021-2022, that pattern started to reverse slightly. In 2022, rural counties as a group increased by 0.1%—modest growth, but a positive change after a decade of losses.
In fact, five rural counties ranked among the state’s fastest-growing in 2022. Notably, Ohio County and Switzerland County in southeast Indiana saw population jumps around 2%. These scenic, quiet counties attracted retirees and remote workers looking for a rural lifestyle.
Indiana’s position next to Illinois has also played a role in migration. Many Illinois residents have moved to Indiana since 2020, often citing lower taxes and housing costs. Even historically stagnant areas like Lake County gained people recently, likely Chicago-area families relocating across the state line.
Urban Market Dynamics
Urban and suburban housing markets led Indiana’s price boom. In the Indianapolis metropolitan area, home values roughly doubled over the last decade. By some measures, Indianapolis home prices rose about 130% from 2014 to 2024—one of the largest jumps in the nation.
Popular Indianapolis suburbs such as Carmel and Fishers became extremely pricey and often out of reach for middle-income buyers. Many families earning under $250,000 found they could no longer afford those top-tier suburbs. As a result, budget-conscious buyers “shopped farther out”—choosing outer suburbs or exurban communities where homes cost less.
Indiana’s smaller cities also saw significant housing growth. Fort Wayne, Evansville, and South Bend had lower home prices than Indianapolis, but they too experienced fast appreciation. College towns brought their own challenges: Bloomington, home of Indiana University, became the least affordable market in the state by 2023 relative to local incomes.
Inventory Shortage and Affordability Crisis
A common theme across all urban areas was shrinking inventory and rising competition. By late 2023, every major Indiana metro area had become “unaffordable” by standard metrics for the median household. According to the Federal Reserve’s Home Ownership Affordability Monitor, by August 2023 a typical family could no longer afford the median home in cities like Indianapolis, Fort Wayne, South Bend, Evansville, Lafayette, Elkhart, Terre Haute, or Bloomington.
A major reason for tight supply is that homebuilding did not keep up with population and job growth. After the 2008 housing crash, construction of new homes in Indiana slowed dramatically. This left a long-term shortage of new housing stock. By 2023, Indiana had what Freddie Mac classified as a 1.04% housing stock shortage—the worst shortfall among all its neighboring states.
Rural Housing Challenges
Outside of the big metros, rural Indiana offered lower prices but also fewer choices. Generally, homes in small towns and country areas cost less than urban homes, which attracted budget-conscious buyers. During the pandemic, the rise of remote work enabled some Hoosiers to consider houses in scenic or quiet rural counties that previously would have been impractical due to commuting.
However, rural buyers faced hurdles of their own. The housing stock in many rural counties is older, and quality move-in-ready homes can be scarce. New construction in rural Indiana has been limited, because developers often hesitate to build far from city centers where they fear demand is weak. This means someone searching in a tiny town might have to deal with aging homes (in need of repair) or wait a long time to find the right property.
Alternative Housing Solutions
Some creative solutions emerged for rural homebuyers. One trend was increased use of manufactured homes—such as mobile homes or modular homes—as a budget-friendly alternative in rural communities. Special mortgage programs helped: USDA Rural Development loans, which offer 0% down payment for buyers in eligible rural areas, became a crucial financing tool.
Certain rural regions saw a noteworthy uptick in interest due to lifestyle and recreation. For instance, counties with lakes and vacation spots experienced more second-home buying. Kosciusko County, home to lakes like Wawasee (the state’s largest natural lake), saw city residents purchasing cottages for weekend getaways. Brown County, known for its forests and art colony, had cabins bought as retreats by families from Indianapolis or Evansville.
Changing Housing Preferences
Despite changing locations, the type of home most Hoosiers want has stayed consistent: the classic single-family house. Indiana joins most of the country in having overwhelmingly high rates of single-family detached housing, with that category making up 73.1% of all housing units in Indiana.
In urban areas, condominiums and townhomes gained popularity as alternatives. For example, in the Indianapolis metro, new townhome developments appeared both downtown and in certain suburbs. These attached homes provided slightly more affordable options than comparable single-family houses nearby.
Pandemic-Driven Space Requirements
Home size preferences shifted during this period. The pandemic changed what people wanted from their homes: suddenly extra space was a premium. With remote work and remote schooling, families looked for homes with an office or an extra bedroom, and bigger yards became more appealing. Real estate agents noted many buyers in 2020-2021 were upsizing—seeking larger houses or properties with home offices, even if it meant moving farther out.
At the same time, there was also movement on the other end of the spectrum: downsizing by older Hoosiers. Baby Boomers were a major presence in the market as both buyers and sellers. By 2022, Boomers (roughly ages 58-76) actually surpassed Millennials as the largest generation of homebuyers in the U.S.
Not all seniors chose to downsize, though. According to AARP surveys, about 78% of older homeowners plan to “age in place” and stay in their current homes. By 2022-2023, many would-be sellers decided not to move since buying another home would mean taking on a new mortgage at 6-7% interest. This “lock-in” effect kept housing supply even tighter.
First-Time Buyers Squeezed Out
One striking trend in the 2018-2023 period was the decline of the first-time homebuyer. Although there was a huge generation of Millennials aging into their 20s and 30s, fewer of them were actually managing to buy homes. Only 26% of home purchases in 2022 were by first-time buyers, the lowest share since tracking began in 1981. By 2023 this figure slipped even further to around 24%.
Several factors pushed first-timers to the sidelines:
- Rapid price increases and bigger down payments—Rising prices outpaced wage growth, making down payments and monthly payments difficult for those without existing home equity.
- Heavy competition from cash buyers and existing owners—In bidding wars, first-time buyers who needed mortgages often lost out to buyers with cash or to repeat buyers with substantial equity.
- Higher age for marriage and family formation—Millennials have been marrying and having kids later on average, which can delay homebuying. The median age of first-time buyers hit the upper 30s by 2022.
By contrast, repeat buyers (existing homeowners) had advantages that allowed them to dominate the market. Homeowners in their 40s, 50s and beyond could use equity from selling their old house to help buy the next one. Many Baby Boomers became a powerful force among buyers, often coming in with cash offers.
The Investor Impact
Another key feature of 2018-2023 was the huge role of investors in Indiana’s housing market. In central Indiana, roughly 1 in 4 home sales went to institutional or corporate investors by 2021. Indianapolis was reported as the #1 city in the U.S. for out-of-state investment in single-family rental properties. By the end of 2021, 26% of all residential property purchases in the Indianapolis area were by investors, up from under 15% a decade prior.
For everyday Hoosiers trying to buy their first home, this investor surge presented a real challenge. Investors often purchased starter homes, the very properties that first-time buyers wanted. They could pay in cash and waive inspections, making very attractive offers to sellers. By 2022, entire neighborhoods of starter-level homes in Indianapolis and its suburbs were being converted to rentals.
In addition to institutional investors, many small-scale investors and families buying second homes entered the market during this period. With interest rates at record lows in 2020-2021 and rents rising, some Indiana families decided to try becoming landlords or vacation rental hosts.
Historical Comparison: 2008-2017 vs. 2018-2023
The recent trends become clearer when compared to the previous decade’s housing story. The period from 2008 to 2017 was dramatically different for Indiana real estate. It began with the 2008 housing crash and Great Recession, which hit Indiana hard. Home values fell sharply around 2008-2011, and sales plummeted.
From about 2013 to 2017, Indiana entered a recovery phase. Home sales and prices did increase, but at a much gentler pace than the boom of 2018-2023. Annual price growth in the mid-2010s was on the order of 3-5% per year, closely tracking inflation and income gains. In those years, housing was generally affordable.
Another contrast is housing supply and construction. The late 2000s bust led to a construction slump that lasted years. By 2015-2017, builders had slowly resumed building, but far below pre-2008 levels. The number of homes on the market in 2015 or 2016 was considerably higher than in 2022 or 2023. Indiana’s months’ supply of inventory was around 5 to 6 months in 2015—a balanced level. By late 2022, it sank to under 2 months, indicating an extreme shortage.
Urban vs. rural dynamics also differed in the earlier decade. From 2008 to 2017, Indiana’s growth was heavily concentrated in metro areas while rural regions continued a long slow decline. Rural housing demand was very soft in those years. By contrast, in 2018-2023 we saw renewed interest in rural living from some segments, and rural prices escalating almost as fast as urban prices.
Conclusion
Over the last five years, Indiana’s housing landscape has transformed, affecting cities and rural communities alike. Urban markets like Indianapolis and its suburbs experienced frenzied growth, with soaring prices and fierce competition, while rural areas also felt the ripple effect, shedding their decades-old stagnation to see rising demand and costs.
Hoosiers have been buying all sorts of properties—from downtown condos to country farmhouses—but all faced the common squeeze of higher prices and limited supply. Many families upsized to gain space, even if it meant moving outward, while others downsized or stayed put. First-time buyers found it harder than ever to get a foot in the door, as older, repeat buyers and investors claimed a large slice of the pie.
These trends from 2018-2023 mark a distinct break from the prior decade, when Indiana was recovering from a housing bust and homes were comparatively cheap. Now, the state grapples with the challenges of success: housing shortages and affordability woes spanning from Indianapolis to the smallest crossroads town. The data tell a clear story—whether in Marion County or rural Rush County, home prices nearly doubled in the last ten years.
Going forward, policymakers and communities are seeking ways to expand housing supply and keep the Hoosier homeownership dream within reach. The period of 2018-2023 will be remembered as a time of rapid change—a booming market that in many ways lifted Indiana’s housing to new heights, while also creating new challenges for the next generation of homebuyers.
References
- IU News – Indiana’s population growth slowed in 2022 — its smallest annual increase since 2015
- Mirror Indy – Indiana’s affordable housing crisis hits Rushville and other rural areas
- Indiana Capital Chronicle – Homeownership dream dwindling as high mortgage rates affect housing prices
- Indy Multifaith Housing Summit – How investors are buying homes in Indiana and driving up prices
