The IU Center for Real Estate Studies’ winter luncheon brought together an expert panel focused on the timely and relevant topic of housing and affordability in Indiana. The discussion touched on the affordability of the local housing market, demographics and the trends affecting supply, possible solutions, and what we can expect going forward.
The panel was moderated by Sara Coers, Associate Director of the IU Center for Real Estate Studies and Lecturer in Real Estate at the Kelley School of Business in Indianapolis. Panelists included:
- Matt Kinghorn, Senior Demographer, Indiana Business Research Center
- Philip T. Powell, Ph.D., Academic Director, Indiana Business Research Center, Daniel C. Smith Faculty Fellow, Indiana University Kelley School of Business
- Chris Pryor, Chief Advocacy Officer, MIBOR Realtor Association
- Stephanie Quick, President, Intend Indiana, a community development non-profit using innovative financing and development solutions to preserve affordability
- Ernest Xi, President, Valu-Built Construction
- Jun Zhu, Ph.D., Clinical Assistant Professor of Finance, Indiana University Kelley School of Business, Non-Resident Fellow, Housing Finance Center, Urban Institute
To open the discussion, Coers gave an overview of the current state of the housing market and its importance, stating that home ownership and stable housing have enormous social and community benefits for people, including educational success, civic participation, and better health. Home ownership is also the largest source of wealth among families, as it promotes accumulation of personal and generational wealth through equity building and home appreciation. Consequently, our housing market is a substantial part of our national economy, comprising almost 17% of GDP in 2021. However, rapidly rising home prices are threatening this path to economic security for many, with Central Indiana’s median sale price increasing by double digits each of the last three years, with a 43.6% total increase in the median sale price since December 2019.
The panelists discussed what affordability means when we talk about single family housing and the barriers we’re currently facing with regard to home ownership locally. The issue of low supply alongside growing demand was addressed in relation to historically high construction costs. Panelists discussed the demographic trends that have increased demand during a time when the high cost of labor and building materials skyrocketed and what policy solutions could improve supply-side issues.
Panelists also shared their insights on the role of institutional investors in the housing market and their impact on housing inventory and prices, with a particular focus on their impact on low- to moderate-income and first-time home buyers. There was discussion about policy moves and their potential implications, including laws prohibiting or limiting single-family rental activity, as well as what might cause investors to lose interest in the housing market.
To wrap up the discussion, the panelists discussed the future of housing and affordability, including what we can expect going forward demographically as one segment of the population
ages out of their homes while another growing segment of non-traditional new households is formed. Panelists also weighed in on what sort of innovative approaches to financing and home buyer assistance may become more widely available to help address the problem of affordability. Example of home buyer assistance included the growing trend of employers constructing homes to sell to their employees at affordable rates (such as Cook Medical in Spencer) and philanthropists and employers providing down payments that are either paid back at zero interest or are given with no expectation of payback. In addition, innovation in construction design and materials, including volumetric modular construction, was discussed as one of several possible avenues to help bring down housing costs.
Thank you to our panelists and moderator for providing their expertise on this important and relevant topic.
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