Fisher: Inventory remains long-term concern for housing market
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Existing home sales in Indiana fell in 2022, but the Indiana Association of Realtors says the state is still outpacing the nation. According to annual data collected by the association, sales dropped 11% amid rising mortgage rates, though the U.S. saw a sharper decline of about 16%. CEO Mark Fisher says Indiana housing in 2022 was a story of stability against stiff headwinds, but sales were close to pre-pandemic numbers.
Fisher told Inside INdiana Business as the state continues to see population growth, the ability to bring more inventory to the market remains a long-term concern.
“[There’s a concern of] making sure that as we continue to grow and we have success in the economic development space that we are matching our housing strategy with our economic development strategy,” Fisher said. “We’re excited to see the legislature take up some of these concerns this legislative session, addressing, really, what are the pinch points that builders face in bringing more inventory.”
Last year, Indiana saw 102,764 new home listings, down 5% from 2021. Fisher said the Indiana General Assembly will consider several proposals this year looking at how uncertainty on costs and regulations could be eliminated to help boost inventory.
“So they’re looking [at] how can the state partner with local communities and developers to address some of those concerns,” he said. “A lot of it’s going to be centered around the infrastructure. So, how can state funding induce a local governments to be proactive and putting in infrastructure like water and sewer broadband?”
Fisher said understanding the interplay between economic development and housing will be key to overcoming long-term inventory challenges.
“Our national economists likes to say, ‘No houses, no people, no jobs.’ As we continue to succeed in economic development, we need to make sure that our housing policy stance is complimentary. So I do expect [the state] to look at programs like the READI initiative and and how they can fund it and spur more housing development to make sure that we have the housing that is attracting the people and the people that are attracting those jobs.”
The Indiana Association of Realtors said every region of Indiana saw at least a 25% decline in monthly sales in December compared to the same month in 2021.
However, home sales in west central Indiana saw the smallest drop in year-long sales, just 4% below 2021. Columbus/Bartholomew County also resisted a big slow down, with sales down 5%.
Fisher said in 2023, he expects Indiana to continue to outperform national trends, but limited supply could put a ceiling on the state’s recovery.
“We see some of the prices cooling off a little bit. We’ve seen this 18% to 20% increase in prices year-over-year over the past two years; we’re starting to see that cool off a little bit and even a little bit of a drop,” he said. “But without addressing those long term inventory challenges, we don’t expect to see a precipitous drop in prices. So we will see a cooling of the market. We will see more opportunities for buyers to enter the market. But we don’t expect a huge drop off because of those long term inventory challenges.”