Housing is critical infrastructure for Indiana’s economic development – Inside INdiana Business

Mark Fisher (photo courtesy of Indiana Association of Realtors)

As uncertainties clouded the national economic outlook, 2022 produced a steady stream of positive news for Indiana through July – new business attraction and expansion projects worth nearly $17 trillion dollars (a record pace), unemployment below 2.5%, personal income growth outpacing the United States by nearly 20% over the past year and a half.

A number of factors will fuel continued economic momentum, including the size and skills of Hoosier’s workforce – and, closely related, the housing market for those workers.

It has been said, “Houses are the places where jobs sleep at night. Communities can’t compete (and businesses can’t hire) if their residents and recruits can’t find affordable, attractive housing. The lack of housing keeps workers away from their jobs and creates a more difficult climate for growing employers.

In recent years, Indiana’s housing market has come under pressure from population and economic growth. Our average monthly inventory of homes for sale has fallen 80% over the past decade, while new building permits have fallen to half the level of the 2000s.

At the same time, the state’s population has grown by nearly half a million, including the net migration of more than 50,000 new Hoosiers since 2018, while gaining 250,000 total jobs. The growing imbalance between housing supply and demand drove home prices up at a faster rate from 2013 to 2019 than the “bubble years” before the Great Recession.

Unsurprisingly, the 2020 IACIR survey of local authorities identified “quality and affordable housing” as a top concern for 74% of respondents – only public health issues ranked higher, as the questionnaire was distributed as COVID restrictions took hold throughout Indiana.

Over the next two years, more Hoosiers entered the housing market in search of fewer listings, pushing prices even higher. But recently, demand has cooled off from the blistering pace of 2021.

June brought 12,042 new listings – a 5.8% increase over June 2021 – and monthly inventory reaching 10,550 homes, first month inventory has exceeded 10,000 since December 2020. During the first half of 2022 , new registrations are 4.7% higher than in 2021.

But more homes are available in part because some buyers have been sidelined by rising mortgage rates and inflation. Indiana’s housing gap hasn’t closed, it’s just been temporarily obscured by weaker demand and slower sales.

Inflation will decline and the Federal Reserve will lower interest rates, and the housing market will readjust to match economic and demographic trends (around mid-2023, according to the general consensus of national economists). In this case, limited capacity could limit Indiana’s future growth…unless we stay focused on supply-side solutions.

The Indiana General Assembly created a statewide housing task force to study these issues and make policy recommendations for consideration in the next legislative session. Indiana Realtors actively participate in these discussions and are prepared to defend its findings.

Indiana is not alone in our struggles with housing inventory, so we also hope the state benefits from the Biden administration’s housing supply action plan. This would allow remaining COVID relief funds to be used for a wider range of housing development projects, prioritize construction supply chains, and incorporate development-friendly incentives into federal funding formulas. , among a multitude of other proposals.

Sen. Todd Young’s “Yes in my Backyard” (YIMBY) Act seeks greater transparency about local zoning and land-use policies that tend to restrict residential growth, an approach that could highlight the biggest obstacles. more common to new housing and create momentum for reform.

In many cases, local policy makers may not be aware of all the financing options and incentives already available to promote new housing. Indiana REALTORS works closely with city and county officials to highlight existing resources while advocating for a better stocked development toolkit.

In short, rebuilding residential inventory should be an economic development priority worthy of a full-fledged state, federal, and local action press.

After all, housing is essential infrastructure for thriving communities that have ambitious plans to attract people, employers and investment. Inadequate housing discourages growth – we may be heading for a more balanced housing market, but we have yet to correct our longer-term imbalance in housing supply.

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