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Housing is critical infrastructure for Indiana economic development

Monday, November 20, 2023 3:32 PM | Jill Ewing (Administrator)

Mark Fisher
Chief Executive Officer
Indiana Association of REALTORS®

In today’s talent-driven economy where workforce is often the top priority for corporate decision-makers, housing development goes hand-in-hand with economic development: Communities can’t compete (and companies can’t grow) if residents and recruits can’t find affordable, appealing places to live.

For Indiana, housing is a cost-of-living advantage that boosts state-level buying power: According to federal measurements of price parities across states and regions Hoosiers pay roughly 75 cents for every dollar of housing costs paid by the average American. (Indiana’s median home price passed $255,000 this summer, while the U.S. eclipsed $400,000.)

But this advantage can disappear. Indiana housing prices have outgrown the nation for the past five years. REALTORS®, homebuilders, economic development professionals and elected officials have to work together to ensure housing capacity keeps up with the demands created by new jobs and business investment.

One respondent to the latest Site Selection Magazine Site Selectors Survey (2023) gave a first-hand account: “Other than the metropolitan communities, most communities do not have the labor to accommodate a large production facility…Unfortunately, almost every metropolitan community has a significant housing shortage, which is greatly skewing the labor market.”

Indiana’s housing shortage is actually more acute than most parts of the country. In 2012, an average of 45,000 homes were listed for sale across the state’s MLS marketplaces on a given day; today, that number is just over 11,000. In the same timeframe, we’ve grown by more than 160,000 new households while adding fewer than 150,000 new housing units.

This lack of housing forces workers further from jobs, raising labor costs and challenging corporate expansion plans.

This imbalance between supply and demand is responsible for escalating price appreciation as well – roughly 50% since 2018, from a median sale less than $160,000 to nearly $245,000 year-to-date.

REALTORS® obviously don’t mind price appreciation; rising property values create wealth for homeowners as a byproduct of healthy economic and demographic demand. But when lack of inventory increases housing prices and outpaces wage growth by a wide margin, it pushes potential homebuyers to the sidelines and stymies our business climate.

Fortunately, help is on the way: The state’s current budget includes historic levels of support for housing development, including a new $75 million state-backed revolving loan fund to help local governments invest in infrastructure to encourage new housing projects, with priority given to localities that have analyzed their housing needs and enacted pro-growth zoning reforms.

The General Assembly also provided more flexible residential tax increment financing options for repaying these infrastructure loans from a growing property tax base, further enhancing the value of TIF to local communities.

More than 40% of the projects requested in the first round of Regional Economic Acceleration and Development Initiative (READI) grants focused on workforce housing needs, and ‘READI 2.0’ formalizes housing as a funding priority for the next $500 million.

These appropriations headline the largest state-level investment in housing ever for Indiana. Lawmakers recognized that housing development, workforce development and economic development are inter-connected; we can’t promote quality of life without creating places to live.

We’re eager to see the dollars allocated in Indiana’s budget put to work expanding housing opportunities and encouraging economic growth across Indiana. REALTORS® can be tenacious allies advocating for new development and pushing back against ‘not in my backyard’ resistance.

We’re also ready and willing to partner with READI regions and local economic development organizations to provide housing market data drawn from our MLS marketplaces. REALTOR® associations can be a resource for real-time, market-driven assessments of housing availability, affordability and sales demand.

REALTORS® and local economic developers are natural partners with a shared purpose – selling the communities you serve to potential homebuyers and growing employers. Let’s work together to attract more Hoosiers by choice, job creators and capital investment.

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