Why Indianapolis

According to an Inman News Special Report, the Indianapolis-Carmel metro area was named the best market for real estate investors. This was the most populous of the markets chosen which included Winchester VA, Gainesville FL, Tucson AZ, Tallahassee FL, Hagerstown-Martinsburg MD, Salt Lake City, Richmond VA, Gainsville GA and Winston-Salem NC. The Indianapolis area’s population jumped 15.2 percent between 2000 and 2010, to nearly 1.8 million people, according to the U.S. Census Bureau. By comparison, the U.S. population as a whole rose 9.7 percent in the last decade.

“If you’re looking at market trends on a positive side, certainly a growing population is hard to argue with. It will funnel through the first-time-homebuyer segment of the economy or push rental rates up,” said Realty Trac’s Rick Sharga. SmartZip, which contributed population, job growth, home-price appreciation and ROI projections data to this report, predicts the metro area’s population will rise 8.6 percent over the next 10 years, somewhat higher than average.

Indianapolis-Carmel’s unemployment rate was 8.1 percent (not seasonally adjusted) in March, compared with 9.2 percent for the nation as a whole. The rate fell by two percentage points year-over-year — compared with a 1 percentage point decrease for the U.S. overall. Ten-year projected job growth for the area is 14.9 percent.

As a state capital, the area’s largest employers are the federal and state governments. Several health care-related companies and universities are also among the area’s top employers, including Eli Lilly and Co., Clarian Health, St. Vincent Hospital, Indiana University and Purdue University.

Indianapolis-Carmel had the lowest sales price of the chosen markets in fourth-quarter 2010, at $106,000, and the highest affordability, with 93.5 percent of homes affordable for households making the median income. Indianapolis-Carmel has been the most affordable housing market in the nation almost continuously for the past five years, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index, a national affordability index.

While the area’s projected 10-year home-price-appreciation rate was modest relative to the other chosen markets, at 24.3 percent, Indianapolis-Carmel had the highest projected 10-year ROI of the chosen markets: 300.9 percent.

The ratio of median total cost of ownership to the median rental cost of property in the metro was the lowest among the 10 markets: 0.79. According to SmartZip, a ratio of 1 implies that it costs the same to own or rent a property in the metro; a ratio less than 1 indicates it costs more to rent and is therefore better to own; and, a ratio greater than 1 indicates that it costs more to own and is therefore better to rent.

According to HotPads, Indiana’s median rental price rose 6 percent between April 2010 and April 2011.

Indianapolis-Carmel is relatively steady in terms of home prices. It was the only chosen metro area to see its median sales price remain completely flat year-over-year in fourth-quarter 2010, though its median listing price has fallen somewhat lately.