A lot available sign is up for a corner lot at Supernova Drive and Hercules Drive in the Bluffs at Youngs Creek subdivision in late May.
Daily Journal File Photo
Housing inventory is up in Johnson County as the market cools off and more houses continue to be built, but real estate and building experts say the demand for new homes is still high.
Active inventory in Johnson County increased year over year in the last few months, jumping up by 47% in May this year, compared to May 2022, according to market data from MIBOR Realtor Association. Pending sales were down again as well, by 22.5% in May compared to May 2022.
New single-family home construction is booming across the county, with new neighborhoods going up in nearly every city and town, from Greenwood to Edinburgh.
Compared to the unprecedented last two to three years in the market, home sales have been balancing out in the last six months. House prices are still going up, with the Johnson County median home price in May sitting at $317,000, according to MIBOR data. The median home price in May last year was $301,000 and $255,000 in 2021.
Newly-built homes are generally priced at around an average of $400,000 to $700,000 in Indiana now. Interest rates are still high too, hovering near 7% again.
Buyers interested in purchasing or building new homes are still there though, and the demand remains high, said Drake Branda, director of government affairs at the Builders Association of Greater Indianapolis and CEO of Building Partners of Indiana.
“Homebuilders around Central Indiana, they’ll tell you demand is still strong. In fact, we’re probably about 62,000 homes short of demand,” Branda said.
From the real estate side, Victor Perr, a Realtor at F.C. Tucker, said there is a good portion of buyers interested in purchasing new in this market. The real estate market has picked up in the last six months, and this time of year is typically busier anyway, as more people buy houses in the summer.
‘There is a portion of the population that really prefers to settle into a new home. Some of them that’s all they’ve known … They know moving into new home means they won’t have to do any major updates or renovations, for the next five to 10 years,” Perr said.
Johnson County is growing and is known as a good place to live near a major city, making it a good market for new houses, he said.
“Given the growth, the accessibility Johnson County has, I think the amount of homes that are planned, in my mind anyway, that hasn’t kind of reached that point of being too much,” Perr said.
Building permits in Johnson County are down so far this year, compared to last year. A total of 91 permits have been filed since April this year, which is lower than the 292 filed at this time last year.
That doesn’t mean the new home market is fizzling out. Branda said the homebuilders are getting close to normal pre-pandemic levels. The last two and half years were unprecedented, he said, with a 48% increase in permits in central Indiana over a year and half. Central Indiana in general saw a 23% decrease in 2022 permit activity compared to 2021.
“It’s been kind of a 19% to 25% normalization to getting back to levels that are sustainable,” Branda said.
A bigger problem is finding ways to build more homes, also at an affordable price. The cost of building a new house keeps increasing, for a number of reasons.
Branda said inflation isn’t necessarily the sole cause of new home price increases. Fuel costs right now have driven the cost of freight for homebuilding products up. During the pandemic, product costs, such as lumber, went through the roof, but that has normalized. Right now, other products are increasing in price due to demand, such as shingles and drywall.
“You can’t single out inflation as, ‘hey that’s the issue.’ It’s fuel costs, it’s freight, it’s labor,” Branda said.
Certain people are getting priced out of the home market right now, with home prices and interest rates, Perr said.
“There’s still that portion of the population that has to sit on the sidelines because the current rates just won’t allow them to afford the monthly premiums,” Perr said.
He added it is hard to predict what the general rates are these days because the rate now depends on the buyer. He suggests to his clients now to get at least three quotes before they get a mortgage.
New homes especially are becoming more out of reach for the first-time buyer, starting at around $400,000 to build new. Branda said the home building industry needs to find ways to keep prices lower.
“Without even doing it purposefully, we priced out that first-time homebuyer out of the whole new home market, almost,” Branda said. “In Indiana, that new home price starts with a four for the first time in a long time.”
It’s up to the industry, along with the municipalities to come up with ways to solve the affordable housing issue, Branda said. Through Build Indiana Roots, a coalition of business groups and trade associations supporting “achievable housing” for Hoosiers, stakeholders are working on solutions.
“What we have to do is figure out attainable housing, affordable housing, whatever you want to call it. It’s kind of that elephant in the room, right?” Branda said. “Does that come down to zoning? Does that come down to architectural standards? From an investment standpoint, we are definitely looking at collaborative solutions.”
Build Indiana Roots has data on its website that it sends to elected officials in municipalities to paint a picture of the industry to show what it’s really like “boots on the ground,” Branda said.
“A lot of people are trying to paint the picture of the sky is falling. We’re trying to take that, a combination of empathy, but also objectivity with the data,” Branda said. “The data showing us the demand is super strong. But we’ve got to find a way to meet that demand and work with our municipality partners to create those affordable solutions.”
BY THE NUMBERS
Johnson County May single-family housing data
Median sales price
2023: $317,000
2022: $301,000
Active inventory
2023: 232
2022: 158
Pending sales
2023: 207
2022: 267
New listings
2023: 240
2022: 303
Days on market
2023: 33
2022: 10
Source: MIBOR Realtor Association
