Indiana Real Estate Market: Prices & Trends 2023

2023 will present real estate market trends in Indiana. This post covers our 2023 real estate market predictions for Indiana. The article focuses on residential real estate market trends because that is what most people really want to know.

Looking Back: 2020-2021 Housing Market Stats in Indiana & Northwest Indiana

It’s no secret home prices in Indiana have increased over the last few years. Let’s take a look at Indiana home prices from 2020 to now in 2023. Also, I can provide some comments about what is fueling the rapid increase in Indiana home prices.

Home Prices in Indiana & Northwest Indiana

A constant real estate market trend in Indiana has been rising home prices. Home prices have increased throughout Indiana over the last three years. On a statewide basis, the average sale price of a home in Indiana has increased 7.9% from 2021 to 2023. Specific areas of the state are seeing larger increases, too. Higher appreciation rates are being found in more populated areas.

Homes for sale in Northwest Indiana have increased substantially making it one of the fastest rising markets in the state. Across Northwest Indiana home prices increased 11% in 2020, 10% in 2021, and at this point in 2023 are up 7%.

Real Estate in Indiana & Northwest Indiana

There are several factors causing an increase in Indiana home values. First, is the population problem. Indiana added about 340,000 new residents in the last ten years. People are attracted to Indiana due to its stable economy, low crime rates, and low taxation.

Two additional population issues put pressure on the housing market. First, there are more 25 to 35-year-olds than ever before. This is a critically important age group for stimulating the Indiana housing market. Secondly, there are more people than ever before living alone. This causes us to need more housing units.

The other issue is the lack of development and new home construction over the last decade. After the Great Recession of the aughts (decade of 2000 to 2009) new home construction fell off of a cliff. Too few homes were built for too many coming buyers.

Lastly, the lack of expanding infrastructure is affecting home prices. This is most prevalent in small towns where it is cost prohibitive to expand a town’s municipal water and sewer services. The low taxation is causing there to be no money for towns to grow, especially smaller towns. Thus, the few homes which are there are becoming more valuable.

Real Estate Agent Commission Rates in Indiana And Northwest Indiana

One of the residential real estate market trends to watch is what are real estate agents charging for their fee? Real estate commission rates have stayed high in some markets and have lowered in others. The Northwest Indiana market seems to have seen the greatest reduction in real estate commission rates.

Other areas of the state, notably the Indianapolis area, continue to have higher real estate commission rates ranging from 5% to 7%. That market has found a way to stave off some of the newer business models which have come on the scene. Well, until us.

The Quadwalls Real Estate Team offers low real estate commission fees and full-feature home selling service. Click here to learn more.

Real Estate Market Predictions And Trends To Watch In 2023

I have formed my predictions and thoughts on trends to expect in the Indiana real estate market during 2023. Here, I can share these with you.

1. Home Prices Will Continue To Increase

The first of my 2023 real estate market predictions is that home prices will continue to increase during 2023. However, the rate of year-over-year appreciation will be lower. I predict Indiana home prices as a whole to increase 3% to 6% in 2023 compared to 2021. The main reason for this reduction will be rising interest rates and inflationary pressure. Larger homes with many amenities may see a downturn in value.

2. Housing Supply Will Be Tight But Will Slowly Improve

Another one of my real estate market predictions is that inventory will improve. We are two years past the start of the COVID pandemic. So, the frequency of major life events is likely already underway. Major life events cause housing changes including enticing some home sellers to sell and homebuyers to buy.

I have already observed about 30% more homes for sale in Northwest Indiana at the end of the first quarter of 2023 compared to the end of the first quarter in 2021. Also, new construction of homes will pick up a lot in 2023. Which leads to my next prediction…

3. Building Boom

Another of the real estate market trends we will see in 2023 is an overall increase in the number of new homes for sale. U.S. housing starts will increase a lot during 2023. Builders are finally seeing an opportunity to start building. Additionally, many of the supply chain bottlenecks which plagued the industry in 2021 will be cleared up in 2023. Home builders want to take advantage of the opportunity in front of them and will start to build more homes.

4. Rural Real Estate Gets Really Hot

One of the current real estate market trends which will continue in 2023 is more people moving to more rural areas. This has nothing to do with COVID and people fleeing the city and all that. Honestly, not much of those widely published headlines actually happened. Instead, rural towns and hamlets within a 30-minute drive of larger cities are attractive due to the affordable home prices.

Inflation is red hot, home prices are up everywhere, but wages are only inching up. Homebuyers are searching for value. Homebuyers will trade up from a 15-minute to a 30-minute commute in search of affordable homes. Many of the highest appreciating areas will be the small towns of a few thousand people within 30 minutes of a city of 30,000 or 40,000 people.

5. Mortgage Interest Rates Will Increase And Will Increase Rapidly

Another of my real estate market predictions is for mortgage interest rates to increase and stay high compared to the last 36 months. In the first quarter of 2023 mortgage rates increased dramatically. In late 2021 highly qualified buyers could get a mortgage in the 3s. As we started the second quarter of 2023 it was the low 5s. Ouch. This will cool home prices more than a little bit. The biggest loser of the high mortgage rates will be homebuyers and sellers of homes in the top 20% of any local real estate market.

6. Big Tech Real Estate Reset

Current real estate market trends include the addition of the latest dot-com company coming to disrupt the real estate industry. In 2019 and 2020 a lot of big tech ideas about real estate came out. iBuyers were frequently talked about. There were some other cutting edge ideas, too. Many quickly failed. As for others, my how the headlines have dried up.

The real estate agent is alive and well. And, we do more than just open a door, write an offer for 15 minutes, and collect our commission. Big tech in real estate has learned this and is likely stepping back to re-evaluate how to put themselves into the industry.

7. Real Estate Commission Fees Will Become More Negotiable

My favorite residential real estate market trends to watch is real estate commission rates becoming more negotiable. Too many agents with too little work to do will cause some real estate agents to be more negotiable about their real estate commission fee. Rightfully so in my opinion. I am hopeful the consumer continues to be informed about what agents actually do to get a home sold.

Indiana home sellers can move past those awkward conversations and just hire the Quadwalls Real Estate Team to sell your home in Indiana. We offer low real estate commission fees right out of the gate and provide a full-feature home selling service.

How Should Buyers and Investors Prepare for the 2023 Real Estate Market?

Homebuyers need to stop trying to time the market. Timing the market is too difficult and will likely cost you more in the long run. Additionally, it is unlikely home prices will deteriorate much at all in 2023 despite rising inflation and mortgage interest rates.

Real estate investors will face challenges in 2023. First, the cost of money will increase. Rising interest rates, increasing mortgage interest rates, and hard money lenders wanting a higher return will affect real estate investors. Secondly, real estate investors will continue to face challenges of acquiring properties at attractive prices. This is due to the fact many homebuyers are still in the market competing for homes.

How Should Sellers Prepare for the 2023 Real Estate Market?

Home sellers should prepare to see the market shift in 2023. Early 2023 will continue to favor home sellers. However, the second half of the year will be more challenging.

Mid-2022 showed signs of home inventory levels increasing. Additionally, the days on market for homes have been growing longer in nearly all markets. Home sellers needing to sell need to temper their expectations as the market becomes more challenging for home sellers.

Home sellers trying to time the market would most likely be better off selling in 2023. It is likely that home appreciation rates will normalize in 2023. So if you are waiting for that next surge of rapid appreciation to occur, think again. Though demand remains strong, high inflation and mortgage interest rates have cooled what buyers are willing to pay.

Will The Housing Market Crash in 2023?

It is very unlikely the U.S. real estate market will crash in 2023. Simply because prices were high does not mean there will be a crash. Several major macroeconomic events would need to occur in order for a housing crash to take place. This would include massive layoffs followed by high unemployment. Simply looking in the rearview mirror at what happened from 2007 to 2009 is not a reasonable way to view the world. What happened then and what is happening now are very different.

Conclusion to Indiana Real Estate Market in 2023

The Indiana real estate market will remain stable throughout 2023. The Indiana real estate market will follow along with the momentum experienced in the rest of the U.S. But, Indiana is a resilient state; the swings that occur in many parts of the country happen here, but with less energy. To say differently, it’s a lighter swing.

Indiana real estate is plagued with the same problems existing in many other areas of the country. Specifically, too few of the right homes for today’s homebuyer. There are tens of millions of people in the U.S. at the prime homebuying ages of 25 to 35 years old. The age demographics of Indiana are not too different from every other state. Those wanting and ready homebuyers will keep the Indiana real estate market from crashing.

Homebuyers should buy a home despite high mortgage interest rates. Long term, home prices are only likely to increase. We can help you buy a home in Northwest Indiana. Take the first step and complete the Quadwalls HomeFinder Assistant. It’s free, fun, and only takes 3 minutes. Click here to complete your HomeFinder Assistant today.

If you have a home to sell in Northwest Indiana we can help you, too. We offer a full-feature home selling service at low, low, low real estate commission fees. Click here to learn more about our services and real estate commission fees.