New homes are not profitable in 2/3 of Indiana counties, study says
INDIANAPOLIS, Ind. – A new study from Ball State University is shedding some light on the housing market in Indiana.
Building a new home carries quite the cost, and in some counties, the cost is more than the value.
“In most places in Indiana, in about two thirds of the counties, it’s not profitable to build a new home,” said Michael J. Hicks, Director of the Ball State Center for Business and Economic Research.
That figure came as a surprise to Hicks, who spent months researching Indiana’s housing market.
“If you look around the state, you’ll realize we have 300,000 excess homes that are unoccupied,” Hicks said. “That’s enough to house one in three Hoosiers.”
Hicks says those homes are in areas not seeing investment, a stark contrast to other areas like Indianapolis’ northern suburbs.
“In general, in the last 14 years we’ve definitely seen an increase in average sales price and just generally a very strong market,” said Andy Liechty, a realtor with FC Tucker.
Liechty is seeing success from his Noblesville office, in a county Hicks says is doing well.
“Hamilton County is probably among the best places for new home construction in America right now,” Hicks said.
“I would say it leans a little bit more towards a seller’s market,” Hicks said. “But we’re seeing a little bit more inventory coming on the market right now.”
As the state looks to address the issue of affordable housing, Hicks hopes his study will show the issue starts with supply and demand. In order for homes to be built, developers need a reason to build them
“I think most Hoosier policymakers need to understand we don’t just have one problem,” Hicks said. “If builders don’t find it profitable, then there’s some more fundamental problem in that community, and just throwing tax dollars at it is not a good way to solve that problem.”
You can find a link to the study here.