Andrew Kelley just closed on his dream home in Westfield. 

“Very excited about it, but it has been a long and arduous process,” said Kelley.

It took months for Kelley to buy his home even though he’s well qualified, fully financed and has a good job as an environmental consultant.

Kelley lost out on other houses because he was outbid by an institutional investor. Often, it’s a Wall Street company buying homes in central Indiana to make money on them later. The companies come in with cash offers, frequently above asking or appraisal price, making it next to impossible for regular buyers like Kelley to compete.

“It’s really frustrating, especially when you find out you got beat out by cash offers by these investors who just want to flip it or rent it out.”

Andrew Kelley, homebuyer

Dan O’Brien has been buying and selling real estate in Indiana for almost 10 years. He’s a realtor with Trueblood Real Estate in Hamilton County. He said central Indiana is a prime target for big investors.

“They can get a decent house for $150,000, $200,000, really under $300,000 is their bread and butter, where that’s also a first-time homebuyer’s price point, that’s an empty nester price point,” said O’Brien.

Research done by the MIBOR Real Estate Association identified six companies as the most active institutional investors in Central Indiana.  According to the Pew Research Center, the investor share of home sales in Indiana reached 26% in 2021.  That’s a 44% increase from just the year before.

“We have had people contact our office who have decided not to become homeowners because they just couldn’t purchase something,” said Amy Nelson of the Fair Housing Center of Central Indiana.

A recent report from the Fair Housing Center of Central Indiana says institutional investors impact not only home buyers, but renters as well.  Particularly low-income renters who get prices out when the rental supply is snapped up by defeated buyers who can’t compete with investors.

“They’re taking away affordable rental opportunities for low and moderate-income, because they can pay more, they can be choosier. They can pick up something more moderately priced if they want to,” said Nelson.

State legislators discussed institutional investors in a recent Housing Task Force Meeting.  Members were hesitant to pass any laws without knowing if investors are a long-term issue in the state.  There’s also the question of fairness.

“How do you make laws to stop these big companies, but you don’t impede on my ability to own investment properties or rental properties,” said O’Brien.

For his part, Andrew Kelley is getting ready to move in. But, he admits he never would have been able to buy his house unless the seller had graciously rejected a high bid.  An “all cash” bid from an institutional investor.

“To an investor, it’s just another property, it’s just another profit… but for me, it’s a home.”