Indianapolis ranks high among cities for home ownership over renting
INDIANAPOLIS (WISH) — A new study ranks Indianapolis in the top 10 when it comes to the best places to purchase a home over renting.
The study from Clever, a real estate company, took data from the federal government and other real estate agencies to determine the affordability of home ownership as compared to renting across 50 metro areas.
Indianapolis came in 10th alongside other Midwest metro areas: No. 1, Cleveland; No. 3, Chicago; No. 7, Detroit; No. 8, St. Louis; and No. 9, Cincinnati.
This study took the annual average rent price in each metro area and divided it into the average home price. The study says if the resulting ratio was under 15, it is a better area in which to purchase a home.
Indianapolis came in at 13.9.
Any metro areas with ratios over 21 were better places for renting due to the high cost of the homes.
So, overall, the metro areas with higher rent prices but cheaper homes got better scores.
“It doesn’t surprise me that Indianapolis is on anything that has to do with housing prices. We’ve been affordable for a long time,” said Joel Clausen, a broker at Real. “That’s what’s really attractive about Indianapolis being such a big metropolitan area is that it’s still kind of affordable to live here compared to a lot of places that are around our size.”
Despite increases, Indianapolis continues to have affordable prices to buy homes but some areas have seen a dramatic increase in rent prices.
“Indianapolis for a long time you had certain pockets all over indianapolis where you could really get, I mean you could have a $700 a month rent a few years ago and get a nice 3-bedroom, 1.5- (or) 2-bathroom house,” Clausen said. “And now some of those same places, when I’m looking for investors and such, those rents are around $1,200, $1,300. That’s just within five years it almost doubled.”
As for the future of homeownership in Indy, Clausen says he thinks the metro area will continue to remain affordable.
“We are one of the 15th-largest cities in the U.S. and we’re still so much more affordable than something that is very close like Chicago,” Clausen said. “Chicago outpaces us with their home prices and that brings in some of their not-great areas.”
There were some metro areas that ranked surprisingly well including No. 3 Chicago, No. 11 Miami and No. 16 New York. This could be attributed to multiple factors including the large metro areas bringing the average home price lower than in just the downtown area of that city. The scores were also affected by the extremely high rent prices in those areas. This means that, despite the high home prices, the rental prices are considerably high, too.
The study listed Indianapolis’s average home price at $263,696. Rent was at nearly $1,577 a month.
Indianapolis is consistently ranked as a top place to purchase and is one of the best to purchase a first-time home.