Indianapolis Indiana Rental Market Update December 2022
Hi guys. Mike Taylor, broker Owner, Red Door Property Management. Today I'm excited to bring you our December report for the Indianapolis Rental Market. So, we're starting to see some interesting trends. Unfortunately, it's not for the best. The Indianapolis market, it is seeing a bit of a decline in average rents as well as an increase in days on market and an increase in absorption rate. So, it is a little bit seasonal. These are the December market reports. And so, you are going to see some seasonality with every year. You're going to see that every single year. But this year seems to be a little bit more precipitous, a little bit steeper of a decline than we're used to seeing. So, without further ado, let's take a look at the numbers for December.
Active Homes
Okay, let's take a look at the numbers for the Indianapolis rental market report for December of 2022.As I kind of mentioned in the intro, we are seeing some seasonality, some decreases, and kind of a tail of caution here. So just kind of jumping into these numbers here. Active homes, number of active homes is 1833.Active homes that may or may not mean anything to you. We kind of try to give it some context by talking about absorption rate. I will get to that in just a minute. But just so you know, there are 833 active homes on the market currently in Indianapolis for rent. Jumping into this middle, this middle graphic here. So, this is median rental price over time. And so, the line here is 2022.And you can see that we had a pretty good run up here all the way to August and then a very steep decline coming in through December. Usually, we do see a curve like this based on seasonality. We're going to see the most activity in the spring and in the summer, and then it kind of tapers off and activity tapers off and then average your median rental price also tapers off a little bit. But this is a very, very steep decrease from August to December. It's a lot more gradual than this, usually not as drastic. That's a pretty big runoff from the heights of the summer. So, a little concerned about that. Hopefully that's going to level off.
Average Rent
If we look at the average rent, this is for December. The average rents actually the median rent is going to be 1390.That represents a 4.3% decrease over last month, November of 2022, but it does represent a four and a half percent increase over 2021.So this just goes to show you the importance of these market reports, the importance of constantly updating your pricing strategy. Because if you were thinking about getting your home on the market in August, September or October, you likely need to revisit your pricing strategy because you're probably overpriced based on the rest of the market. And what the rest of the market is doing. So super important to reevaluate this or have your property manager reevaluate your pricing, because in the Indianapolis market here, it's changing pretty rapidly. And what was average two months ago is definitely not average. So, it might be time to think about a decrease. Or you can try to wait it out and see what the spring market brings. That would not be my recommendation. I would recommend lowering your rents and filling that vacancy and get that cash flow coming in. So just kind of a word of caution to revisit your pricing strategy for 2023.Taking a look over here.
Average days on the market
At average days on the market, we're at 36 days on the market on average to rent a home in December of 2022.That is actually up 50% from last year, which is crazy. It only took 18 days last year to rent a house in December. That's really great. That was obviously lack of inventory, things like that. And the 36 days is actually up 6% from last month. So, from November of 2022 took 6% longer to rent a home in December price range.
Price Range
This one is just kind of more of for education, just so you can kind of see where the bulk of the activity is in the market. So, this breaks it down by price point and shows you where homes are leasing for. So, the vast majority in Indianapolis are kind of in. That like $1,000 to maybe $1,800 range. That's definitely the meat of the market. If you're thinking about purchasing a rental home or putting a rental home into use, that would be my recommendation of that's a really good price point to be at in the Indianapolis market.
Absorption Rate
And then lastly, we do talk about absorption rate. So, it kind of ties into active homes. It puts a little bit of perspective on it. Again, this is the number of months it takes to run through your current supply of homes. So, there's 1800 homes on the market. If we stopped putting homes on the market, it would take 2.8 months to run through that inventory. That's not crazy. It's not out of whack, but that is an increase over the past several months. So, the trend of that absorption rate is going up, which is not great. That means there's either more inventory or less demand or both. But this is definitely a trend that we want to keep track of. I think in a couple of months ago, that was definitely below two. So, it's definitely creeping up. Definitely something that we want to keep an eye on.
So, there you have it., There's the numbers for December of 2022 for Indianapolis. Please watch our other submarkets because there is a little bit of a different story happening in other areas of town. We do one for Fishers, we do one for Westfield Noblesville, we do one for Avon this month so please click on our other market reports to educate yourself on the submarkets of Indianapolis as well.
