Indianapolis Indiana Rental Market Update January 2023
Hey, guys. Mike Taylor, broker owner, Red Door Property Management. Today we are bringing you the January market report for rentals in Indianapolis today. So, if you watched last month's video, you know that we saw a pretty steep and precipitous decline from the average rent price in, I think it was August when we peaked out. And then towards as we got later and later in the year, we saw those rent prices decline pretty gradually or sorry, pretty dramatically. So, let's take a look to see if those prices are still going down. Have we bottomed out? Are we stabilizing? What's going on with the market? Let's take a look.
Okay, let's take a look at the numbers for the Indianapolis rental market for January of 2023.As I mentioned in the intro last video, we saw this huge precipitous decline from August all the way through December, and some of that is normal seasonality. However, that is a lot steeper of a decline than we will typically see from just being in the winter months. So, what happened in January? Well, it continued to go down. Unfortunately, we're kind of getting a sneak peek in February. So that maybe there's some optimism here because there are some early February numbers reporting of a little bit of an increase from January. But the average rent is actually down again slightly 1.51% from last month. So, nothing huge, but it is still trending downwards. But again, the early indicators for February indicate that maybe that's going to trend back up. So, sense of cautious optimism is what I would say in terms of the average rental price in Indianapolis.
Active Homes
There are 1808 homes currently on the market in Indianapolis for rent and then just kind of going back to this rental price over time. Again, I mentioned this in almost every video, but you really need to take a look at we do these videos in other markets as well, and it's interesting to look at these submarkets and to see what a difference there is in days in the market. Average rents and the trend lines we have some like for example, in Westfield, the trend lines are actually trending up. So, it is very specific, even specific to submarkets. You can't just kind of lump Indianapolis as a whole and include all of what we call the Donut counties, everything outside of Indianapolis as well. So please check out the other videos that we do on a monthly basis to get a sense for the entire market.
Average days on the market
That being said, let's take a look at the days on the market. So, this also continues to creep upwards. Look at this, we are up 30% from last year and actually up 20% just from last month. So, we are almost at 45 days on the market is the average. Last year that was 1520 days on the market. So, things are definitely taking a lot longer to lease up this month. And this year as compared to last year. So, something to keep in mind for sure.
Median Rental Price Over Time
Also circling back on this median price over time. Again, this is something to consider where if you leased something up this past year, in July or August or September, kind of at the height of this peak, we will see how this trend line goes. But you might need to rethink your pricing strategy, at least evaluate your competitors when it comes up for either renewal and or probably more importantly, if the tenant does move out and we have to fill a vacancy. Again, definitely that is something that we look at every single time that we have a vacancy as we reevaluate the price. Normally it's a recommendation of either stay the same or go up. But in this particular case, with such a huge price drop, our recommendation might be to actually go down this year. Well, depending on what happens here, hopefully this trendline continues up. But again, if your home is managed with us, we will reevaluate that both at time of renewal and at time if the tenant moves out to see what the correct pricing strategy should be. So, we will continue to modify that trend line to see if prices continue to go up. But that is something that we do. We evaluate all of our prices at time of renewal and at time of when it's time to advertise for a vacancy. So, we've gone over days on the market, we've gone over average rent price range. Again, we go over this one just to show you where the bulk of the market is, the bulk of the activity is, I mean, it's a huge range, right? 500, 550 to 8500.But in the Indy market, you're really, for the most part, let's call it $1,000, really between 1002 thousand is the vast majority of the transactions that are happening. So, if I was to purchase a rental, I would personally want to be in that price point.
Absorption rate
And then absorption rate is something that we also talk about. So, this is again the length of time in months that it would take to run through the current inventory. So, we're currently at 2.2. It's okay. I would say it's acceptable in my book.We've seen it. Some of our markets are lower than one. I don't think there's any higher than three. So, it's kind of right in the middle there. It seems like a healthy, balance dish market in terms of owners. We like to see that less. That means there's more demand, but that seems to be a healthy balance.
So, there we have it. There is the market report for January. Kind of pinning some hopes on this blip right here. But for the most part, average days on the market are up. Average rent is a little bit down. So, we'll keep an eye on it, see where these trend lines go as we get into the leasing season, things warm up and hopefully prices continue to increase. So, take a look at our other submarkets. We do, Westfield. We do Noblesville. We do Fishers. We did Anderson this month. And subscribe and like our YouTube channel.
