Indianapolis is ranked as the fourth top housing market positioned for growth in 2022. Real estate investors are also putting Indianapolis at the top of their rental market list, where the property prices are stable, and potential returns are more likely to be higher.
If you are one of these investors, you might need to pay close attention to a few things to ensure long-term profitability, such as absorption rate, active homes for rent, or rented homes. Doing your market research can help you make a lucrative investment decision and run a successful rental business.
To give you a brief idea of the current market scenario, we present the August 2022 report that provides information and valuable details city-by-city, including essential statistics of rental homes, current rental prices, and absorption rate. So, let’s look at the Indianapolis market for August 2022.
Active Homes for Rent
According to the August 2022 real estate report, there are 647 actively available homes in Indianapolis metropolitan area. Compared to August 2021, it has gone up by 66%, and if we compare it with July 2022, the rise is 34%. It indicates a significant influx of homes for rent on the Indianapolis market, which may result from either interest rates or the resumption of offline education.
Rented Homes
The report shows that 365 rental homes were rented in August 2022. It indicates a dip in demand by 7% from August 2021 and 5% from July 2022. As discussed previously, there are 647 homes available, and only 365 were rented. It shows that more rental units are available, and few are being rented. Investors need to keep track of this number in the coming months to ascertain whether it is a seasonality phenomenon or a continuous trend.
Average Days on the Market
As per the figures for August 2022, it takes an average of 33 days to rent a property in the current Indianapolis rental market, which is a decent figure. However, compared to August 2021, it has increased by 65%, and if we consider July 2022 figures, it has gone up by 43%. It indicates more supply and less demand in the market. Although these statistics show a cooling off in the rental market, investors must look for long-term figures.
Average Rent
The average rent for a rental property in the Indianapolis metro area is $1589, considering the August 2022 report. There is no significant leap in the figure month over month and year over year, as it is slowly growing. It highlights an increase of 4% from August 2021 and a 3% decrease from July 2022. The reduction from July 2022 coincides with all the figures we have discussed.
Absorption Rate
Absorption rate refers to a measure of supply and demand. By considering the number of rental units rented in a month and dividing it by the number of units available in the market, investors can find a percentage that determines how quickly properties get rented.
According to August 2022, the absorption rate is 1.7 months. This figure is a quick way of getting a gauge of the market health. In sales, the absorption rate of four to six months is a balanced market, which shows that the current Indianapolis market is a seller’s market. In the rental world, the absorption rate of one to two months can be considered a healthy sign.
If we look at the breakdown of the rental market by price points, the maximum number of rented homes falls between $1,200 to $2,000. This is where the supply and demand ratio is almost even. If you go beyond the $2,000, the demand tends to go significantly down. However, investors need to look at these figures granularly, city to city and area to area.
Considering all the above factors and statistics can help Indianapolis investors and homeowners make a wise investment decision. If you are an investor looking forward to renting your property in metropolitan Indianapolis, consider working with the most trusted property managers in the city, Red Door Property Management. We offer deep insights into current market trends and can ensure that you make the best of your rental investment.
For more information, contact us at Red Door Property Management.
