Does Indianapolis Offer the Most Affordable Homes?
The third quarter statistics quoted in a recent article about housing costs and affordability of homes in Indianapolis led me to my own research. I'm not the type of person who takes this information as the final word. I always run my own numbers to verify the data.
It's not my intent to discredit the news source. Their data could include homes which were private sales and not part of the Indianapolis MLS statistics, where I get my information. Not to say the news isn't good, but it's just not accurate, in my opinion.
Indianapolis has always been in the top twenty for home affordability and many times #1 in the past five years. The city actually held the #1 spot for 17 consecutive quarters. The fault I see in the reporting of the statistics is the fact, Carmel and Indianapolis are always lumped together. As stated in the report -
'By contrast, the average home in the Indianapolis-Carmel housing market sold for $117,000.'
The truth is, regardless of whether you're buying a home in Carmel or Indianapolis, the affordability index is great. It indicates the housing in these areas is affordable to a higher percent of people in the average income level for the area, This probably holds true whether you live in Carmel, Indianapolis or any other Metro city or town.
According to the data provided by the National Association of Home Builders (NAHB) and the Wells Fargo Housing Market Index, The average price of a home in Carmel - Indianapolis for the 3rd quarter was $117,000 and the average income was $66,000. This makes the affordability index at 90, which means 90% of the homes were affordable to families earning the medium income. Like I said, this probably holds true for both Carmel and Indianapolis, but the numbers are not equal.
According to Wikipedia, the average income for Carmel in 2007 was $90,321; City-Data claims the average income was $87.133 for the same year. The same numbers for Indianapolis indicate average income of $48,979. and $40,278.. This would give us an average of between $65,529. and $69,650. for both cities combined. So while the person with an average income in Indianapolis could most certainly afford 90% of the homes available in Indianapolis, they would be stretched to buy the average priced home in Carmel. The average wage earner in Carmel could also afford the average priced home in Carmel.
What do the numbers look like when you break them down? According to the Indianapolis MLS data of homes sold in the 3rd quarter of 2011, these are the averages for both cities, as well as the data for the entire Indianapolis Metro area.
- The average price of homes sold in Carmel was $338,878, while the median price was $294,950.
- The average price for homes sold in Indianapolis was $123,682 and the median price was $99,000.
- The average price for the entire Metro area was $152,897 and the median price was $120,000.
The article also states home prices are stabilizing. All in all, the news is welcomed. We can probably stack up all the cities and towns of Metro Indianapolis and come up with the same or similar affordabilty numbers. It's not a true reflection of the market and affordability to combine the Carmel-Indianapolis real estate statistics together.
I welcome your thoughts and comments!