Indianapolis middle school teacher Janae Johnson wasn’t even thinking about buying a house.
How could she?
Housing prices in Indiana are rising fast, and salaries haven’t kept up, squeezing potential buyers out of the market, and delaying any hope Johnson had of home ownership.
“It was very far off,” she said.
Median incomes in Indiana have increased by about 8% since 2016, according to census data.
But the rise of Indiana home prices have far outpaced income, increasing by about 60% during the same time period, according to a Mirror Indy analysis of Realtor.com data.
To put that squeeze on Hoosier homebuyers in perspective, over the last decade home prices in Indianapolis increased at a faster rate than in San Francisco, one of the nation’s most expensive markets.
Of course, San Francisco started the decade with much higher prices than Indiana, and housing here remains more affordable. But some housing advocates question whether Indiana can continue to lean on its reputation of affordability as more people are priced out.
Andrew Bradley, senior director of policy and strategy at Prosperity Indiana, said that reputation has become a facade.
“It’s a coating,” he said. “It’s superficial.”
Some help is available. And Johnson would eventually find her way into the hodgepodge of programs — some government, some private — that exist to attack the problem.
But funding for those programs, too, hasn’t kept pace with inflation, let alone the growing demand.
How we got here
Experts cite a number of reasons for Indiana’s rapid rise in prices, including shortages of new housing, investors gobbling up lower-cost existing homes, lengthy permitting processes and even a failure to rehab thousands of abandoned homes across the state.
A lack of inventory routinely takes the blame, with Zillow reporting that the U.S. housing shortage grew to 4.5 million homes in 2022. For the Indianapolis metro area, the real estate website pegged the shortage at more than 14,000 homes.
Plus, the pandemic introduced unique challenges, including an initial drop in mortgage rates that created higher demand — and the market couldn’t keep up.
“The pressures we’re feeling in the housing market have been building for some time,” said Brad Coffing, director of housing insights at Mibor Realtor Association.
Government agencies, policymakers and community organizations are trying to address the challenge. But consensus is often hard to find.
The sense of urgency reached the presidential campaign, with Democratic nominee Kamala Harris saying she wanted to give first-time homebuyers up to $25,000 in down payment assistance.
Meanwhile, President Donald Trump and Vice President J.D. Vance blamed immigration for rising housing costs and floated the idea that mass deportations would fix the problem. With immigrant workers making up nearly a third of the construction workforce, economists worry deportations would slow development and make rising costs even worse.
At the state level, Rep. Cherrish Pryor, D-Indianapolis, said to the extent that the Republican-led Indiana General Assembly cares about affordable housing, its primary tool to increase affordability is property tax reform — which is more about preserving rather than creating affordability.
“As a legislature,” she said, “we have not really done anything or set up a robust program to make sure people are able to purchase a home.”
State lawmakers try to address the problem
Pryor introduced a bill this session that would restrict telephone solicitations to buy homes, in an effort to curtail investors from competing with residents for scarce homes.
A report from the nonprofit Fair Housing Center of Central Indiana found investors are gobbling up Central Indiana’s housing stock, making up 17% of single-family home purchases from 2018 to July 2024.
And investors tend to buy homes in the price range where first-time homebuyers are often looking, the report noted, making up nearly a third of the buyers for homes sold for less than $250,000 in Central Indiana.
Pryor’s bill, however, hasn’t gotten a hearing since being assigned to a committee, making it unlikely to move forward in this legislative session.
Sen. Linda Rogers, R-Granger, wants the permitting and zoning process to be simpler, in order to reduce the time it takes to get permission to build and, consequently, to help lower costs.
Rogers also touted the Residential Housing Infrastructure Assistance Program, which lawmakers created in 2023. The program gives money to communities to pay for infrastructure such as sidewalks and sewer lines — costs that developers are typically responsible for.
In the first round of funding last year, 10 communities split $51 million. Indianapolis received $5 million.
But Rogers said the problems extend beyond subsidies.
“There’s not one area that you can say, ‘If we fix this, everything will get better,’” she said. “It just doesn’t happen that way.”
Some programs help, but don’t solve affordability
First-time buyers like Johnson, the middle school teacher, have been pinched particularly hard.
Renters, who make up the bulk of first-time homebuyers, tend to make less money. In Marion County, the median household income for renters is just under $43,000, less than half that of homeowners.
Johnson makes $48,000 teaching English language arts and coaching volleyball at an eastside school, a salary that is actually less than what the average Indiana teacher made more than a decade ago in 2013.
Plus, she is paying off student loans after graduating from Franklin College in 2023.
Some lenders are adopting special purpose credit programs to help people who otherwise would have a hard time qualifying for a loan because of their credit score. But Johnson had good credit.
State lawmakers allocate millions of dollars annually to the Indiana Housing and Community Development Authority, which administers homeownership programs.
In 2024, the agency gave out about $31.5 million in down payment assistance for first-time homebuyers. That money is recovered by the state when the homeowner sells the home. The largest chunk of that money — about $7.3 million — went to Marion County homebuyers, according to data provided by the agency.
Still, such programs, while helpful, do not bring down the selling price of the home.
So, Johnson wasn’t looking. Then she stumbled onto a bit of good fortune.
‘Capital A’ affordable housing
The school where she works got an email from a nearby organization promoting an affordable housing program.
The Englewood Community Development Corporation, a nonprofit established by the Englewood Christian Church on Rural Street in 1996, uses a combination of government and philanthropic subsidies to build homes and then sell them at below-market rate.
Simply put, Englewood CDC builds houses at a cost of around $300,000 and sells them to qualifying low-income buyers for around $175,000.
To pull it off, the organization uses what its executive director, Joe Bowling, likes to call a “capital A” approach to affordable housing — where subsidies and grants allow developers to build new housing, and sell it at an affordable price without losing money.
“There’s just no way to say it otherwise,” he said.
People who make less than $56,000 a year are eligible for the program. Qualifying buyers can’t sell the home within five years, or else they'll have to pay back the subsidy.
Most of the money going toward subsidized housing projects comes from the U.S. Department of Housing and Urban Development. Federal money usually goes to states for distribution, but in some cases, cities such as Indianapolis get funding directly from HUD.
Englewood CDC is close to completing seven townhomes that will be sold at around $175,000 in an eastside neighborhood where similar homes are listed for at least $200,000.
“It takes a fair amount of subsidy in order to bring that cost down and make it affordable,” Bowling said.
The need only keeps growing as home prices lurch upward, Bowling said, but there isn’t enough money flowing down from the federal government to meet the demand.
That’s the same problem John Franklin Hay saw when he was executive director of Near East Area Renewal, another nonprofit developer in Indianapolis. Hay retired in January.
NEAR got enough funding to do seven houses in 2024, Hay said, and it’ll cost around $240,000 to build a three-bedroom home.
To make it affordable, though, NEAR will sell the home at $160,000.
That means there’s a gap of about $80,000 that the organization needs to cover with subsidies.
“There’s just not enough federal funding available to the city to really make a dent in it,” Hay said.
In 2024, HUD gave Indianapolis $15.9 million for community development projects. That’s about $500,000 — or 3.2% — more than the city got five years ago.
However, the cumulative inflation rate in that time period is about 23%.
Bowling, with Englewood CDC, said the difference between subsidies and inflation over the years effectively equates to a budget cut.
“Essentially, you’re only able to produce half as many units with the same amount of money,” he said.
Some find good fortune, but many wait
After seeing the email about Englewood CDC, Johnson saw that she met the income requirement and figured she’d give it a shot. She turned in her application for the program and got in.
Suddenly, homeownership went from an abstraction to a real possibility.
And from there, the process of getting a loan was familiar to anyone else who’s done it.
Johnson shopped loan offers and ended up picking Old National Bank because she liked the terms: 30 years with a 6.125% interest rate.
Less than two months after learning about Englewood CDC’s program, Johnson was unpacking boxes in her new home.
Her large German shepherd, Khailo, was still getting used to the stairs. And the cats were still hiding under the bed.
Johnson’s favorite part about her new home is the kitchen. It has new appliances that came with the house and an island where the sink is. Plus, there’s a walk-in pantry and soft-close cabinets.
She already knows what’s next on her to-do list in the house.
She wants to put a fence in the backyard so Khailo can run around. There’s also some painting to do, maybe carpet to add.
That’ll all come later. For now, Johnson is enjoying having a home of her own.
“It hasn’t hit yet,” she said on her front porch the day after hauling her belongings from a rented house in Franklin. “Not yet.”
Most people aren’t as lucky, though.
There’s a long list of potential first-time homebuyers in Indiana who are still waiting for their opportunity. In 2023, there were nearly 800,000 renter households statewide, according to the National Low Income Housing Coalition.
The scale of the housing problem means that Englewood CDC’s seven townhomes will help a few families.
But in a city with a shortage of 14,000 units, many will continue waiting.
Mirror Indy reporter Emily Hopkins contributed reporting.
Mirror Indy reporter Tyler Fenwick covers housing and labor. Contact him at 317-766-1406 or tyler.fenwick@mirrorindy.org. Follow him on X @ty_fenwick.
Editor's note: Mirror Indy and Free Press Indiana partnered with Whitewater Publications to examine how a statewide lack of affordable housing is impacting Indiana residents. We looked at the challenges confronting homebuyers, and how some urban and rural communities are hoping to address the problem.
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