IU real estate expert explains Indy’s hot housing market

INDIANAPOLIS — Indianapolis is expected to be one of the hottest housing markets in the country in 2025.

That’s according to the latest report from Zillow.

Coming in at number two, only behind Buffalo, New York, Indianapolis had a median home sale price of $248,267 as of Jan. 31, 2025. Zillow found more than 56% of sales were under the listing price.

To come up with the ranking, Zillow looked at home value growth, projected change in owner-occupied households, job growth compared to new construction and the speed at which homes are sold.

Sara Coers is the associate director at Indiana University’s Center for Real Estate Studies. She said there is a simple reason why Indianapolis is on the map: a supply and demand issue.

“When the housing market really heated up, a lot of people rushed into more popular markets, like Austin, which is now notably over built. No one did that with Indianapolis,” she said. “There’s, of course, always building going on, always new development going on, but we still continue to have an under supply and we continue to have strong demand.”

She said an older home built in Indianapolis will typically sell for more than new builds out in the suburbs. One reason for that could be commute times since people will tend to pay more to be closer to their jobs

“We do have that work-from-home trend declining as more companies and the U.S. government and state governments want people back in the office,” she said. “So people will pay more to be closer to where those economic centers are.”

While you shouldn’t expect to see housing prices come back down anytime soon, Coers said the housing market is finally stabilizing.

“As we see people sort of adjust to this is how things are going to be, we have more sellers coming online willing to sell because they’re not as afraid to be buyers anymore,” she said. “Whereas there was a real shock to the market before, when people weren’t willing to become sellers because they thought, ‘I don’t want to be a buyer right now.'”

She also said people can worry less about corporate investors competing to buy homes because they are more sensitive to yield prices.

When it comes to the rental market, Coers said rents are not rising as quickly in the single family market but remain high in the apartment rental market. According to apartments.com, the average rent in Indianapolis is $1,100 a month for a one-bedroom apartment of about 700 square feet–about 29% lower than the national average.

Click here to read Zillow’s hottest housing market study.

Click here to learn more about IU’s Center for Real Estate Studies.