If you're trying to buy a home in Indiana, you're likely feeling frustrated. Inventory is at its lowest in decades, making for a fiercely competitive market. According to the Indiana Association of Realtors, the number of homes on the market fell nearly 15 percent from April 2015 to April 2016.
While that makes the home buying process difficult, experts say it's a good sign for the state's economy.
Market Forcing Sellers To Act Immediately
The process of buying a home started out exciting for Tyler Lake and Jenny Mac. They're trying to buy a house in Bloomington after renting for years.
"You're really fired up and it's just like shopping," Lake says.
They started browsing homes online, checking out neighborhoods they loved and started to stumble across houses they were convinced were meant to be theirs.
I don't think you think when you're going to buy a house that every step along the way is going to be a compromise, but it is. Every step.
"We saw that everything sells immediately," Lake says. "So as soon as something's up, if you're not on it, it's gone."
After getting outbid and watching houses sell in a matter of hours, all of the excitement is wearing off.
"It becomes all about compromise and I don't think you think when you're going to buy a house that every step along the way is going to be a compromise," Lake says. "But it is. Every step."
The process is just as exhausting as it is exciting. And for good reason.
The number of homes on the market has dropped significantly since the recession. President of the Indiana Association of Realtors Nancy Smith says inventory is the lowest she has seen in her 38-year career.
And that's changing the process for buyers.
"You can no longer just go shopping and then go home and think about it," Smith says. "You've got to be ready to pull the trigger when you see something that you like."
Smith says it's a nationwide trend that's impacting both urban and rural communities. According to the Indiana Business Research Center, Kokomo and Columbus saw the greatest increase in home sales from June 2014 to June 2015, with gains of nearly 13 and 12 percent. Bloomington and Lafayette/West-Lafayette saw a 9 percent jump in sales during the same one-year period.
That strong demand doesn't just mean houses are going quickly – in many cases they're selling for more than list prices. Many sellers are getting multiple offers, leading to bidding wars.
That's something realtors haven't seen in years.
"That is causing many buyers to pay above list price," Smith says. "You have to be careful with that because, again, the house has to appraise. So we have to make sure that they're making a smart move that they're getting a good buy."
Bad For Buyers, Good For State's Economy
The competitive market can be tough on buyers, but experts say it's evidence of a strong economic rebound.
The Midwest saw the highest homeownership rates in the first quarter of this year, with nearly 69 percent of people owning their homes.
"I think it's a good sign that the economy is picking up steam a bit that people have confidence to make that big home purchase," says Matt Kinghorn, Senior Demographer at the Indiana Business Research Center.
We're seeing some slight increases in home building. But we're still well below where we were before the recession.
But there are some areas where Indiana is still lagging behind. Home building hasn't rebounded as quickly as expected because of high costs, which is contributing to the competitive market.
"Since the start of the great recession we've seen a serious decline in new home construction and that really hasn't started to pick up yet," Kinghorn says. "We're seeing some slight increases in home building. But we're still well below where we were before the recession."
Kinghorn says that's slowly starting to change as demand for homes continues to climb. And as more homes come on the market, prices will level out.
That's welcome news for Mac and Lake, who are hoping to close the deal on their first home this summer. And, as they learned from the buying process, it's best to remain cautiously optimistic.
"We hope that maybe it might just possibly be OK," Lake says.
