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Homeownership by out-of-state investors is becoming more prevalent in Indianapolis and surrounding areas and Indiana has become a top state for new single-family “build-to-rent” communities, according to a new comprehensive housing report released Aug. 9 by the Fair Housing Center of Central Indiana.
The report, entitled “The State of Fair Housing in Indiana Report: Who Owns Indy’s Houses: A Review of the Largest Single-Family Home Investors,” contains several key findings.
According to the report, while it used to be more affordable to buy a home in Indianapolis, it is now more expensive to own than rent a starter home in Indianapolis.
The FHCCI estimated that 27,000 single-family rental properties in Marion County are now owned by corporate investors and around 13,000 of those homes are owned by out-of-state investors.
In a FHCCI release, Hafsa Razi, FHCCI’s systemic investigations coordinator, said that with each month, upwards of $15 to $20 million in rent payments leave Indiana to the out-of-state owners of single-family homes.
Last fall, ATTOM, a property and real estate data company, reported that the Indianapolis metropolitan area was in the top 10 of U.S. metro areas for housing markets with the greatest share of institutional investor single-family home sales, Razi said.
According to the new FHCCI report, in Marion County there are 259,385 single-family homes and out of those, 49,232 are rentals.
The FHCCI noted that the difference between local landlords and out-of-state corporations are that locals are viewing it as a long-term investment, whereas corporations work in quick turnarounds.
“Investor activity presents fair housing concerns when corporate investors reduce homeownership opportunities, displace people of color from formerly affordable neighborhoods, or do not maintain the properties they own and rent out, impacting health and blight, and evict the tenants that call those properties home for unfair or sometimes unlawful reasons,” the report states.
More than 50% of the single family rentals in the area’s far east side, more than 75% in Lawrence and more than 80% of some south side neighborhoods are now owned by out-of-state investors, according to the report.
Indianapolis’ far east side neighborhood had more than half of residential sales from 2018 to 2022 that involved all-cash transactions and thousands of homes were converted into rental units, the report states. In the last 20 years, the homeownership rate in the neighborhood has dropped to 40%.
The report states that some neighborhoods have been clear targets, given their previously low property values, such as Martindale–Brightwood, Meadows and Near NW Riverside.
“Cash buyers shut out low to moderate income buyers, limit opportunities for first-time home seekers, and drive-up home values in some of our last affordable neighborhoods, neighborhoods that were formerly redlined and historically made up of Black residents,” the report states.
It notes that federally, senators have filed the “Stop Predatory Investing Act,” which would prohibit an investor who acquires 50 or more new single-family rental homes after the date of enactment from deducting interest or depreciation on those properties.
“As demonstrated, Indiana is failing our residents. We have been in a housing crisis, and private equity has been flocking to Indiana due to its weak oversight of bad housing actors, escalating this crisis further. Action needs to be taken now and we call upon our state leadership to do so,” the FHCCI report states.
The FHCCI report also notes that ATTOM recently reported that among the 23.6 million investor-owned homes in the U.S., in the second quarter of 2023, about 843,000 are vacant, or 3.6%.
The highest level of vacant investor-owned houses nationally was in Indiana, with 6.9% vacant.
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