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Annual price growth has slowed from double digit increases during the pandemic to 4% as of the third quarter of 2024. This is the statewide average, but most metropolitan areas actually diverge from this trend. Out of 15 metro areas in Indiana, six have price growth at least twice as fast as the state. In five metro areas, prices are falling or growing at half the statewide rate. Only four metro areas have price growth similar to the statewide average.
The chart below shows how the median sale price has changed between the third quarter of 2023 and the third quarter of 2024 for each metro area in Indiana. When we refer to price growth in this article, we are referring to the year-over-year change in the third quarter unless we note otherwise.
A metropolitan statistical area (MSA) is defined by the U.S. Census Bureau as a principal city and the suburban areas surrounding that city. Sometimes they contain a single county, such as Michigan City (LaPorte County) and sometimes they contain many counties—Indianapolis MSA contains 11 counties. Indiana includes three metro areas whose principal city is in another state: Cincinnati, Chicago, and Louisville. We only refer to home sales within the Indiana portion of these metro areas.
The charts above compare price trends for the metros with the fastest and slowest growing prices. Indiana's largest cities are all in the slow growth category. It is harder to move the needle in these very large markets. Large cities also tend to be more expensive than rural areas, and this chart seems to indicate that higher-priced areas have slower price growth recently. Four out of these five metro areas rank in the top half of the state in terms of price in the third quarter of 2024.
The metro areas with the fastest price growth cover the whole spectrum of prices, from Terre Haute at the most affordable to Bloomington at the most expensive end of the spectrum.
Three of Indiana's college towns have fast price growth. Bloomington and Lafayette are two of the state's three most expensive metro areas, and prices grew in those cities by 8% and 9% respectively. In the third quarter of last year, the median sale price in Bloomington was equal to Indianapolis. This year, it is 5% higher. Lafayette went from 12% less expensive than Indianapolis to only 6% less expensive.
South Bend and Kokomo have seen some of the strongest price growth in the state as industrial developments have added jobs to these areas and increased the demand for housing. South Bend has 5% sales growth for the 12 months ending in September, and Kokomo had positive sales growth as recently as August.
Kokomo, Michigan City, and Terre Haute have the fastest year-over-year price growth in third quarter. We are going to dive into those metro areas in detail to see what is driving price increases.
When the median sale price goes up, we must ask: Is this because properties are more expensive than last year or because expensive properties are selling more often? To investigate this, we can look for changes in price per square foot. An increase in price per square foot is likely to indicate homes at all price points are increasing in value. We also look for sales growth and price changes in small areas, like townships and ZIP Codes. If sales are increasing in expensive areas but median prices are not changing or price per square foot is not changing, this indicates that the overall change in prices is driven more by the difference in which homes are selling than it is by increasing property values.
The Kokomo MSA includes Howard County. Median sale price was $196,800 in the third quarter compared to $156,500 a year earlier.
Kokomo is one of three cities with noticeably lower prices than the other metro areas, but in 2024 it has been separating itself from the pack. In fact, prices hardly declined during the winter season, which is unique compared to all other metros. Kokomo has had strong sales this year and low inventory (1.8 months of inventory in quarter three compared to 2.2 months statewide), which helps to drive up prices.
In the last 12 months, price per square foot is up 16%. Home sales under $250,000 have fallen by 12% while sales of at least $250,000 have risen by 38%. Prices are rising even for the more affordable properties: Price per square foot increased 14% for homes under $250,000.
Within Howard County, three townships make up 80% of sales: Center Township (Kokomo), Harrison Township (southwest), and Taylor Township (southeast). Center Township is the lowest priced township in the county (median sale price of $158,600 in the third quarter), but prices here grew 18% year-over-year. Prices grew 20% in Harrison Township and 67% in Taylor Township. While sales were down in all townships in the third quarter, they held up better in the more expensive areas, driving up the median sale price. Sales fell 21% year-over-year in Center Township but only fell 13% in Taylor Township and 7% in Harrison Township.
Overall, price growth here is coming both from increasing property values and sales growth at higher price points. Sales held up better in expensive areas and grew in the county for homes over $250,000. But at the same time, lower-cost homes experienced growth in price per square foot, and median sale price increased in the affordable Center Township.
Michigan City MSA is LaPorte County, including the cities of La Porte and Michigan City. The median sale price rose from $204,600 in Q3 2023 to $241,600 in Q3 of 2024.
In the past 12 months, sales have fallen 30% for homes under $150,000 but risen 19% for homes over $250,000. In fact, though these sales are not common, home over $350,000 increased 30%. Inventory has also grown for homes over $250,000.
Price per square foot grew 8% for homes between $150,000 and $250,000 and 7% for homes between $250,000 and $350,000. For homes under $150,000, price per square foot did not change.
Geographically, price growth is coming equally from Michigan City (ZIP Code 46360, +23%) and La Porte (ZIP Code 46350, +20%). Sales were flat year-over-year in the third quarter, and this does not vary much geographically.
Similar to Kokomo, price growth here is fueled both increasing property values and changing sales patterns. Price per square foot is rising for homes between $150,000 and $350,000, which is the core of sales in this area. But sales growth is exclusively happening in higher price points ($250,000 and up).
The Terre Haute MSA is comprised of Vigo County, Sullivan County, and Clay County. The median price grew from $152,900 in Q3 2023 to $171,100 in Q3 2024.
In the last 12 months, price per square foot increased for all price points but increased fastest (+10%) for homes between $250,000 and $500,000. Overall, price per square foot is much lower here than the state average ($111 compared to $148) but grew almost twice as fast (9% compared to 4%).
Sales under $250,000 contracted by 10%, but over that price point sales grew by 13%. However, in this low-cost area, only one quarter of sales in the past year are priced at $250,000 or higher.
Central Terre Haute (ZIP Code 47807) is the lowest-cost area but had the strongest price growth. The median sale price was $72,000 in the third quarter, 23% higher than quarter three of 2023.
While Sullivan County only makes up 10% of the sales in this metro area, it did have strong price increases. Sales between $150,000 and $250,000 increased 48%. In Q3 2023, the median sale price was $114,500. Increased sales activity at higher price points drove the median sale price up to $142,200 in Q3 2024. Most sales are in Hamilton Township, which contains the town of Sullivan and Lake Sullivan.
Lost Creek Township contains subdivisions on the eastern edge of Terre Haute. This area is more expensive than the surrounding townships and had both price growth and sales growth. In the last 12 months, there was strong sale growth between $250,000 and $350,000 (+19% year-over-year) and between $350,000 and $500,000 (+47%).
To a larger degree than Michigan City or Kokomo, price growth in Terre Haute is driven by rising property costs in the center city, even though this represents some of the lowest-cost properties in the metro area. There is still a growth in sales over $250,000, but sales growth at this price point is more moderate than the other two metro areas. These sales are also not very common, even if they are growing.