THE INDIANA HOUSING MARKET Realities, trends, and predictions  Not market but markets  Focus on big picture (metro and rural)  Key reality is fundamental change  Key trend is that by the time you identify a trend it is too late  Key prediction is I’ll be wrong

BIG PICTURE REALITY  All public housing policy since WWII has been baby boom driven  Growing population  First the Post war marriage household boom, then the baby boomers create even more new households  Expanding job market  Growing incomes  Challenge to keep up with demand and keep housing affordable  Result new subdivisions and suburbs  We couldn’t and that is why housing appreciated and affordable housing was challenging  And where housing was affordable the neighborhoods were less safe and the quality of life lower

FUNDAMENTAL CHANGE IN THE MIDWEST HOUSING MARKET In the Midwest population, employment and wages have leveled off So have housing prices Long range projections suggest the trend will continue

IN THE MIDWEST POPULATION, EMPLOYMENT and INCOME HAVE LEVELED OFF ( 15 slowest growing states in population change 2000 – 2025, national = 22%)

IN COASTAL AND MOUNTAIN STATES THE POPULATION BOOM WILL CONTINUE 15 Fastest growing states population change 2000 – 2025, national = 22%) 15 fastest growing states

REGIONAL CHANGE IN HOUSING PRICE

MEDIAN SALES PRICE 2011

AFFORDABLE VERSUS EQUITY  Result many Midwestern markets show up on most affordable list WSJMoney Magazine 1. DetroitIndianapolis 2. South BendDayton 3. RockfordLakeland, FL 4. Warren, MIModesto, CA 5. MemphisGrand Rapids 6. Monroe, MIBuffalo 7. Youngstown, OHOgden, UT 8. Battle CreekSyracuse 9. Appleton, WIAkron 10. East LansingCincinnati  34 Indiana counties experienced $0 or less equity growth between July-August 2011 and 2012  36 counties had median sales price of $100,000 or more in July – August 2012

 The two states of Indiana  Stats IN Projected population change 2010 to 2040  Metropolitan Indianapolis 32%  Rest of Indiana 6%  Where do the people who move to metro Indiana come from?  2010 net into MSA migration of 20,000 households  2010 net out of state MSA migration minus 2,000 hh INTRA-INDIANA FUNDAMENTAL CHANGE

WORKING DRAFT CENTER FOR URBAN POLICY AND THE ENVIRONMENT RURAL COUNTIES HAVE A DIFFERENT EXPERIENCE Population Change 2000 to 2010

1. Over-supply in metro areas (even with the demand) In rural areas undersupply when there is economic success 2. We are getting older Over 65 in metro Indianapolis ,786 or 11% in ,786 or 19% Over 65 in rest of Indiana ,108 or 13% in ,517,912 or 22% over supply of 2 story homes exclusionary zoning limits empty nester options in suburbs 3. The sustainability generation bias toward authentic urbanism, slowing outward momentum MORE FUNDAMENTAL CHANGES

WORKING DRAFT CENTER FOR URBAN POLICY AND THE ENVIRONMENT MORE DIVERSE Population Change 2000 to 2010

We are all in this together o Urban and rural places o All people Housing is a commitment to place and a long term investment aka the days of move up housing might be over, housing not likely in most markets to be a means to short term wealth building and certainly not without risk TWO KEY POINTS

1. Gravity matters 2. Neighborhoods not subdivisions 3. Quality and right sizing 4. Diversity and tolerance 5. Housing by the decade rather than quarter 6. Residential industrial parts 7. Benevolent rent to own PREDICTIONS

1. Authentic urbanism 1. Empty nesters and sustainable kids into core cities and small metro towns 2. Rural trends less clear 1. Mini-hubs 2. Retirement 3. Amenities (natural and built) TRENDS

Recognize that fundamentals are changing Embrace change Invest in future rather than manage decline HOPE