Area homebuilders are on pace for their busiest year in more than a decade, and they've seen rising applications for new houses in 33 of the last 36 months.
But a new report from the Builders Association of Greater Indianapolis and MIBOR Realtor Association says builders have a long way to go if they want to keep up with future demand.
The study—compiled by Indianapolis-based consultancy Greenstreet Ltd. and Alexandria, Virginia-based Lisa Sturtevant & Associates LLC, and released Friday—found area builders should be constructing an additional 1,750 units per year to keep up with demand for new housing. The study is titled "Coming Up Short: Housing the Region's Future Workforce."
The BAGI-MIBOR report, which includes three counties not usually counted in BAGI statistics (Decatur, Brown, Montgomery), said the Indianapolis region will need a 21 percent increase in housing units (an additional 180,257 units) over the next 20 years to meet demand created by 274,576 net new jobs.
According to researchers, more of that demand will need to be met by apartments, duplexes and town homes rather than single-family dwellings. The product mix will be closer to 50/50 rather than the current ratio, which is made up of about two-thirds single-family homes.
That mix needs to change because of demographic changes and the decreasing affordability of traditional homes, researchers said. The report also said neighborhoods are likely to get denser, more walkable and more affordable.
“In the future, households are more likely to be renters than today’s current household mix,” the study said. “But they may be different from today’s renters who predominately live in multifamily units. More single-family rentals will be needed to support families who choose to or need to rent.”
The study said underproduction of housing is a national issue that has long-term implications for the economy and business creation.
Builders filed 501 single-family construction permits in the nine-county area last month, a 13 percent increase over the 442 filed in September 2017, according to the latest numbers from the BAGI.
On a year-to-date basis, permit filings are up 18 percent, from 4,708 in the first nine months of 2017 to 5,570 during the same period this year.
Builders are well on their way to passing 2017’s year-end total of 6,198 permit applications, the highest total since 2007.