August 2025 Indianapolis Rental Market Economic Update
The Indianapolis rental market is entering late summer with a rare combo: easing mortgage rates, discounted new construction, and expanding suburban pipelines. Here’s what that means for investors positioning their next acquisition and lease-up.
Rate Relief: Why Sub-6% Matters
Rates are finally relenting, with quotes dipping toward the high-5s (often with points). Expectations point to potential Fed cuts this fall, improving the financing backdrop for acquisitions. For long-term holders, a traditional 30-year fixed still has merit, but with rates trending lower, many investors are eyeing 3/5/7-year ARMs to capture near-term payment relief and refinance later.
- Tactic: Lock favorable terms now while sellers remain flexible. If you plan to refinance, model conservative rent growth and stress-test vacancy.
- Cash flow impact: Lower payments can turn marginal deals into workable rentals, especially when paired with builder incentives.
New Homes Cheaper Than Resales: A Local Translation
Nationally, new homes have flipped to a discount vs. resale—a rarity historically. Builders are motivated sellers and are actively buying down rates, covering closing costs, and streamlining move-in timelines. Locally, this dynamic is most visible in builder-dense submarkets (e.g., Westfield), where new-build pricing is competing directly with resales.
Investor Implications
- Lower early CAPEX: New construction reduces near-term repair risk, protecting year-1 to year-3 cash flow.
- Price to market on day one: In pockets with higher new-build supply, list competitively to avoid early vacancy drag.
- Think total return: If month-one cash flow is thin, account for tax advantages, principal paydown, and likely appreciation.
Build-to-Rent Adds Competition (McCordsville)
Another build-to-rent (BTR) neighborhood is breaking ground in McCordsville within a major mixed-use development near key corridors. Short-term, expect sharper competition on concessions and amenities; long-term, this validates rental demand and area livability.
- Positioning tip: Compete on value (pet policies, smart lease starts, maintenance responsiveness) rather than rent alone.
- Acquisition filter: If buying nearby, underwrite with conservative absorption timelines during BTR lease-ups.
Permits & Momentum: Where Growth Is Going
Central Indiana new-home applications have risen in recent months, with outer-ring counties (e.g., Hancock, Hendricks, Boone) seeing more growth than core counties. More land, newer product, and relative affordability are pulling demand outward, especially for renters seeking space and amenities.
- Investor focus: Follow infrastructure, schools, and commute patterns—renters do. Newer product + value pricing = strong absorption.
Fishers & Carmel: Quality Demand (Mind the Rental Caps)
Fishers is elevating community amenities (large community center with aquatics/fitness), and alongside nearby Carmel, continues attracting high-earning relocations in tech and professional fields. These locations typically deliver stable tenants and fewer headaches, but rental caps mean compliance and capacity checks are essential.
- If capped: Consider adjacent, uncapped zones and market the “near-Fishers/Carmel” lifestyle for strong renter appeal.
Action Steps for August 2025
- Shop now, refinance later: Use today’s negotiating power, especially before further rate cuts increase buyer competition.
- Leverage builder incentives: Rate buydowns and credits can materially improve DSCR and year-one returns.
- List smart in supply pockets: Launch at market rent with flexible terms to capture the first qualified tenant quickly.
- Validate cap rules early: Near Fishers/Carmel, confirm rental caps and permitting before you go live.
Need Local Underwriting & Lease-Up Support?
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Start here: Indianapolis property management for full-service leasing & operations, scan live pricing signals via Indianapolis homes for rent, or tap our corridor expertise with Fishers property management.
Transcript Here
0:10 — Interest Rates Drop Below 6%
Indianapolis and your surrounding suburbs, any economic developments that might be happening that might relate to the real estate. Uh, don't forget we're going to get into here later in the podcast the month's question of the week where we're going to go over common questions that I receive during the week, highlight those and how you might be able to adjust that question to generate a better response out of your property managers that you're evaluating at the time.
So, jump in. Let's start off with economic data for let's see, we're going to be talking about August, right? So, we're going August 2025. Yeah. A couple like national news type things and then a couple news type things. So the one the first one I want to highlight I'm so excited about. I think every investor is going to be excited about this. Interest rates are finally relenting. They are down. I saw six and a half. I even have a thing pulled up here for US Bank to show you could get a 5.99% interest rate right now. So it is under six.
Yeah, under six. I think you have to pay a point for that. But this is huge, huge news. Because we've been dealing with interest rates for so long. As a guy, I just closed on a place myself a few months back and I think I was at like seven and a half. So, if we could be at six or sub six, that is huge news. I mean, the affordability goes up, the cash flow starts to go up, all of that. So, that is huge, huge news. And then they are projecting that the Fed's going to cut it at least a quarter of a point in September, probably another quarter point in October. So it looks like we are trending in a downward trend for interest rates, which is oh my gosh, what a relief. It's been too high for too long.
So the other thing I wanted to talk about was the strategy with that as far as what type of loan you might want to look at. I'm for the most part, I'm like a I want to get a 30-year fixed because I'm a long-term hold kind of a guy and I want to know what my payment is going to be. I don't want it to fluctuate. But where we are now, it looks like we're trending towards a downward trend in interest rates. So, I mean, we're currently looking for another property right now. I am going to very seriously consider, and probably lean towards some sort of ARM. So, some sort of adjustable rate mortgage, a three, a five, a seven-year, because I'm fairly confident that, you know, over the next year or two or three, the interest rates will be lower than they are today. And then therefore, I'll take advantage of the lower rate of the ARM, which gives me higher cash flow, and then I will look to refinance that in a year or two or three or whatever it is. But it's really a smart thing to look at when we are in a downward trend, and that's what it looks like we're trending towards.
Nice. Any market in particular that you're looking in? A couple different ones where we're actually looking where we're looking for some short-term rentals. We are also continuing to look in the Fischer market. Just because we think it's a good market, a good solid market. And then there's the rental cap that we've been talking about for the last couple of months. Yeah. Sure. That's intriguing. There's no doubt I saw interest rates going to start declining here soon because, as I've been touting the last several months, the sales market's coming to a complete halt. And those are the conversations I'm having on a day-to-day basis with reluctant landlords, right, that their house has been on the market for so long and they're reducing, reducing, reducing, and still there's no interest in anyone picking up their property. So, honestly, if you're in the market, if you're an investor, I think this is a great time right now. Especially ahead of them reducing the interest rates because you're right that is right around the corner. So your ability to refinance is not far away. So pick up a property now because I believe that your negotiating power right now is better than it's been in years.
4:05 — New Homes Cheaper Than Existing Homes
That actually leads me to my next story. Chris, I'm going to share my screen on this one for the next couple of ones if that's okay.
Yeah, of course.
So, in addition to the interest rates, to dovetail onto your comment, not only are we seeing interest rates go down, this story is crazy.
Filibuster.
Yep. Okay. New homes now cost $20,000 less than existing homes. Can this trend last? So, this is absolutely unheard of. I'm going to just read a couple quotes from this. So, this is now saying that new homes typically are more expensive than existing homes. It's just the way it's always been. Like, literally, as far back as modern records go, newly built homes have almost always cost more than previously owned homes. But in recent months, this trend has been upended to an extent that has never been seen with a typical new home selling at a sharp discount to existing homes.
In June, this is nationwide data, $407,200 median sales price of new homes was about $28,000 less than existing homes, a 6.5% discount and by far the biggest inversion in the last 25 years. So, this is huge news. Driving this trend is the fact that new home sales price peaked in late 2022 and have been trending down since, while prices for existing homes have continued to march up to record highs. The affordability difference goes beyond sticker price, too. This is an important fact.
As many builders are offering incentives like cash to closing, like they'll pay your closing costs or they'll buy down your interest rate, and that can make a major difference in upfront cost or monthly payments. You see this quite a bit where they will and they can get really, really aggressive with buying down your interest rates. I mean, you could probably easily be in the fives with a builder if they're willing to buy down your interest rates. So new homes have grown cheaper in part because home builders have pivoted to smaller floor plans to appeal to home buyers who are struggling with affordability.
Builders are more motivated sellers. Most sellers of existing homes have an inventory of one while builders have hundreds or even thousands of homes to sell. Weaker demand this summer has builders scrambling to move inventory and they're pricing it more aggressively as a result. Delistings have surged this summer in a sign that many sellers prefer to wait than negotiate after failing to get an offer of their dream price.
Yeah.
So, this is huge, huge news for investors looking to purchase. You know, I think we've done a couple segments of, hey, does it make sense to purchase a new home as a rental? And I mean, I can't think of a better time to seriously consider that because not only are you going to get at this point a better price point, you're going to get probably a much better interest rate because they're going to be willing to buy down your interest rate. And of course, you know, the biggest benefit of building a new home is the maintenance costs should be very, very minimal on a new home. Everything is brand new. Shouldn't have any HVAC repairs, any roof repairs. All that is really kept to a minimum. So really, really time to consider purchasing a new home as a rental home.
Yeah. And the thing is is I think that secret is out a little bit with some investors because it's it has been out a while that new home builders have been offering lower interest rates. In fact, for the last year, I think here locally, home builders, Fischer Homes, have been offering four and a half percent interest rates a lot. And in Fischer Homes in particular, they have their own financing department. So I mean the terms are so much more favorable if you finance through them.
Yeah, go ahead.
And that's always really been the case that they've always been able to throw money because a lot of times, honestly, they own the mortgage company or own an interest in the mortgage company. So they're kind of double dipping and so then they can pass some of those savings on to you. So that's always been the case, but what hasn't been the case is the combination of that with the pricing. Usually the pricing is more expensive for a new home and you pay the premium for that. But now that's not the case.
And so this is national data. And so I kind of was like, well, I wonder if this is translating to Indy. And when I looked at Indy as a whole, the answer was no. But I thought, okay, well, what's a major area where there's a ton of builders? And of course, I thought of Westfield, right? And so, let me share this screen with you. I'm going to run this. Can you see my screen here right now?
Yeah, it changed.
Okay. So, I'm going to run this. I'm going to just run a quick report here just to show you that this is translating to the local market here. So, I picked Westfield because Westfield has a ton of new construction, a ton of builders. Okay. So, this is going to be I'm going to run you through this. Sold homes in Westfield from August of this year. Okay. And I'm going to say year built up to 2024. Generate this report. So, we're looking at last month, all existing home sales, average sales price $564,249.
Okay. If I do this and say, okay, built in 2025. This isn't perfect, but it's pretty close to it.
Okay.
Sorry, just slow you down just a little bit here. So, you were looking at homes that were built at least a year ago or older, correct?
Okay.
A year ago or older. So, I'm going to go ahead and call that resale homes.
Okay.
Most likely that's what they are. So the average sales price for August was $564,000. Okay, if I go back and I change that to built in 2025, it's $540,000.
Interesting.
Crazy, huh? So it's translating. I think that's about a 6% difference, but it's translating to here in our marketplace as well. Because if you read this article the vast majority of this is occurring in the Sunbelt regions, and so I was just wondering, well are we seeing that here in Indy? And yes, we are. It might be a little bit localized even here because again, I did it for all of Indy and it didn't translate to Indy, but in an area where there's a ton of builders, that's exactly what we're seeing. A decrease in price for new homes over existing homes.
Awesome.
Awesome. I feel like somebody on this podcast has been touting a buyer market coming. I don't know if I know that guy or not, but no. All jokes aside, I want to talk about how to digest this information and what also that might translate to if you're purchasing a property that's going to be on the rental market.
Now, some of this news is not new. Like I was mentioning a moment ago with the interest rates that home builders are offering lower than you might get if you're buying an existing property. We already know that investors are picking up on that data and have been. We've been onboarding a lot of new construction properties. Unfortunately, that also comes with them needing to list the property at higher than market value and sometimes unless they're listening to us on the front end, it sits for a little bit until we reduce the price to equal market value.
Now, I want to be clear that I believe that with this information, it's going to continue to grow and hit consumers and they're going to continue to take advantage of this. Investors, and that is going to undoubtedly result in a surplus of rental properties as well in the short term. Now, so your cash flow might not be huge positively on the front end.
Do you agree with that? Do you think? Because I mean we've already been kind of saying that in Westfield, for example, right? We've talked about new homes and how investors need to get real for the short term here, place a tenant, re-evaluate as the market continues to settle. And it will. And you're going to see a lot of benefits aside from just your monthly cash flow. You're going to see appreciation and of course all the other benefits that go along with real estate ownership, tax benefits, so on and so forth.
So I just want to mention, because we are a property management company, how this information can translate to if you pick up a property and put it on the market tomorrow. And there's no doubt that it's going to be extremely difficult to purchase a brand new home in a highly desirable area like a Fischers, like a Westfield, and have it cash flow from day one. I mean, the odds of that happening are pretty minimal. Those days are pretty much gone. If you're going to want to cash flow, you're going to want to listen to our market reports to highlight some of the other areas that you're going to need to look at or do a rehab or you have to put a little bit more work in, honestly, if you want to buy a property that's cash flowing.
But, you know, if this is a little bit of the easy button in terms of just buying a new home and it's ready to go, right? But the good news is you can finance all of that. And like you said, you do get the benefits of everything. You get depreciation, you get appreciation, you get the mortgage getting paid down, you get tax benefits. So yes, I totally agree with you.
13:14 — Build-to-Rent Neighborhood in McCordsville
Okay. All right. So, and that kind of takes me into because there is such a demand for new investors picking up these new homes. Some of these property management groups have been, and I'm not going to mention their name because this is Red Door Property Management, and we don't talk about the competition. Only when they're failing, that is. No, I'm kidding. I'm kidding.
No. So, here in McCordsville, there is another rental neighborhood that's going to be developed here. And I just picked this up after on my way back from the gym today and I saw this. I was like, the headline is: new rental neighborhood breaks ground at Gateway.
So, important to know here on the east side, an entire neighborhood that is going to be built here along this corridor that leads right to I-70. So, this is information I'm going to want to know. Am I going to be picking up a rental property in McCordsville right now? Probably not, because the competition is going to be real with this entire neighborhood that is going to be dedicated.
This will make the second one. It's a $460 million mixed-use community that's being constructed here. And I had the number of units that they were planning to build, but that's beside the point. The fact is, another rental community is being built. I'm probably not going to pick up a property in that direct community because your competition is going to be pretty surreal.
Yeah, there's no doubt that build-to-rent is a trend that's continuing. It has been and is continuing to increase. So, yes, you need to be aware of those things that are popping up in the area. So, for sure.
Maybe it's something Red Door should look at. Maybe we should build a build-to-rent neighborhood.
Yeah, I've thought about it.
15:19 — New Home Applications Rise in Central Indiana
I want to go over two more quick ones, Chris, and then we'll wrap it up. This one is actually kind of in line with what we're talking about, but this is just some stats here locally that new home applications in central Indiana rise for the fourth straight month.
So, this is just I guess really agreeing with the data that we're pushing here, the stories that we're talking about here, that new home sales are cheaper, interest rates are going down, and people are buying new homes. And so this came out at the end of August here. So maybe a week or two ago. But filings have increased for five of the first seven months of 2025. So builders are having a great 2025 despite some of the weakness that we are seeing in the other resale market. Builders are doing quite good.
What I wanted to highlight here was that they broke it down by county here locally, which I thought was cool. And interesting to see the difference. Like, look at this. Hamilton County is down 19%. Marion County down 18%. Look at Hancock County up 91%.
Wow. Wow.
Yeah. Boone up 27. Hendricks up 41. Morgan County 27. Shelby up 219. That's a little out of our service area, but interesting that some of the further out counties are experiencing way more growth while we're experiencing a little bit of contraction here in Marion and Hamilton County.
Wow. That's interesting.
Yeah, that is very interesting. Is that due to just—I mean Hamilton County's got plenty of room, right?
Yeah.
Wow. I mean Hancock's got tons of room, right? So that 91% doesn't completely shock me. It's nothing but farmland out here and they're just developing like crazy.
Yeah. Could be affordability, too. You know what I mean? It's as you get further out, it gets more affordable. You're right. That's all we've been hearing about is affordability, affordability, affordability. Hancock is kind of out there. There's a lot of farmland. I'm actually not really familiar with Shelby County, but I would assume it's the same or more of the same.
Yeah.
So it’d be interesting to see the average price points here to go along with this, but that's my gut instinct as to why those are experiencing declines and everywhere else is experiencing increases.
Yeah. Marion County affordability though.
Yeah. I don't know. I don't know.
Yeah. Yeah. Interesting to dissect this over the next couple months, but this is fascinating information for sure. I love it.
17:23 — Fishers Community Growth & Tech Expansion
And then one last one. I just want to talk about this one briefly. This isn't like really all that, but I just thought I'd put it in here just to highlight Fishers. We've been talking about Fishers again with the rental cap that's coming on. And I was thinking about it, you know, a lot of our listeners, viewers are not from the area and they don't know what Fishers is. They don't know what Noblesville is and, you know, why should you invest in Fishers and all of that.
So this is just like an article just to show what Fishers is, the quality of the community that it is. So it's putting the touches on this community center. We talk about Fishers a lot because there's a lot going on there.
The community center.
Yeah. They're doing this huge community center. It's like they have a similar one in Carmel. I think it's going to be similar. It's like a fitness area, workout space, aquatic center, lap pool, like a water slide. So it's just like, it's a really high-quality community. And when we talk about Fishers and recommend Fishers, again it's not one of these areas where you're going to probably get immediate cash flow but what you're doing is you're attracting typically a higher-quality tenant because it's a higher-quality area, higher-quality neighborhood, higher-quality schools.
And so what that does is, you know, it reduces the drama that comes along with being a landlord. It reduces the evictions and the late and the vacancies and all that kind of stuff. So anyway, I didn't want to talk about this too much, but just to highlight the fact that Fishers is such a high high-quality community and a high-quality area.
Yeah. I mean, since you mentioned Fishers, I know that they've got a lot of growth in the tech industry as well, right along with Carmel.
Yeah.
Yeah. I was just reading an article just before we jumped on here, so I might as well just mention it since you brought up Fishers, is that tech hiring in Carmel continues to surge in 2025. Growth is projected at nearly 44% with big players like Eli Lilly, Elanco, and Roche investing in local innovation. AI engineers and other high-paying roles are driving relocation and demand.
Now, I don't know if it's worth talking about Carmel and Fishers. I mean, I guess you can get close to those communities, but picking up rental properties in these communities is coming to an end. So, nonetheless, there's a lot of job growth and those outlying communities that surround these are also going to see some runoff demand. So, it's important to at least—
Well, that's why I wanted to mention it one last time because, like you said, because purchasing a rental home is all but coming to an end here. You know, technically you can if it's under 10% in that particular neighborhood, it's just going to get a lot more difficult. So, wanted to just remind people about Fishers, remind people about that cap that does go into effect at the end of the year. Check it out on our previous podcasts.
Yeah, cool. I think that's good enough.
All right, that wraps up our economic reports for the Indianapolis and surrounding suburbs for August 2025.
