Condos in Indianapolis can save you a lot of money vs a house right now
Condos can provide an affordable, less-competitive way to enter the real estate market in 2022.
As a real estate investment, houses in the Indianapolis housing market have been—and still are—affordable compared to peer cities. A single-family home in Indianapolis has a median sales price of $300,000 in June 2022. But as work-from-home changed people’s habits and desire for more personal space, prices have nudged up almost 20% since 2021.
Condo prices have stayed much more consistent. If you’re looking for a condo in Indianapolis, there is much more inventory readily available and overall, less demand from buyers. What does this mean for you? Likely a better deal.
A lot of first-time home buyers I talk to want a great place to live (and condos are in some really great neighborhoods, not just in Downtown Indy) or they want to park some savings in a safe investment to start building equity. Condos have this connotation of “low value for what you pay,” but that’s just not true in 2022. While condos appreciate a little bit slower than houses, they’re remarkably stable and are a great way to enter the Indianapolis housing market.
Don’t let your past ideas about what condos are and aren’t cloud your view. They’re usually smaller so you have less to clean, less to manage, and really reduce the expense of furnishing more space than you need.
Pros and cons of condo living in Indy
Pro: no exterior maintenance like mowing, shoveling, or painting. Not only does this save you time, the HOA or condo association almost always takes care of external maintenance, including big-ticket items like roofing, siding, and exterior painting.
Pro: more space than you think with amenities. In Indianapolis, you can find condos with a couple of thousand square feet, and they often have pools, garages, and a parking space or two. That’s more space for you, the kids, or the dog to move around in and none that you don’t end up using—like a half-finished basement.
Pro: your homeowner’s insurance is likely far cheaper with a condo. Insurance rates for condos is significantly less than insurance for single-family homes. If you’re looking for a quote, I can connect you to some great insurance agents who can help you crunch the numbers.
Con: large pets may not be allowed. Like apartment buildings, condos often prohibit dogs over 50 pounds and, sadly, bar some breeds entirely. For better or worse, this is something you’ll want to check if you have a pet.
Pro: you’ll have lots of neighbors in a condo!
Con: you’ll have lots of neighbors in a condo!
Con-ish: HOA fees do add to the cost. All that snow removal and maintenance costs a monthly fee. In Indianapolis, it’s often as low as $150 a month but can get expensive. It varies wildly depending on the condo, the association, the amenities they offer (gazebos are cheap, pools aren’t!) and even the exterior landscaping and materials used around the neighborhood.
Houses and condos each come with their own costs for maintenance and upkeep. In many cases, your HOA fees might average out—you’re just coming at the inevitable expenses from different angles because nothing lasts forever.
Con: “special assessments” can get pricey sometimes. As a licensed Realtor I can help you ask all the right questions on special assessments.
Special assessments are designed to cover unusual expenses like extensive hail damage requiring a complete roof replacement. That kind of maintenance cost isn’t usually included in the homeowner association’s budget or insurance premiums.
If five big blizzards blanket town, that’s unusual, and the extra snow removal costs are divided up among residents. Or maybe the parking lot needs repaved due to unexpected wear and tear. Some associations have these provisions, and some don’t.
Con: the financing options with condos vs houses are a little harder. Banks and lenders often prefer houses to condos. Some of this has to do with government-backed FHA and first-time homebuyer loan rules. So it’s not uncommon for condos to require a larger down payment, whereas lending products for some houses sometimes don’t require any money down.
Lenders often require a condo inspection to make sure the building and HOA are in good shape. After all, they want to protect their investment just as much as you do.
Pro: lower utility rates with a condo vs a house. Since condos are usually newer, often a little smaller when you subtract attics and basements (a common feature of Indianapolis houses), you end up heating and cooling only what you use. The electricity in a condo can be as low as $40 a month, whereas a house is usually $60-100+.
Pro: condos are great for simple living. Many people buy into the notion everyone needs a lot of space and all the kids need their own bedroom. And the cat needs a room for herself, too!
That’s fine, but does a toddler need their own bedroom when all they do in there is sleep 99% of the time? If you’re looking for a way to Marie Kondo your life or downsize your way out of DIY repairs, a condo is a great choice for your lifestyle. Less to clean, too.
What to check for and know before you buy a home or condo
Sorry to break it to you, but an HOA will probably prevent you from building your dream treehouse with space lasers and fireworks.
The HOA might be a benefit, or it might not. For every client I talk to that loathes the idea of an HOA someone else finds it a real benefit. Some folks don’t want to be told what they can and can’t do. But others hate the idea of mowing a lawn in the summer heat, or are getting older and don’t want to be shoveling a foot of snow each winter. Still, if you want to build a treehouse complete with space lasers and fireworks, an HOA will have a problem with that. But, HOAs also keep your neighbors from building a treehouse with space lasers and fireworks.
Look closely at the HOA’s finances. Some operate incredibly lean—maybe too lean—and others seem to sit on endowments and rarely spend any of it. Like any good governing body, you want one that’s good about maintenance, has a respectable cash flow, has a healthy mix of building investments, and benefits the residents. As a real estate agent, I can help you find details on the financial health of the HOA, including its cash on hand and average yearly costs.
New construction has slowed in the Indianapolis area the past several years, but plenty of individual units exist in popular neighborhoods like Broad Ripple, Washington Township, Fall Creek Place, and Downtown Indianapolis.
If you work from home, look for provisions in the contract and HOA that might prohibit certain kinds of work. Most work-from-home desk jobs are fine, but if you’re using one bedroom for a hair salon or woodworking shop, someone’s going to notice.
Consider joining the HOA board. It’s usually not complicated and most are happy to bring another person on board. When you join, you’ll develop a deep understanding of the finances and can help protect and grow your investment. Sometimes costs go up somewhere and the condo fees have to go up because the trash company or other necessary service increased their rates.
You’ll find great Indianapolis real estate investment opportunities for yourself in condos
Condos and single-family houses in the Indianapolis real estate market have an average of just four days on the market. But whereas homebuyers seeking a single family home may have to enter a bidding war, condos tend to have far less stress.
You should also know some homeowner associations have rental restrictions and caps. A lot of neighborhood associations implemented rental restrictions to deter out-of-state real estate investors from buying up a bunch of condos and deferring maintenance or letting them sit.
Likewise, few if any condos are in HOAs that allow short-term rentals and Airbnb stays, and the ones that do tend to be competitive amongst cash investors.
These rental restrictions are likely not a big deal for most condo buyers. But if you ever want to lease your space, you might not be able to. The most common situation is you buy a home, then get a job offer out of state or far enough away you don’t want to live there—but you also don’t want to sell. A rental restriction could restrict your ability to rent it out.
If you’re looking to invest in the Indianapolis real estate market, a condo is a great way to tuck your money in an asset that’s relatively stable and builds equity. You can use that time to get a feel for the neighborhood, start a marriage or family, or just enjoy life on your own terms without a lot of homeowner responsibilities.
Let’s talk more about condos in Indianapolis
The right condo might be more affordable and easier to buy than houses in Indianapolis right now. Let’s talk about whether one’s right for you. Call or text (317) 441-3569 or email ally@indyhomeguide.com.
