Options are key to unlocking housing affordability

By MARCY DeSHONG
Guest Columnist

Across Indiana, rising home prices and rents have pushed local leaders to search for quick fixes. In some communities, that search has led to proposals to cap the number of homes investors can own. The frustration behind these proposals is understandable. But limiting who can buy homes won’t solve Indiana’s housing shortage – and may ultimately make it worse.

After the Great Recession, thousands of homes across the state sat vacant as individual buyers struggled to qualify for mortgages. The market responded, purchasing distressed properties and putting them back to use. In many cases, those homes became rentals for Hoosiers who wanted the space of a single-family home but couldn’t yet afford to buy one.

These rentals can be especially beneficial for families by allowing them to live in neighborhoods with high-quality schools. Recent research shows that single family rentals open the door for children to attend high-performing schools and achieve higher academic success. When local governments try to regulate or eliminate single family rentals in their neighborhoods, they are inadvertently depriving Indiana’s children of educational opportunities.

This is the lens through which the legislature’s recent move to reverse these restrictions should be viewed. More housing options are good for Hoosiers.

Prior to the last session, some municipalities pursued caps on institutional ownership, which runs the risk of reducing the number of available rental homes at a time when demand remains high. Fewer rental options don’t always translate into lower prices; they often mean higher rents, fewer choices, and displacement for lower-income families.

State lawmakers took a different approach this year by focusing on increasing supply rather than restricting ownership. The General Assembly enacted tax incentives for homebuilding and expanded the property tax deduction on owner-occupied homes. These reforms aim to encourage construction and ease price pressures by addressing the underlying shortage.

The direction of the 2027 interim study committees reinforces this approach. The announced topics are a signal that lawmakers remain focused on the cost side of the equation rather than revisiting ownership restrictions. Indiana also drew a line on foreign ownership from adversarial nations, a move justified on national security grounds. That targeted policy stands in contrast to broad restrictions on domestic investors, which risk discouraging capital that helps bring housing to market.

Critics of institutional investment often argue that large buyers crowd out families and inflate prices. But recent data suggests a more nuanced reality. Many institutional investors are now selling more homes than they buy, frequently to owner-occupants.

Owner-occupants are still the dominant force in the housing market. Data from Parcl Labs shows that in Indiana, only 1.5 percent of single-family homes are owned by investors. That number is the same in Hamilton County, which has become the focal point of the debate on residential investment.

None of this is to say that every form of investment benefits every neighborhood equally. Local leaders are right to scrutinize how housing policies affect residents. But affordability is ultimately a supply problem. Limiting participation in the housing market does little to help families who rely on rental homes or who are still working toward homeownership.

As lawmakers prepare for the 2027 session, the focus should remain on building more homes, reducing unnecessary government barriers, and expanding options for both renters and buyers. This will provide Hoosiers with more housing opportunities and choices.

Ultimately, this could be a huge boon not just to parents looking for an affordable place to live, but also to their children and the communities they will build and support.

Marcy DeShong leads Midwest Remodeling Services and serves as the 74th president of the Indiana Builders Association.