SUMMARY    HISTORY    PEAKS & TROUGHS    FORECASTS

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In order to most accurately determine prior market price cycles one must remove the effects of inflation and look at real historical prices. The past thirty years have seen four real price cycles in Indianapolis. The prior Indianapolis market downturn involved marginal nominal price growth, which is likely scenario for the present downturn cycle. Market cycle time periods have varied from the prior growth cycle of 22 years to the downturn cycle of 4 years.

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The mortgage-debt-to-income ratio is commonly viewed as the most accurate method of determining market cycles. The past thirty years have seen two cycles both of which included large changes in home affordability. Interestingly the local market did not experience any real decrease in affordability, as did nearly ever other US city, during the national increase in prices over the past few years. The peak in 1981 is an abnormality due to all time high mortgage rates. It does however act as the turning point of a 25 year improvement in Indianapolis home affordability. Due to this abnormality of the late 1970s and early 1980s, the median affordability ratio is skewed. Despite this fact however, the current mortgage-debt-to-income ratio generates no concern.