High Homeownership Rate and a Tight Housing Market in the Gary HMA
The Gary, Indiana housing market area (Gary HMA) borders Lake Michigan in northern Indiana and includes the counties of Lake, Porter, Jasper, and Newton. The Gary HMA is part of the larger Chicago MSA, which includes 14 counties spanning the states of Illinois, Indiana, and Wisconsin. An estimated 19 percent of workers in the Gary HMA commute to jobs in Chicago. The population of the Gary HMA is estimated at 706,300. A recent Comprehensive Housing Market Analysis highlighted economic and housing market activity in the Gary HMA.
Unemployment Remains High as Economic Activity Resumes
As happened elsewhere in the nation, economic activity in the Gary HMA slowed over the past year because of the onset of the COVID-19 pandemic and the policies implemented to reduce the spread of the virus. During this period, nonfarm payrolls in the Gary HMA declined by an average of 8.2 percent compared with the previous year, and the unemployment rate increased to an average of 9.9 percent.
During this period, job losses occurred in every sector except for the transportation and utilities sector, which saw employment increase by 4.4 percent, or 700 jobs, over the previous year. The most severe job losses were in the leisure and hospitality sector, which saw an employment decline of 17.1 percent, or 5,700 jobs, from the previous year.
The manufacturing sector in the Gary HMA is relatively strong, accounting for 13 percent of payrolls in the area. Over the past year, employment in this sector declined by 8.2 percent, a loss of 2,900 jobs. Three of the 10 largest employers in the area are in the manufacturing sector. The largest employer in the area is ArcelorMittal, a steel manufacturer employing more than 5,000 people. Historically, the area is known for steel manufacturing, and although employment in this sector has declined over the years, the robust steel industry in the Gary HMA has made Indiana the largest steel producer in the nation.
The education and health services sector is the largest employment sector in the Gary HMA, accounting for 18 percent of local payrolls. Four of the area’s 10 largest employers are in the education and health services sector, including Franciscan Health, Northwest Health – Porter, Community Hospital, and Saint Margaret Mercy Healthcare. Over the past year, the sector saw employment decline by 7.2 percent, or 3,600 jobs.
The leisure and hospitality sector also has a large presence in the Gary HMA, accounting for 11 percent of area payrolls. The sector includes two of the 10 largest employers in the area: Horseshoe Hammond and the Ameristar East Chicago Casino. Over the past year, employment in the sector declined by 17.1 percent, a loss of 5,700 jobs.
Over the next 3 years, nonfarm payrolls in the Gary HMA are expected to grow an average of 1.3 percent annually as economic activity resumes following efforts to mitigate the spread of the coronavirus.
High Homeownership Rate and Increased Housing Prices in a Tight Market
The home sales market is tight, with an estimated vacancy rate of 0.9 percent. Over the past year, the tight housing market has caused home sales prices to increase by 14 percent to an average price of $226,900. Homeownership rates have increased over the years because housing is more affordable in the Gary HMA than in other areas in the greater Chicago MSA. The National Association of Home Builders/Wells Fargo Housing Opportunity Index shows that households with a median area income could afford 82.2 percent of homes in the area during the fourth quarter of 2020. The homeownership rate in the Gary HMA is estimated at 71.7 percent, which is higher than the national rate of 65.4 percent.
In response to the demand for housing, building permits were up to 2,550 over the past year, an increase from the 1,900 issued the year prior.
The rental market is balanced, with an estimated vacancy rate of 7.2 percent. Single-family homes account for 45 percent of rental units in the area, with multifamily buildings of more than five units accounting for 36 percent of rental units. The average rent for an apartment in the Gary HMA is $931.
Over the next 3 years, demand is estimated for 6,625 for-sale homes and 570 rental units. For more detailed information, see the recent Comprehensive Housing Market Analysis on the Gary HMA.