The Indianapolis metropolitan area is growing in high-technology fields, serves as a regional health care center, and has attracted firms involved in trade and warehousing because of its transportation links and proximity to much of the Nation’s population. Indianapolis has some inherent economic stability owing to its concentration of State government employment.

According to the 2000 census, the population of the metropolitan area reached 1.6 million; the 1990–2000 growth rate, 16 percent, was the second highest among metropolitan areas in the Midwest with a population over 1 million. All 9 counties in the metropolitan area experienced growth during this period; Hamilton County had the largest absolute gain (73,804 people) and percentage gain (68 percent). Marion County remains the largest county in the metropolitan area, although its share of the area’s population fell from 58 percent to 54 percent during the 10-year period.

From 1990 to 2000, Indianapolis’ labor force and employment grew at rates close to the change in population. Nearly 130,000 more people were employed in 2000 than in 1990. Unemployment rates fell to below 3 percent from 1997 through 2000. With the slowdown in the local economy in the latter half of 2001, unemployment rose to 3.4 percent for the year. The February 2002 unemployment rate was 4.5 percent, up from 2.9 percent in February 2001. Manufacturing is concentrated in the automotive industry, which is cyclical in nature, so the local economy fluctuates accordingly.

The Indianapolis area has a significant concentration of jobs in the technology sector. Advanced manufacturing plays a major role in the area’s industry as evidenced by the presence of Allison Transmissions/GMC, Allison Engines/Rolls Royce, Ford, Navistar International, Delphi Energy, Thomson Electronics, and Carrier Corporation. Eli Lilly, the area’s largest private-sector employer outside the healthcare field, and Roche Diagnostics help make Indianapolis a leader in health technology.

The housing industry grew at a rate that was slightly higher than the change in population. For the metropolitan area, there was a net increase of 109,898 housing units (19.2 percent) from 1990 to 2000. The homeownership rate increased from 65 percent to 68 percent during this period and increased again to 72 percent as of the first quarter of 2002. Building permits for 2000 and 2001 showed continued growth, with single-family homes representing more than 80 percent of the 15,295 permits in 2000 and 17,053 permits in 2001. According to Indianapolis Downtown, Inc., recent homeownership opportunities in and near downtown Indianapolis include approximately 85 units in several developments along the canal and another 137 units in projects in other downtown locations. All available home sites in Phase I of Fall Creek Place, an Indianapolis Homeownership Zone project just north of downtown, have been reserved.

Despite some softening of the local economy, low interest rates spurred a 7-percent increase between 2000 and 2001 in new and existing home sales in the Indianapolis area, according to the F.C. Tucker Company. Sales in February 2002 were 5.3 percent above sales in February 2001. Local sources view this as a positive sign for continued strong sales activity during the remainder of 2002. The 2001 median sales price for existing homes was $118,500, up 3 percent from 2000. The median sales price for new homes in 2001 was $169,600, down slightly from $170,700 in 2000.

Recent multifamily permit activity has been relatively stable. Between 1995 and 1999, multifamily permit activity averaged approximately 3,000 units per year, decreasing to 2,500 units annually over the past 2 years. This decrease in permitting may explain the small 2-percent decrease in multifamily occupancy since the early 1990s. Corson & Associates’ survey of multifamily projects in February 2002 found occupancy to be 89 percent; this level reflects movement toward the single-family market and some softness in the multifamily market. The current occupancy level is close to the general range of 90–91 percent since 1998. According to CB Richard Ellis, some announced developments are being postponed, which could help strengthen the multifamily market this year. Rents for one and two-bedroom units in 2001 averaged $525 and $683 a month, respectively. Rents, which increased approximately 3 percent annually over the past 8 years, are expected to moderate to around 2-percent growth in 2002.